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The Online Culture of the Crypto-Economy: A Liquid Modern Voyage through the Deep Web By Josh London Fall 2014 Advisor: Oren Kosansky

The Online Culture of the Crypto Economy

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The Online Culture of the Crypto-Economy:A Liquid Modern Voyage through the Deep Web

ByJosh LondonFall 2014

Advisor: Oren Kosansky

Abstract:

In 2009 a purportedly pseudonymous individual known as

Satoshi Nakamoto released the non-centralized and untraceable

digital currency, Bitcoin, to the virtual public. Since then, the

virtual currency has generated a substantial cult following.

Enthusiasts have put forward bombastic and contradictory claims

about this disruptive technology’s radical potential: an

emancipatory triumph over the junta of the market, the birth of

an anarcho-capitalist utopia, the death-knell of the nation-state

—in short, far-fetched sound bites befitting science fiction have

been actualized in a postmodern social drama; a digital opera

featuring a cyberpunk quest for Pirate Utopia in

hyperreality. Engaging Granovetter’s theory of embeddedness,

which claims that market networks are predicated on pre-existing

systems of social relations (1985), I posit that the crypto-

economy is entangled in a web of modern-mythic narratives

reflecting libertarian and anarcho-capitalist beliefs. Through an

2

ethnographic voyage into the Deep Web, I demonstrate that the

ways in which these systems of value are practically and

symbolically engaged by participants in the crypto-economy

validates Zygmunt Bauman’s projections about the breakdown of the

State in Liquid Modernity (2000; 2014).

Key Words:

Bitcoin, Cryptocurrency, Cryptoanarchism, Informal Economy, Virtual Economy

Acknowledgments:

Thanks to: Oren Kosansky, Sepideh Bajracharya, Robert Goldman,

David Chaum, the motley crew of kindly correspondents—brave

netizens one and all—and a special thanks to the management and

3

staff of Palio and Cellar Door in SE Portland, for countless

complimentary beverages; this project is as much the product of

their caffeinated signs of affection as anything else. And to

Michelle Katz and Stephen London, for their unwavering support,

no one has ever had to endure so many incoherent late night phone

calls on block-chain technologies (xoxo etc.).

4

Contents:

Abstract………………………………………………………………………………Pg. 2

Acknowledgements…………………………………………………………………..Pg. 3

Prologue………………………………………………………………………………Pg. 5

Introduction………..................................................

................................................... Pg. 6

Methodology………………………………………………………………………… Pg. 10

Mythologies of the Crypto-Economy………………………………………………...Pg. 13

Economic Mechanisms of the Crypto-Economy……………………………………..Pg. 50

Cartography in Cyberspace…………………………………………………………...Pg. 82

WikiLeaks & Whiffies Pies…………………………………………………………..Pg. 117

Academic References………………………………………………………………...Pg. 133

5

Prologue:

In the late hours of a bitterly cold night in the Fall of

2012, I found myself amongst a handful of sleep-deprived college

students in an unkempt dorm room on the Lewis & Clark College

campus. The room was lit solely by the soft glow of a laptop

which rested on the cluttered floor. From the device’s speakers

the ambient chatter of a police radio could be discerned, barely

audible, over the hushed voices of the room’s inhabitants. The

subject of their discussion was cryptocurrency. I recall having

tuned out for most of the conversation— I had been up for what

felt like days writing research papers and was distracted by the

thick cloud of smoke that was blowing in from the windowsill

where one of the room’s tenants was perched smoking a cigarette.

As I was imagining the RA busting through the doorway, the fire

6

marshal close behind, I was forcefully returned to the present

when one of the students shouted, “what the hell is Bitcoin?”

The reply came from the windowsill, along with the demand

to shut up and quiet down. People were sleeping. The perched

smoker explained (more or less), “it’s like untraceable internet

money, you can buy anything with it: guns, sex, drugs…” So how do

you get it? “You mine it. Well, you mine data and you just get

it.” I asked what “mining data” could possibly mean; “that’s just

it, I’m not sure anyone really knows what the data is, they just

set up their computers to crack these encrypted bits of data and

voila, they get Bitcoin.” So this encrypted data could be…

“anything, hell, for all I know it could be some CIA firewall or

something.” At this point, the seeds of my interest in

cryptocurrency had been sown. What was this untraceable virtual

cash? Was it really being used to combat a federal agency? And

moreover, who designed it, and why? After finally getting some

sleep and waiting around for a year or two I came around to

addressing these pressing questions.

Introduction:

7

The last empty spot on the map was filled in by Shackleton

in 1899; it’s been said that we live in a world without a

frontier, without terra incognita.1 In 1967 Marshall McLuhan

proclaimed ours the era of the global village, united by the

electronic circuit in a vast intercontinental network of

communications technologies—a kind of artificial global nervous

system. In hindsight it looks like McLuhan may have jumped the

gun in 67’, though his predictions about a humanity bound

together through digital technologies has in many ways since come

true. However, terra incognita exists again, no longer an

archipelago in some uncharted sea, but in the form of virtual

islands in the Deep Web.

In the early years of the new millennium Zygmunt Bauman put

forward his theory of Liquid Modernity, which— just as McLuhan

once predicted—suggests that global convergence comes with its

own unique set of growing pains. The entailments of Bauman’s

Liquid Modern life are manifold: impacting everything from

1 Hakim Bey. T.A.Z.: The Temporary Autonomous Zone, Ontological Anarchy, Poetic Terrorism. Brooklyn, NY:

Autonomedia, 1991. Print. Pg. 100

8

personal identity to economy and the State. It is the latter two

of these categories that interest me here.

According to Bauman Liquid Modernity has engendered a

crisis: the nation-state is losing its cultural coherence to a

generation of “netizens”—global citizens bound to the

supranational culture of the Web2—whose daily realities are

affected by global affairs, by a global economy whose behaviors

emerge from what Arjun Appadurai calls a “space of flows” that

exists largely above and beyond the purview or legislative power

of any one State.3 Bauman calls this fracture a divorce between

power and politics, that is, a divorce between the ability to

effect change and the ability to determine which changes (or

regulations) ought to be made. 4 In short, the monolithic edifice

of the State is ruptured, and spontaneous cultural formations are

developing in the cracks. What follows is an investigation into

just such a formation—what I am calling the online culture of the

2 Thompson, Tok. "Netizens, Revolutionaries, and the Inalienable Right to the Internet." Folk Culture in the Digital

Age. By Trevor J. Blank. Logan, Utah): Utah State UP, 2012. Print. Pg. 493 Appadurai, Arjun. Modernity at Large: Cultural Dimensions of Globalization. Minneapolis, MN: U of Minnesota,

1996. Print. Pg. 304 Bauman & Bordoni. Pg. 20

9

crypto-economy. Whether or not the political aspirations of this

emerging Liquid Modern community are realizable is largely

irrelevant for the purposes of this study; what matters is the

social fact of its emergence in the first place. I argue that the

emergence of the crypto-economy, situated in Deep Web

marketplaces and mediated by untraceable digital currencies,

demonstrates the realization of Bauman’s Liquid Modern

projections.

Following the 2008 financial crisis a wave of decentralized

virtual currencies were introduced to the World Wide Web.

Designed to ameliorate concerns about the opacity and corruption

of global financial institutions in the wake of the crisis, these

so called cryptocurrencies—in reference to their programmable,

cryptographic protocols—were heralded as potential alternatives

to the formal economy and its traditional mediums of exchange.

Cryptocurrencies are universally predicated on encoded mechanisms

that ensure that they are non-centralized, non-regulated (outside

of their initial program) and very nearly untraceable. The first

cryptocurrencies were designed to circumnavigate what their

creators saw as the inflationary tendency of state-backed

10

(hereafter simply “fiat”) currency. Their programed scripts create

mathematically predictable rates of economic growth, and can be

modeled to emulate any economic principle or monetary recipe

their creators find desirable.

Bitcoin, the first of the cryptocurrencies, entered onto the

cultural stage in 2009. Ingeniously engineered by a purportedly

pseudonymous individual known as Satoshi Nakamoto, Bitcoin was

inexplicably gifted to the virtual public. The fuse was lit; soon

mystifying tales of the cryptocurrency’s origins began to

converge with whispered half-truths about burgeoning

assassination markets and untraceable international drug deals.

Mainstream media sources like Newsweek, The New York Times and

The Economist eagerly picked up on the trail of sensational

breadcrumbs, further fueling the online rumor mill. Meanwhile, in

the wake of tantalizing rumors of daydreaming computer

programmers made millionaires overnight, there surfaced bombastic

and contradictory claims about this disruptive technology’s

radical potential: an emancipatory triumph over the junta of the

market, the birth of an anarcho-capitalist utopia, the death-

knell of the nation-state——in short, far-fetched sound bites

11

befitting science fiction have been actualized in a postmodern

social drama; a digital opera featuring a cyberpunk quest for

Pirate Utopia in hyperreality.

Beneath this sensational narrative lie the everyday

practices of a distinct virtual community, one whose diffuse and

chaotically depicted activities have become conflated with

criminality and contraband. Who are the dramatis personae in

this digital drama? Are they really the depraved criminals of the

mass media’s portrayal; dragons lurking in the terra incognita of

the Deep Web? Or are they social crusaders—cut of the WikiLeaks

cloth—as many proponents of the emerging crypto-economy would

have us believe?

This study engages these queries in order to situate the

crypto-economy and its constituent subjectivities within the

realm of Zygmunt Bauman’s theory of Liquid Modernity—mapping the

ideological and technical components of the crypto-economy within

the socio-historical and cultural context of late capitalism.

The paper proceeds from an exploration of the cultural

legacy of the 1980’s cyberneticists—a select cohort of early

12

software engineers responsible for laying the technical and

ideological foundations of the contemporary crypto-economy.

Timothy May’s Crypto-Anarchist Manifesto and Samuel Konkin’s New

Libertarian Manifesto, both products of the 1980’s technological

counter-culture, are here introduced as foundational texts both

prefiguring and precipitating the libertarian and anarcho-

capitalist values which unify the crypto-community. This framing

maps cultural-economist Mark Granovetter’s theory of embeddedness

—which asserts that social ties are as important as financial

concerns in establishing networks of trade—on to the crypto-

economy. The narrative analysis of this section segues into a

technological primer on the cryptocurrency Bitcoin, which serves

as the de facto coin of the realm across the crypto-economy. This

primer engages Bill Maurer’s The Practical Materiality of Bitcoin, to

demonstrate how both the encoded economic mechanisms of Bitcoin

as well as the rhetoric employed by its users adapt the

ideologies of the 1980’s cyberneticist counter-culture to the

Liquid Modern present. Expanding upon Maurer’s conclusions, I

note that cryptocurrency’s modern mythic narrative serves to draw

13

fresh participants into the crypto-economy as successfully as the

incentivizing forces of financial reward or underlying ideology.

Investigating the economic mechanisms of the crypto-economy,

I turn to topical analyses from bloggers like Lui and Kyle Drake,

as well as to a number of first-hand interviews to illustrate the

cryptoeconomy’s underlying discursive processes which allow

diffuse social phenomena like reputation, risk perception, and

trend setting to impact the “real” value of individual

cryptocurrencies.  Wolfgang Fritz Haug’s Critique of Commodity

Aesthetics (2005) is employed to make sense of this complex process

of valuation.

The next section constitutes a parsing out of the various

forms of digital infrastructure that allow the crypto-economy to

function. Presented in ethno-cartographic fashion, the Deep Web

and virtual (black)marketplaces like the SilkRoad are here

introduced. The developmental histories of these virtual locales,

in conjunction the popular narratives that have emerged from

their continued operation reinforce an understanding of the

14

crypto-economy as symptomatic of Zygmunt Bauman’s Liquid

Modernity.

Having established the sites, mediums, and methods of

exchange that make up the crypto-economy online, the paper next

turns to address the cryptoeconomy’s potentially disruptive

effect on traditional political and financial institutions. Here,

the adoption of cryptocurrency by brick-and-mortar businesses

operating outside of the digital realm is also discussed.

The paper concludes with a final consideration of the

crypto-economy as both reflecting and reifying Bauman’s

conception of the Liquid Modern crises of economy and state.

Ultimately I posit that even in its more ideologically neutered,

non-market applications, block-chain technology still reflects a

tendency towards the breakdown of the nation-state as a hegemonic

cultural construct, and suggest that the crypto-economy figures

into an increasing trend towards decentralized, non-hierarchical

and—for lack of a better term—anarchistic social enterprise.

Methodology:

15

The research here presented is primarily the product of

qualitative methodologies. In conjunction with a number

of informal and semi-structured interviews with former as well as

current participants in the crypto-economy, wide arrays of

topical materials—from technical whitepapers to popular films and

science-fiction novels—were researched and consulted.  Many of

the narrative accounts and rhetorical quirks that I argue are

symptomatic of Bauman’s Liquid Modern crisis of the state emerge

from virtual forums and blogs (Reddit, bitcointalk, and 4chan, to

name just a few) ; venues which I as researcher played little

part in molding. Nevertheless, the analysis of these digital

locales and the conduct of their inhabitants serve as fully-

fledged forms of participant observation given the virtual

context of the study.

The virtual spaces in question fall broadly into three

distinct categories: online forums (such as the official Bitcoin

forum at https://bitcointalk.org, or 4chan.org), mainstream media

websites (such as The New York Times [nytimes.com] & Newsweek

[mag.newsweek.com]), and independent blogs (links to Kyle Drake

and Lui’s blogs can be found in the bibliography). Each category

16

of site listed above provides avenues for communication between

participants in the crypto-economy. While the primary uses of

these sites vary drastically, there remains an observable overlap

between the types of conversations occurring across their varied

platforms. For instance, informal blogs and mainstream media

websites with their open comments sections provide a space—just

like online forums—for participants in the crypto-economy to

reflexively address their activities and beliefs.

Online venues also supplied a platform for more proactive

ethnographic methods.

Using the Reddit, 4chan, and Bittalk forums, a set of structured

interviews were conducted. It became clear to me while conducting

research online that the particular cultural milieu of the forums

is by no means conducive to direct interrogation—as the following

4chan forum-dweller’s comment ought to reveal:

cluelesscollegiate: What is your current relationship with cryptocurrency ?

Why do you use it/ what for (be honest plx) ?

Anonymous: none, cryptocurrencies are for fuckin morans.

put that on your shitty report / term paper.

17

In spite of my several attempts, I was only able to garner a

limited number of helpful informants through strictly virtual

channels. That being said, the difficulty I encountered in

obtaining willing participation over the forums is itself

indicative of the central roles that privacy and anonymity play

in this community, as well as of their effects on social

“texture” of the crypto-economy.

Passing from the virtual to the “real”, this study also

relies on the views of participants in the crypto-economy as they

were expressed to me in face-to-face interviews. The interview

subjects directly quoted in the sections that follow span a

diverse cross-section of the crypto-economy and represent active

participants—buyers, vendors, speculators and external

commentators—academics and software designers—alike. A broad

depiction of both the everyday activities as well the underlying

ideologies of the crypto-economy emerge from these intimate

dialogues.

Finally, a number of informal dialogues with brick-and-

mortar business owners across the Portland metropolitan area have

helped to inform my understanding of Bitcoin’s gradual transition

18

into the entrepreneurial mainstream. Likewise, conversations with

the influential cryptologist David Chaum, as well as Robert

Goldman, a professor of sociology at Lewis & Clark College, have

helped me conceptualize the crypto-economy’s political and

cultural significance beyond the confines of the digital realm.

A final reflexive note: For the sake of full disclosure, I

am not particularly sympathetic to the spectrum of anarcho-

capitalist and libertarian ideologies often expressed by

participants in the crypto-economy. That being said I have tried

not to let my own political views bias my ethnographic analysis,

and have opted to let topical sources and informants speak for

themselves.

Mythologies of the Crypto-Economy:

The Web helps provide the epics, songs, genealogies andlegends of the tribe; it provides the secret caravanroutes and raiding trails which make up the flowlinesof tribal economy; it even contains some of the very

19

roads they will follow, some of the very dreams theywill experience as signs and portents.5 –Hakim Bey

Behind the baroque of images hides the grey eminence of politics.6

–Jean Baudrillard

The ideological inheritance of the crypto-economy is

fundamentally entangled with the particularities of its present

constitution. Perhaps this sounds like a hollow truism. Of

course, all cultural formations are historically (and so

ideologically, politically, socially) contingent; the social

never occupies an empty stage. In this case however, historical

contingency is not just a given, its apprehension is crucial to

an understanding of the crypto-economy’s technological, economic,

and cultural conditions.

This sentiment is largely an invocation of economic

anthropologist Mark Granovetter’s theory of embeddedness, which

posits that in market networks, “Actors do not behave or decide

as atoms outside a social context, their attempts at purposive

action are instead embedded in concrete, ongoing systems of

5 Hakim Bey. T.A.Z.: The Temporary Autonomous Zone, Ontological Anarchy, Poetic Terrorism. Brooklyn, NY: Autonomedia, 1991. Print. Pg.1086 Baudrillard, Jean, and Mark Poster. "Simulacra and Simulations." Selected Writings. Stanford, CA: Stanford UP, 1988. Print. pg. 170

20

social relations.”7 In other words, market networks are heavily

impacted by exogenous—non-quantifiable, non-market—factors;

factors like pre-existing social relations, shared systems of

belief, or normative codes of conduct. What follows is a

genealogy of mythological narratives that have both presaged and

precipitated the emergence of the crypto-economy. These

mythological narratives constitute the assemblage of shared

beliefs and social relations within which the crypto-economy is

embedded and which have largely determined the cultural texture

of the virtual community as a whole.

A framing of the ideological and historical precursors of

the crypto-economy in terms of mythologies merits some

justification. Myths are malleable.8 They lay no precise claim to

historicity. And yet, as powerfully as any political mandate, any

historical event, myths mobilize—they organize thought, compel

action.9 They exist apart from history and occasionally lay claim

7 Granovetter, M. "Economic Action and Social Structure: The Problem of Embeddedness." The American Journal of Sociology 91 (3): 487 (1985). Print. pg. 4878 Barthes, Roland. "Myth Today." A Barthes Reader. New York: Hill and Wang, 1982. Print. Pg. 93-949 Malinowski, Bronisław. Myth in Primitive Psychology. New York: Norton, 1926.Print.

21

to the future. In this sense myth and ideology are kindred

categories; they conjure up visions of how things might or should

someday be. It is a unique quality of myths however that they

pave the way towards their own realization. According to Donna

Haraway, “The boundary is permeable between tool and myth,

instrument and concept…Indeed, myth and tool mutually constitute

each other.”10 I share Haraway’s sentiments about the efficacy of

myth, but would go on to suggest that mythic narratives are more

than tools, they’re actors in their own right.

This is not to discredit the role of more traditional agents

—people— in producing the social and technical particularities of

the crypto-economy, or to deny their agency in collectively co-

authoring these mythic narratives in the first place. Rather, as

Constance Penley and Andrew Ross note in the introduction to

their 1991 anthology on technoculture, “the kinds of liberatory

fantasies that surround new technologies are a powerful and

persuasive means of social agency…their source to some extent

10 Haraway, Donna Jeanne. "A Cyborg Manifesto: Science, Technology, and Socialist-Feminism in the Late Twentieth Century." Simians, Cyborgs, and Women: The Reinvention of Nature. New York: Routledge, 1991. Print. Pg. 169

22

lies in real popular needs and desires.”11 As with any

mythological narrative, the episodes here related are of course

concerned with individuals—mythic heroes if you will—whose

actions, aspirations, and ideals do not necessarily (as

Granovetter puts it) “adhere slavishly to a script written for

them by [any] particular intersection of social categories.”12

Indeed, a more focused attention will be paid to the individual

actors operating within the crypto-economy, the dramatis personae of

this digital drama, in latter sections. For the present moment

however, our chief concern is not with individual actors, but

with the narrative currents that continue to mediate their

actions.

A genealogy of the crypto-economy must track modern mythic-

narratives back to the phantasmal projections of Marshall

McLuhan, who in the late 1960’s prophesized the emergence of a

global community from out the digital ether. This fata morgana

manifested as historical fact through the efforts of

cyberneticists and software engineers in the 1980’s. Plagued by

11 Penley, Constance, and Andrew Ross. Technoculture. Minneapolis: U of Minnesota, 1991. Print. Pg. xiii12 Granovetter, pg. 487

23

Orwellian fever-dreams, these digital pioneers penned the

doctrine of crypto-anarchism—an ideal which disguised as science

fiction slipped, wraith-like, into popular-culture. In the wake

of financial crisis the coals of crypto-anarchism were reignited.

Refined by decades of digital diffusion, the development of

untraceable digital currencies, and a new generation of tech-

savvy cyber-activists, this reemergence was understandably

explosive. Sensational as these mytho-historical moments may

seem, if we are to grasp the hold they maintain over the crypto-

economy we must, as Penley puts it, consider “the pragmatic shape

of these fantasies and everyday actions rather than dismiss them

as the sugary fare of the lotus-eating masses.”13 While rooted in

the recent past, I hold that this constellation of historical

vignettes continues to shape the crypto-economy with the

efficacy, indeed the agency, of myth.

Visions of a Global Village

In 1962 Canadian philosopher-cum-pop-intellectual Marshall

McLuhan coined the phrase “global village” in his text Gutenberg

13 Penley & Ross. Pg. xiii

24

Galaxy. 14 However, it was not until the publication of The Medium Is

the Massage in 1967 that the term gained social traction. This

later tract put forward a bold claim—one that in many ways

established McLuhan as the darling intellectual of his day— in

McLuhan’s own words, “Ours is a brand-new world …‘time’ has

ceased, ‘space’ has vanished. We now live in a global village…”15

According to McLuhan, the advent of electronic forms of

communication had overthrown the regimes of time and space,

compressing the vast geographical and psychic distances that had

previously divided the globe into the parochial categories of

nation, culture, or tribe.16 This new era of global connectivity,

made possible by the technological miracles of electric

circuitry, would similarly spell the end of the old modes of

economy and governance, which McLuhan argued would necessarily

have to adapt or die before the “spirit of the new technology.”17

McLuhan’s new digital era, characterized by the emergence of a

global village and its paradigm shifting social entailments,

14 McLuhan, Marshall. The Gutenberg Galaxy: The Making of Typographic Man. Toronto: U of Toronto, 1962. Print. pg. 3215 McLuhan, Marshall, and Quentin Fiore. The Medium Is the Massage. New York: Touchstone, 1989. Print. Pg. 6316 McLuhan. The Medium Is the Massage. Pg. 1617 McLuhan. The Medium Is the Massage. Pg. 16

25

stands as the first iteration of what will swiftly come to be

seen as a reoccurring vision in this catalogue of mythological

narratives.

McLuhan’s proclamations about the actual instantiation of

the global village in 1967 must be taken with a grain of salt. In

1967 the personal computer was still largely the stuff of science

fiction; true enough computer hardware had made the jump from

transistors to integrated circuits—a transition which ushered in

the exponential development of microprocessing power described by

Gordon E. Moore (founder of the Intel Corporation), now called

Moore’s Law18– but even the most state of the art computers were

still the size of filing cabinets or refrigerators and largely

consigned to high-tech office spaces or college campuses (see

Fig. A). Of course the Internet had not yet been invented

either. To keep things in technological perspective, it may help

to consider a popular quote from contemporary physicist Michio

Kaku, reminding us that “Today [2011], your cell phone has

more computer power than all of NASA back in 1969 when it sent

18 Moore, Gordon E. "Cramming More Components onto Integrated Circuits." Electronics Magazine 1965: 4. Print.

26

two astronauts to the moon.”19 The point of all this is simply

that it took the reality of technological development a few

decades to catch up to Marshall McLuhan’s vision.

Fig. A: the SEL 810A computer circa 1967 20

And yet, even if McLuhan might be said to have jumped the

gun in 67’, aspects of his analysis certainly hold up under

retrospective scrutiny. In fact many of his views appear quite

sophisticated even from our own technologically privileged

standpoint. For one thing, McLuhan’s concept of the global

village, if something of an exaggeration circa 67’, is by no

means an inappropriate description of the digitally mediated

socio-cultural present. Moreover, McLuhan was apt to note that

technology has no inherent moral disposition—in the midst of an

19 Kaku, Michio. Physics of the Future: How Science Will Shape Human Destiny and Our Daily Lives by the Year 2100. New York: Doubleday, 2011. Print.20 “Jeremy Toby at the SEL 810A” http://www.shermiewiehe.com/album02.html

27

overwhelming cultural tendency towards technophobia (born as much

from the hippie counter-culture as post-Marxist critical

theory21) McLuhan cast the predicted technological upheaval in

judgmentally neutered terms. Digital technology was—and remains—a

tool, albeit a tool capable of profoundly affecting the dominant

social order, but nonetheless a tool. McLuhan noted that digital

technologies, like any other tool, might be negotiated or

employed in the pursuit of any number of political endgames, some

more threatening to democratic civil society than others. Even in

1967, McLuhan was able to accurately predict the serious threat

that digital communications technologies might pose to privacy:

Electrical information devices for universal, tyrannical womb-to-tomb surveillance are causing a veryserious dilemma between our claim to privacy and the community’s need to know. The older, traditional ideas of private, isolated thoughts and actions…are very seriously threatened by new methods of instantaneous electric information retrieval, by the electrically computerized dossier bank—that one big gossip column that is unforgiving, unforgetful and from which there is no redemption, no erasure of early ‘mistakes.’22

McLuhan’s concerns about the emergence of an insidious Orwellian

surveillance state—mediated by digital technologies— strike an 21 Marcuse, Herbert. One Dimensional Man. London: Sphere, 1968. Print.22 McLuhan. The Medium Is the Massage. Pg. 12

28

eerily familiar chord in the post-9/11, post-Snowden world. The

world-wide digital panopticon is no looming phantom; it’s a

simple fact of life in the 21st century. But this is another

thread in the cultural tapestry of the crypto-economy, one which

we’ll check in on later. Even if digital technology might fit

into dystopian schemes of mass surveillance, it is equally suited

to enabling forms of popular resistance.

According to McLuhan “A strange bond often exists among

antisocial types in their power to see environments as they

really are.”23 It should come as no surprise then that the decade

following the publication of The Medium is the Massage witnessed the

rise of a technologically savvy counter-culture, hyper attuned to

the potential perks and perils of life in the emerging global

village.

In an essay entitled How Counterculture Helped Put the ‘Vernacular’ in

Vernacular Webs, Robert Howard characterizes this cohort as “anti-

establishment hippie-hackers who saw themselves standing in

opposition to the powerful institutions of corporations and

23 McLuhan. The Medium Is the Massage. Pg. 88

29

governments.”24 Contesting the establishment’s monopoly over

technological expertise, the hippie-hackers of the 1970’s

prepared themselves for a kind of “information warfare.”25 In

1974 Theodor “Ted” Nelson, a paragon of the new counter-culture,

self-published the radical broadsheet Computer Lib: You Can and Must

Understand Computers Now/Dream Machines: New Freedoms Through Computer

Screens—A Minority Report (hereafter simply Computer Lib).26 Though he

would eventually become a well-established sociologist and

information theorist (coining neologisms like hypermedia and

hypertext, terms indispensable to any discussion of the modern

Web), Ted Nelson was at the time a non-institutional agent, a

kind of “computer nerd Robin Hood…[hoping] to bring computers

from the mountaintop to the masses by distributing computer

skills more widely among the population.”27 Computer Lib was as

much a technical manual for hobbyists as it was a denunciation of

institutional oppression; it argued that everyday individuals had

to become technologically literate if they wanted to preserve 24 Howard, Robert G. "How Counterculture Helped Put the ‘Vernacular’ in Vernacular Webs." Folk Culture in the Digital Age: The Emergent Dynamics of Human Interaction. By Trevor J. Blank. Logan, Utah): Utah State UP, 2012. Print. Pg. 2725 McLuhan. The Medium Is the Massage. Pg. 13826 Howard. Pg. 2727 Howard. Pg. 30

30

their privacy and ward off the impending surveillance state.28

The text served as both a warning and a call to action:

Deep and widespread computer systems would be tempting to two dangerous parties, ‘organized crime’ and the Executive Branch of the Federal Government (assuming there is still a difference between the two). If we areto have the freedoms of information we deserve as a free people, the safeguards have to be built at the bottom, now.29

McLuhan once said that we march backwards into the future.30 He

meant that our inherited hopes and fears have a way of sneaking

into our social realities. Looking back on McLuhan’s vision of

the global village (and its Orwellian shadow as articulated by

Nelson) it seems difficult to dispute this claim. With the

efficacy of myth, McLuhan’s prophecy egged on the likes of Ted

Nelson and the hippie-hackers of the 1970’s, who seized the

Promethean flame of the new technology and called for a

preemptive strike against the hypothetical authoritarian

surveillance state. Their call quickly became a chorus.

1980’s Technoculture & The Birth of Crypto-Anarchism

28 Howard. Pg. 2729 Howard. Pg. 3030 McLuhan. The Medium Is the Massage. Pg. 75

31

The rallying cry of the 1970’s hippie-hackers appealed to

computer hobbyists and professionals alike, and rapidly grew to

incorporate a politically diverse cross-section of the 1980’s

techno-culture (those individuals with direct access and/or a

focused interest in computer technologies). By the mid 80’s a

kind of high-tech libertarianism had become the de facto zeitgeist

of Silicon Valley. According to Richard Barbook and Andy Cameron,

“While the New Left resent[ed] the government for funding the

military-industrial complex, the New Right attack[ed] the state

for interfering with the spontaneous dissemination of new

technologies by market competition.”31 This unlikely coalition

was predicated on a shared belief in the liberatory potential of

the new technology—a belief articulated in “a bizarre mish-mash

of hippie anarchism and economic liberalism beefed up with lots

of technological determinism.”32

Even as formerly non-institutional agents found themselves

hitching up with emerging tech giants like IBM and Intel, the

anti-establishment spirit of the last decade remained alive and

31 Ludlow, Peter. Crypto Anarchy, Cyberstates, and Pirate Utopias. Cambridge, MA: MIT, 2001. Print. pg. 1932 Ludlow. Pg. 19

32

well. The reigning ethos of high-tech libertarianism among

cryptologists in the 1980’s can still be seen reflected in the

cryptographic innovations of the time; many of which amount to

what Ted Nelson’s Computer Lib called “safeguards” against

unwarranted institutional surveillance. In 1981, David Chaum—who

would go on to found the International Association for

Cryptologic Research just a year later—published a whitepaper

entitled Untraceable Electronic Mail, Return Addresses, and Digital Pseudonyms.33

Chaum’s paper laid the technical foundations for anonymous

digital communications—the very stuff of Nelson’s call to action—

and stands as the progenitor of the digital architecture that

continues to underpin the crypto-economy (more on this later).

Over a poorly connected long-distance phone call I recently

solicited Chaum to expand on his impressions of the prevailing

concerns of cryptologists and computer engineers in this

formative period; he informed me that:

In those days there was a widely recognized privacy problem; there was a lot of literature and reports on the subject. Though there wasn’t really much of a definitional scope to the issue, it was relatively well

33 Chaum, David. Untraceable Electronic Mail, Return Addresses, and Digital Pseudonyms. Communications of the ACM. 24(2),1981. Print. Pg. 84-90.

33

agreed at the time that the personal privacy problem was a pressing one—you wouldn’t really know what kind of information organizations were maintaining about you, and you wouldn’t be able to correct any information if it was in error. There was also a big concern that unnecessary surveillance would take place and that this would lead to the illegitimate acquisition and improper distribution of information across organizations.

From Chaum’s account, it can be understood that the heavily

politicized, anti-establishment ideals that initially inspired

concerns about institutional surveillance and the abuse of

digital communications technologies in the 1970’s had drifted

into the technocultural mainstream of the 80’s.

Far from consigned to a radical counter-culture, allusions

to the privacy problem were foregrounded in the popular

imagination of the time, in fact, they factored heavily into the

self-conception and marketing strategies of some of Silicon

Valley’s most prominent corporations. In January of 1984, Apple—

at this point still dwarfed by its competitors—announced the new

Macintosh computer in what has since become a near legendary ad-

campaign. In a commercial appropriately titled “1984”, the

34

Macintosh was depicted as the emancipatory tool which would stave

off George Orwell’s authoritarian dystopia (see Fig. B). 34

Fig. B: Apple’s “1984” Commercial 35

Even while spotlighted by the cultural and commercial

mainstream of the 1980’s, the privacy problem still lent itself

to some fairly radical articulations. In 1988, Timothy May, an

electronic engineer and senior scientist for Intel, expanded on

the popular concerns about digital surveillance and privacy by

positing an entire “alternative” political vision in The Crypto-

anarchist Manifesto. This radical document gave voice to the

political philosophy of crypto-anarchism—a term which merits some

parsing out.

34 Howard. Pg. 25 35 http://www.orwelltoday.com/1984applead.jpg

35

“Crypto” here implies not just “secret” but rather,

“cryptographic,” meaning encoded, as in the encryption of digital

computer languages. Cryptographic-anarchism then implies a form

of digital “anarchy”—in the non-hierarchical, peer-to-peer,

collaborative sense of the term rather than the Hobbesian

bloodbath implied by its colloquial usage. This cryptographic-

anarchism is predicated on the use and mastery of sophisticated

digital technologies to foster anonymity and thereby subvert

institutional surveillance. In a way, crypto-anarchism’s central

concern with anonymity makes either reading of the prefix

“crypto” equally apropos. Situated at the forefront of

technological innovation, May was uniquely accredited to give

voice to this new political philosophy.

May believed that technology was on the verge of being able

to “Alter completely the nature of government regulation, the

ability to tax and control economic interactions, [and] the

ability to keep information secret…”36 His manifesto posited that

36 May, Timothy C. "The Crypto Anarchist Manifesto." The Crypto Anarchist Manifesto. Web. Pg. 1

<http://groups.csail.mit.edu/mac/classes/6.805/articles/crypto/cypherpunks/may-crypto-manifesto.html>.

36

sophisticated cryptography—embodied in the technological

breakthroughs of cryptologists like David Chaum— would give birth

to vibrant virtual communities free from oppressive governmental

oversight; anarcho-capitalist communities where consenting

individuals would be free to interact and exchange goods,

services and ideas condemned by the formal state apparatus.

In an anthology of cryptoanarchist essays, Peter Ludlow

quotes Timothy May’s assertion that cryptographic technology

would result in the formation of “Data havens for the storage and

marketing of controversial information … illegal or prohibited in

one or more countries.”37 Data havens, acting like Swiss banks in

cyberspace safeguarding intellectual property, would ensure the

survival of free speech and undermine the efforts of oppressive

governmental regimes to censor their populations. As May states,

“The basic right of free speech is the right to speak in a

language one’s neighbors or governing leaders may not find

comprehensible— encrypted speech.” 38 In essence, May saw

cryptoanarchy as the technological liberation of individuals from

the coercive domination of the state apparatus; it is in this 37 Ludlow. Pg. 7238 Ludlow pg. 67

37

sense that he referred to himself as (crypto) anarchist. May’s

crypto-anarchist vision attributed to strong digital cryptography

a radical potential to restructure the prevailing social order;

as later ethnographic materials will demonstrate, this mythic

narrative lies very near the heart of the contemporary crypto-

economy.

Timothy May’s philosophy of crypto-anarchism was born in

intimate dialogue with another political ideology, that of

libertarianism. Samuel Konkin, who penned the New Libertarian

Manifesto in the late 80’s, similarly longed for the removal of

governmental controls from the realm of market exchange.

Expressing the core sentiments of libertarianism towards the

state, Konkin referred to government as an “institution of

coercion, centralizing immorality, directing theft and murder,

and co-ordinating oppression on a scale inconceivable by random

criminality...”39 Konkin posited that through the practice of

what he dubbed counter-economic activities, individuals might

liberate themselves, and ultimately the world, from statist

oppression. He defined counter-economics as “the actual practice 39 Konkin, Samuel E., III. "New Libertarian Manifesto."  Web. Pg. 6

<http://agorism.info/docs/NewLibertarianManifesto.pdf>.

38

of human actions that evade, avoid and defy the State.”40

Counter-economic activities include (and are by no means limited

to): arms trafficking, alternative economy use, being or hiring

illegal immigrants, drug trafficking, mutual credit, smuggling,

tax evasion—notably, all activities which benefit from the

mediation of strong digital cryptography.

Konkin’s view was that as the counter-economy grew, the

power of the formal state would wane—at which point pockets of

free libertarian anti-states would come to form “discernible

districts and ghettos and predominate in islands or [even] space

colonies.”41 Konkin’s inclusion of space colonies into his

imagined libertarian future indicates something of the expected

timeframe of his counter-economic strategy. Little did Konkin

know that libertarian colonies would soon come to appear in virtual

space, colonies actively engaged with anarcho-capitalist

mythologies and sustained by virtual cryptographic currencies

that would not only enable but embody his theory of counter-

economics.

40 Konkin pg. 1841 Konkin pg. 22

39

It took two decades of technological development and

economic upheaval before the mythologies of crypto-anarchism and

counter-economics finally gained concrete expression in the

crypto-economy. Crucial to these intervening decades was the

diffusion of these radical anti-statist mythologies into pop-

culture through the aesthetic and literary sub-genre known as

cyberpunk.

The Legacy of Cyberpunk in Pop-Culture

In 1982 Ridley Scott’s Blade Runner, a hard-boiled neo-noir

adaptation of Philip K. Dick’s classic science fiction novel Do

Androids Dream of Electric Sheep (1968), appeared on the silver screen.

While Cyberpunk’s literary roots can be traced back to the mid

70’s, it was Blade Runner that ultimately ushered the genre into

the pop-cultural imagination. The film follows Harrison Ford as

detective Rick Deckard through an unrecognizable Los Angeles

circa 2019—equal parts neon wonderland and urban hell-scape—

presenting audiences with an all-too-believable vision of a

dystopian near-future.

40

The gritty aesthetic of Blade Runner’s urban environment

visually captures the key themes of the cyberpunk genre: LA’s

streets overflow with techno-industrial detritus cast aglow from

a sea of clashing neon signs; it’s raining, you feel the

humidity. Churning plumes of exhaust partially obscure the

eclectic human scenery—leather-clad punks with Ferrari-Red

liberty spikes jostle a line of chanting Hare Krishnas in saffron

robes; raver-types in translucent rain-jackets haggle with Asian

junk-salesman in front of back-alley body shops; a conspicuous

spook in a trench-coat accosts a gang of poly-ethnic youths

blasting hip-hop around a trash-fire. From glass storefronts

filled with television screens there flicker a thousand

undiscernible ads, the audio mostly static. Fluorescent Chinese

characters overhang a faintly glowing computer terminal built

into a malfunctioning traffic light from which a robotic voice

endlessly loops a monotonic “cross-now” to passers-by. From the

chaotic comingling of culturally affected signifiers this street

scene situates itself in McLuhan’s digitally mediated global

village—albeit a seedier place than we might have expected. (See

Fig. C)

41

Fig. C: a street-scene from Ridley Scott’s Blade Runner 42

Above the pulsing streets, the glass and steel spires of

mega-corporate towers fade into a black and starless night. Their

edifices double as impossibly large LED screens: a painted geisha

delicately toys a frozen treat; a Coca Cola ad 30 stories high

paints the city red for a brief instant as curtains of rain catch

the electric light. The wailing sirens on the streets below are

just barely audible from these Olympian heights. Peeking through

a tinted window into the living quarters of a corporate tycoon we

are graced by ultra-modernist décor. Stainless steel surfaces and

a tasteful chrome sculpture gently reflect a passing airship

emblazoned with a company logo. From the proliferation of

advertisements, signs foreign and familiar alike, the film

affirms the global success of the neoliberal revolution begun in

the 1970’s. (See Fig. D)

42 http://s640.photobucket.com/user/kidterminal/media/Datasphere%20forum/br_city_street.jpg.html

42

Fig. D: an urban skyline from Ridley Scott’s Blade Runner 43

The trope of a transnational techno-culture born of global

capitalism figures prominently in cyberpunk narratives, which

often play with the intersection of high-tech and low-life in

what cultural scholar Peter Fitting has called “the apotheosis of

the postmodern.”44 The works of science fiction author William

Gibson epitomize this tendency. Gibson’s anthology, Burning

Chrome, hit the market in 1982 while Blade Runner was still in

theaters, but it is largely for his award-wining 1984 text

Neuromancer that he is regarded as the prophet of cyberpunk

literature. In much the same fashion as Ridley Scott’s film, the

plots of Gibson’s stories often involve the activities of classic

anti-heroes—hackers and criminals, misfits and malcontents, all

non-institutional agents who put the “punk” in cyberpunk—who

43 http://blogs.houstonpress.com/artattack/coke0816.jpg44 Fitting, Peter. "The Lessons of Cyberpunk." Technoculture. By Constance Penley and Andrew Ross. Minneapolis:

U of Minnesota, 1991. Print. Pg. 295

43

ingeniously appropriate cybernetic and information technologies

to combat shady or outright despotic transnational corporations.

The employment of digital technologies to undermine or

avoid institutional control by Gibson’s cyberpunk protagonists

would appear to be a narrativized reiteration of Timothy May’s

crypto-anarchism—with one key difference. While the subject of

May and Konkin’s invective ideologies was the State, the arch-

villain of Gibson’s cyberpunk cosmos is most commonly the

multinational corporation.

The typecasting of corporate transnationals as archetypical

villains is perhaps the greatest hallmark of the cyberpunk genre,

a fact which bears some parsing out. As Peter Fitting notes of

Gibson’s Count Zero (1986), “while nation-states still exist, the

dominant forces in the book are multinational corporations.

Rather than having national or political loyalties, the ‘company

man’ is legally bound to the company, along with his family, for

life.”45 Where the State does factor into Gibson’s narratives, it

is almost always as a pawn for backstage corporate entities,

45 Fitting. Pg. 301

44

which in his fictional near-futures have replaced governments as

centers of political and economic control.

Gibson and fellow cyberpunk authors’ reshuffling of

mythological antagonists—from the Orwellian surveillance state to

the faceless multinational corporation—marks both a reflection of

the times as well as an eerie prediction of the near-future. It

is crucial to note that the early 1980’s witnessed the

implementation of neoliberal economic policies under Margaret

Thatcher in the UK and the Reagan administration in the United

States. These policies favored deregulation and privatization,

essentially, as Zygmunt Bauman puts it, “State functions had to

be and were to be shifted sideways (‘hived-off’, ‘outsourced’

and/or ‘contracted out’) to the market.” 46 The impotency of the

State in cyberpunk narratives, coupled with the all-powerful

characterization of villainous transnational corporations, seems

essentially an exaggerated depiction of this neoliberal turn.

Peter Fitting notes that even in the mid 1970’s corporate

giants like IBM and AT&T, as well as multinational organizations

46 Bauman, Zygmunt, and Carlo Bordoni. State of Crisis. Cambridge: Polity, 2014. Print. Pg. 10

45

like OPEC, cast threatening shadows over the imaginations of

science fiction authors. By the 1980’s, “their power and

pervasive presence both ‘everywhere’ and ‘nowhere’ was perceived

and represented as threatening and disturbing.” 47 For cyberpunk

authors, the privileged position of multinational corporations

under neoliberalism required a reorientation of the genre’s

underlying crypto-anarchist ethic. Succinctly articulating this

reorientation in the 1990’s, author David Brin states, “in the

West it is not government but megacommercial interests that

presently threaten to fence off vast realms of cyberspace.”48

Even so, the power of the real State, even in the context of

neoliberal reform, is by no means as atrophied as its denigrating

depiction in cyberpunk narratives might suggest. For our purposes

however, what matters is not so much the veracity of cyberpunk’s

mythic tropes—rogue hackers single-handedly taking on all-

powerful multinationals; the hollow shell of the State crushed by

the forces of global economy—what matters is that through the

47 Fitting. Pg. 30848 Brin, David. "Getting Our Priorities Straight." Crypto Anarchy, Cyberstates, and Pirate Utopias. By Peter Ludlow.

Cambridge, MA: MIT, 2001. Print. Pg.32-33

46

literary and cinematic legacy of cyberpunk, these (crypto-

anarchistic) tropes have been canonized in pop-culture.

While films like Blade Runner or the literary works of William

Gibson serve as excellent case-studies of the cyberpunk genre,

they by no means sum up the entirety of cyberpunks cultural or

creative legacy. Bruce Sterling, who along with William Gibson

figures as one of the founding fathers of cyberpunk literature,

likewise played a large role in bringing the genre into the

cultural mainstream through his 1986 anthology of cyberpunk

stories, Mirrorshades. Sterling’s 1988 novel Islands in the Net

popularized Timothy May’s concept of data-havens, in essence

familiarizing the science-fiction consuming public with what had

theretofore been a fringe political notion. Another prolific

cyberpunk author, Neal Stephenson, presaged the development of

digital cryptocurrencies in his 1999 novel Cryptonomicon, which

was nominated for the Arthur C. Clarke and Hugo Awards for best

novel in 2000. 49 Stephenson’s works are widely appreciated

beyond the bounds of science fiction, so much so that his novel

49 "2000 Award Winners & Nominees." Worlds Without End Blog. Web. 29 Nov. 2014.

<https://www.worldswithoutend.com/books_year_index.asp?year=2000>.

47

Snow Crash, published in 1992, recently appeared

on Time magazine's list of the 100 best English-language novels

written since 1923.50

The cyberpunk genre has made some significant cinematic

waves as well—with iconic films like James Cameron’s The Terminator

(1984),Paul Verhoeven’s Robocop (1987), and the Wachowski’s The

Matrix (1999) all exposing viewing audiences to classic cyberpunk

themes. In both The Terminator and Robocop immensely powerful tech-

corporations are depicted as wreaking havoc on dystopian near-

futures, while The Matrix practically canonized the tech-savvy

anti-heroes of classic cyberpunk conception. It’s worth noting

that these films, as well as their literary predecessors, appeal

not so much to alternative institutions beyond the models of the

corporation or the State, but rather, that they invoke an

alterity to all institutions—a fundamental component of crypto-

anarchism. It is this spirit of technological resistance to

institutional oppression—common to cyberpunk and crypto-anarchism

alike—that the genre ushered into the 21st century.

50 Lacayo, Richard. "All-TIME 100 Novels: How We Picked the List." Web. 28 Nov. 2014.

<http://entertainment.time.com/2005/10/16/all-time-100-novels/>.

48

In The Cyborg Manifesto, Donna Haraway states that “the boundary

between science fiction and social reality is an optical

illusion.”51 This proclamation seems especially true in reference

to the sentiments expressed by John Perry Barlow, a co-founder of

the Electronic Frontier Foundation, in 1996. From the small town

of Davos, Switzerland, Barlow released a firebrand document onto

the fledgling World Wide Web—it was titled A Declaration of the

Independence of Cyberspace. The declaration might just as easily have

emerged from the pages of a cyberpunk novel, as its first few

remarks make abundantly clear:

Governments of the Industrial World, you weary giants of flesh and steel, I come from Cyberspace, the new home of Mind. On behalf of the future, I ask you of thepast to leave us alone. You are not welcome among us. You have no sovereignty where we gather. We have no elected government, nor are we likely to have one, so Iaddress you with no greater authority than that with which liberty itself always speaks. I declare the global social space we are building to be naturally independent of the tyrannies you seek to impose on us. You have no moral right to rule us, nor do you possess any methods of enforcement we have true reason to fear…You do not know us, nor do you know our world. Cyberspace does not lie within your borders.52

51 Haraway. Pg. 14952 Barlow, John P. "A Declaration of the Independence of Cyberspace." Crypto Anarchy, Cyberstates, and Pirate

Utopias. By Peter Ludlow. Cambridge, MA: MIT, 2001. Print. Pg. 28-29

49

All the mythic tropes of cyberpunk literature and film are

present, a global society, an impotent State, and of course a

characteristically anti-institutional ethos. However this

declaration isn’t science fiction, its social fact. Moreover its

bold challenge to the State, which according to Barlow possesses

no “methods of enforcement which we have true reason to fear,”

seems a direct return to the politics of Konkin and May, to the

ideology and rhetoric of crypto-anarchism.

What distinguishes this document from the manifestos of the

1980’s is the immediacy of its cultural implications. From

McLuhan to May, this web of mytho-historical narratives has dealt

almost solely with predictions, with portents. In the late 90’s,

individuals like John Perry Barlow, possessed by the anti-

institutional spirit of crypto-anarchism, were for the first time

also equipped with the tools to see their ideals realized. For

the first time in the course of this genealogy of myths,

cyberspace—the global village par excellence— had become a reality.

Barlow and likeminded digital pioneers now set out to create a

new virtual civilization, “more humane and fair than the world

50

[of] governments [had] made before.”53 The truth is that even

with the digital frontier open, and the mythic vision of Timothy

May made a familiar sci-fi plot—it would take a dramatic

departure from the socio-economic status quo to politicize the

denizens of cyberspace, and to thereby prompt the creation of the

crypto-economy. The nature of this departure? A Liquid Modern

Crisis.

Liquid Modernity & Financial Crisis

According to the Polish sociologist and social theorist

Zygmunt Bauman, we are living in a Liquid Modern world. Liquid

Modernity denotes a state of society wherein conditions change

faster than social actors can find ways of developing habits and

routines, a state wherein the fluidity of daily life and the

fluidity of the social order reciprocally intensify.54 The

factors contributing to our collective entry into Liquid

Modernity are numerous; with communications technologies and the

forms of global economy they produce having played a key role.55

53 Barlow. Pg. 28-2954 Bauman, Zygmunt. “On Living in a Liquid Modern World.” Social Theory: Rootsand Branches. By Peter Kivisto. New York: Oxford UP, 2011. Print. Pg. 50355 Bauman, Zygmunt, and Carlo Bordoni. State of Crisis. Cambridge: Polity, 2014. Print. Pg. 30

51

But if, as Bauman says, Liquid Modernity is upon us, we shouldn’t

waste too much time figuring out how we got here; instead we

should be asking what it means to be here now.

Liquid Modern conditions take their toll on traditional

modes of economy and governance, devised as they were to

accommodate more “solid” times. In light of these taxing

conditions, the stewards of economy and State may have to adapt

or risk impotency in this new age. If Bauman’s proclamation

recalls McLuhan’s vision of the global village to the reader’s

mind, then this constellation of myths has done its job well—

indeed Bauman’s Liquid Modernity figures as the chief and final

articulation of this reoccurring vision-of-doom for political

parochialisms. As Bauman himself puts it, “The global village of

McLuhan was created (or is being created) thanks to economic and

cultural exchange, but at the expense of state-systems that are

no longer in line with the changing times.”56

By Bauman’s reasoning, “…the advent of liquid modern

society spelled the demise of utopias centered on society…If

liquid life prompts an interest in societal reform at all, the

56 Bauman & Bordoni. Pg. 30

52

postulated reform is aimed mostly at pushing society further

towards the surrender [of all] value of its own except that of a

police force guarding the security of self-reforming selves[.]”57

While this description of the State passing off its functions to

individuals, “self-reforming selves”, might at first glance seem

to reflect the recent history of neoliberal reform, I suggest

that it might be taken to mean a more radical form of transition;

not just the passage of power from the State to the market, but

truly as the departure of power from this classic coupling

(market and State) altogether. Prior to these Liquid Modern times

one might have rightfully objected that beyond market and State

there exists no alternative; however, in light of the Liquid

Modern phenomenon of self-regulating peer-to-peer networks like

the crypto-economy, this assumption may have to be amended. We

will return to this far-reaching claim further on, but for now,

let’s focus on how Liquid Modernity helped to engender the

crypto-economy in the first place.

So how is it exactly that Liquid Modernity spelled the

demise of utopic visions centered on the State, as Bauman

57 Bauman. Pg. 508

53

suggests? Quite simply, it created an economic crisis beyond the

States power to control, thereby signaling a “growing separation

and rising probability of divorce between power (that is, the

capacity to get things done) and politics (that is, the ability

to decide which things need and ought to be done).”58 Bauman

explains that the seeds of this divorce were planted over the

course of the last half-century by State governments themselves

who voluntarily joined or were pushed into joining the neoliberal

revolution. According to Bauman, neoliberal policies of financial

deregulation resulted in the evaporation of power from nation-

states into, “the no-man’s land of the ‘space of flows’ whereas

politics has remained as before territorially fixed and

constrained.”59 It is worth recalling that in cyberpunk

mythologies, this space-of-flows into which Bauman states power

has evaporated is the sole domain of multinational corporations,

non-state agents whose pervasive presence “both ‘everywhere’ and

‘nowhere’”60 sets them above the legislative or regulatory power

of impotent State governments. With regards to Bauman’s Liquid

58 Bauman & Bordoni. Pg. 2059 Bauman & Bordoni. Pg. 2060 Fitting. Pg. 308

54

Modern conception of “power freed from all but rudimentary

political control, and politics suffering a permanent and growing

deficit of power,”61 the cyberpunk narrative seems by no means

far from the truth.

With powerful multinational corporate entities and

supranational market forces now beyond the States capacity to

effectively regulate, it was next the markets’ turn to lose

credibility.62 Bauman calls this chapter of neoliberal late

capitalism the “‘opulent thirty’: the years of a consumerist orgy

and all-but-continuous, seemingly unstoppable growth of GNP

indices all over the place.”63 This consumerist miracle was

created by banks and credit-card issuers whose high-risk and

loose loaning practices encouraged the purchase of homes with

unearned money. As Bauman states of this activity, “its profits

came into view much earlier than its costs.”64 Soon enough the

financial returns from these high-risk behaviors reached their

natural limit and eventually ceased altogether. In short, the

bubble burst, or in Bauman’s rather dramatic phrasing, “the

61 Bauman & Bordoni. Pg. 2062 Bauman & Bordoni. Pg. 1063 Bauman & Bordoni. Pg. 1064 Bauman & Bordoni. Pg. 10

55

bright fata morgana of perpetually rising opulence vanished under a

sky covered with dark clouds of prospectless redundancy,

bankruptcies, infinite debt-repayment, drastic falls in living

standards, shrinking life ambitions [etc.].”65 According to

Bauman, the financial crisis of 2008 was not just another

instance of the capitalist cycle of boom and bust. Where previous

financial crises acted as interregnum, opportunities for the

market or the State to take up or cede the reigns of economic

power, this crisis was different:

Every one of the old ways of doing things lies discredited, and the new ways are—at best—at the drawing board or experimentation stage. No one can swear, hand on heart, to the effectiveness of any… Crisis is a time for deciding what way of proceeding totake, but in the arsenal of human experience there seemto be no trustworthy strategies to pick from.66

For Bauman then, in the wake of the financial crisis of 2008,

both the State and the market have been discredited. This is the

dilemma of Liquid Modernity, a double bind between the crises of

economy and state. We Liquid Moderns are painfully aware that

left unregulated, “the profit-guided markets lead to economic and

social catastrophes.”67 And yet, because “in its present 65 Bauman & Bordoni. Pg. 1066 Bauman & Bordoni. Pg. 1067 Bauman & Bordoni. Pg. 11

56

condition, the state lacks the means and resources to perform the

tasks which effective supervision and control of the markets,

not to mention their regulation and management, require[,]”68 we

can no longer expect solutions to come from the State either.

Luckily we may not have to.

According to Bauman, as the State is faced with its own

inability to exert power over supranational and virtual spaces of

flow, its cultural coherence is likewise being “swept away by the

opening of borders, by faster and faster exchanges of

communications…by a culture which is no longer restricted to a

local level, and is deeply influenced by suggestions, information

and comments from all over the world.”69 It is to this digitally

mediated transnational culture that we might turn to for an

alternative to the double bind of our Liquid Modern moment.

Following the 2008 financial crisis, non-institutionally

affiliated agents began to seek out their own novel solutions to

the perceived short-comings of the traditional economy. Inspired

by crypto-anarchist and libertarian ideologies and inhabiting

68 Bauman & Bordoni. Pg. 1169 Bauman & Bordoni. Pg. 30

57

their very own ‘space of flows’ beyond the traditional purview of

the State, real-world cyberpunks began levying sophisticated

digital technologies to the task of producing alternative

currencies and digital markets in cyberspace. These alternatives,

while by no means vouchsafed, would appear to cast the classic

dichotomy of market or State as not only false but also

needlessly constraining. The creation tale of Bitcoin—the digital

currency heralded by participants in the crypto-economy as

presenting an alternative to fiat currencies and financial

institutions—factors in as the final narrative in this genealogy

of modern myths.

Satoshi Nakamoto & The Genesis Block

On November 1st 2008 an entity operating under the pseudonym

Satoshi Nakamoto first surfaced on a cryptography-focused virtual

mailing list on metzdowd.com. Nakamoto stated simply, “I've been

working on a new electronic cash system that's fully peer-to-

peer, with no trusted third party[,]”70 signing the message with

an untraceable email and a link to a whitepaper in PDF format.

The paper was entitled Bitcoin: A Peer-to-Peer Electronic Cash 70 http://www.mail-archive.com/search?l=cryptography%40metzdowd.com&q=from%3A%22Satoshi+Nakamoto%22&start=10

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System, and in eight exceptionally parsimonious pages it outlined

the core components of a ground-breaking new technology: “A

purely peer-to-peer version of electronic cash [that] would allow

online payments to be sent directly from one party to another

without going through a financial institution.”71

Over the course of the next week some of the Web’s most

talented cryptographers scanned over Nakamoto’s work. A grueling

cross-examination of the proposed system swiftly ensued. Its

long-term scalability, its security, adaptability, its economic

behaviors, and even its broader socio-political implications came

under fire. Some argued that the level of privacy advertised by

Bitcoin could only appeal to criminals or anarchists, that some

level of transparency, a back door provided for the possible

intercession of law enforcement, was crucial to the projects

survival.72 One virtual interlocutor, arguing that any

cryptographic payment system would ultimately be crushed by the

sheer force of traditional financial institutions told Nakamoto,

“You will not find a solution to political problems in

71 Nakamoto, Satoshi. Bitcoin: A peer-to-peer electronic cash system. 2008. Web. Pg. 1 http://bitcoin.org/bitcoin.pdf 72 http://www.newyorker.com/magazine/2011/10/10/the-crypto-currency

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cryptography [,]” to which Nakamoto, truly showing his

ideological hand, replied “Yes, but we can win a major battle in

the arms race and gain a new territory of freedom for several

years. Governments are good at cutting off the heads of a

centrally controlled network like Napster, but pure P2P networks

like Gnutella and Tor seem to be holding their own.”73

Nakamoto’s faith in the staying power of decentralized peer-

to-peer networks, to say nothing of his practical efforts to see

the realization of his very own peer-to-peer network through

Bitcoin, comfortably coincide with Zygmunt Bauman’s Liquid Modern

projections about (economic) power’s flight from the hands of the

State.74 Moreover, Nakamoto’s rhetoric—epitomized by the

evocation of an arms race between institutions and networks of

rogue individuals—echoes the by now well-established sentiments

of crypto-anarchist and libertarian ideologies. This is because

Bitcoin was not born in an ideological vacuum. Rather, it was

informed by the colorful discursive history of crypto-anarchist

and libertarian ideologues who—writing in the 1980’s—could only

predict and encourage the development of cryptocurrencies. Both 73 http://www.mail-archive.com/cryptography%40metzdowd.com/msg09971.html74 Bauman & Bordoni. Pg. 20

60

Timothy C. May and Samuel Konkin conceived of unregulated virtual

currencies as central to the actualization of their political

agendas. Nakamoto him/her/itself expressed to a fellow

cryptographer that Bitcoin would be “very attractive to the

libertarian viewpoint if we can explain it properly[,]” adding

that, unfortunately, he/she/they were “better with code than with

words...”75

Joshua David of the New Yorker Magazine argues that Nakamoto

was above all else politically motivated, noting that the

pseudonymous character “introduced the currency just a few

months after the collapse of the global banking sector, and

published a five-hundred-word essay about traditional fiat, or

government-backed, currencies.” 76 Nakamoto’s “essay” (in fact a

portion of his whitepaper on Bitcoin) argues that conventional

currencies’ dependence upon central authority constitutes a

serious liability. Nakamoto wrote: “The central bank must be

trusted not to debase the currency, but the history of fiat

currencies is full of breaches of that trust. Banks must be

trusted to hold our money and transfer it electronically, but 75 http://www.mail-archive.com/cryptography%40metzdowd.com/msg10001.html76 http://www.newyorker.com/magazine/2011/10/10/the-crypto-currency

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they lend it out in waves of credit bubbles with barely a

fraction in reserve.”77 Any interested party can still go back

and review Nakamoto’s electronic dialogues from the cryptography

mailing list, most of which are shot through with political-

economy related subjects. As David puts it, Nakamoto’s

conversations seem to cover everything from “the theories of

Austrian economist Ludwig von Mises to the history of commodity

markets.”78

On bitcointalk.org, a popular virtual forum for Bitcoin

enthusiasts created shortly after Bitcoin’s take-off, Satoshi

Nakamoto is similarly viewed as a politically motivated agent. As

one forum-participant, posting under the digital alias “Marcus of

Augustus”, put it, “Satoshi definitely saw this as a strike

against the malignant forces that national fiat currencies and

the parasitic monetary/finance system have become. Enslaving us

all in unpayable debts and endless taxation for wars and bankster

bonuses ... it is now a criminal system that will go down in

history and those at top aren't doing squat to change it.”79

77 http://www.newyorker.com/magazine/2011/10/10/the-crypto-currency78 http://www.newyorker.com/magazine/2011/10/10/the-crypto-currency79 https://bitcointalk.org/index.php?topic=5951.0

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Gavin Andresen, an early investor in Bitcoin who would eventually

come to work closely with Satoshi Nakamoto after Bitcoin’s

release, likewise “got the impression that Satoshi was really

doing it for political reasons[.]" 80 Framing Nakamoto’s activity

in less bombastic tones than Marcus of Augustus, Andresen

explains “He doesn't like the system we have today and wanted a

different one that would be more equal. He did not like the

notion of banks and bankers getting wealthy just because they

hold the keys."81

Whether Satoshi Nakamoto actually embodied the belligerent

crypto-anarchist zeal ascribed to him/her by Marcus of Augustus

or the more cool-tempered—albeit righteous—indignation posited by

Andresen, one thing is certain, “nearly all were intrigued by the

promise of a digital currency accessible to anyone in the world

that could bypass central banks at a time when the global

financial system was on life support.” 82

On Friday, January 9th of 2009, at 5:05pm Satoshi Nakamoto

pressed a button on a keyboard and Bitcoin was born. 83 5 years

80 http://mag.newsweek.com/2014/03/14/bitcoin-satoshi-nakamoto.html81 http://mag.newsweek.com/2014/03/14/bitcoin-satoshi-nakamoto.html82 http://mag.newsweek.com/2014/03/14/bitcoin-satoshi-nakamoto.html83 http://www.mail-archive.com/cryptography%40metzdowd.com/msg10142.html

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and 11months later, with 13.5 million bitcoins in circulation,

currently valued at 376 US dollars to the coin, Bitcoin’s net

worth exceeds $5 billion.84 Not too bad for 31 thousand lines of

code dumped on a non-descript virtual exchange.

But, as the fledgling community of Bitcoin holders would soon

learn, for Satoshi Nakamoto, it was never about the money.

Embedded in the code of the first fifty bitcoins—

reverentially appellated the genesis block– was a line of plain

text: “The Times 03/Jan/2009 Chancellor on brink of second

bailout for banks.” 85 A cursory google search of these terms will

link the reader to an article featured in the London-based

newspaper The Times announcing the failure of a 37 billion pound

bailout which failed to stimulate the British economy in the wake

of the global financial crisis of 2008. As Joshua David put it in

2011, Nakamoto’s allusion is best read as “a sort of digital

battle cry.”86 Bitcoin offered an alternative to the crippled

fiat system depicted in The Times’ article—it would allow

individuals to send money directly to one another without corrupt

84 https://markets.blockchain.info/85 http://www.newyorker.com/magazine/2011/10/10/the-crypto-currency86 http://www.newyorker.com/magazine/2011/10/10/the-crypto-currency

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banks or dysfunctional states acting as intermediaries. By

David’s reckoning, “If Nakamoto ran the world, he would have just

fired Ben Bernanke, closed the European Central Bank, and shut down

Western Union.”87 The need for trust in a central authority was

completely removed from the new system, to be replaced by a faith in

one thing only; the soundness of the code.

Bitcoin enthusiasts’ faith in the digital currency’s

cryptographic protocols is by no means unfounded. At first a

skeptic, Dan Kaminsky, a world famous hacker responsible for

revealing a fundamental flaw in the internet to the Department of

Homeland Security in 2008, became a believer in Bitcoin’s code

the hard way.88 When he first heard about Bitcoin, Kaminsky

decided to put the cryptocurrency to the test. He developed a

series of elegant bugs designed to compromise Bitcoin’s code, but

when he attempted to execute his plot he was met with an

unyielding defense. Kaminsky told The New Yorker, “every time I

went after the code there was a line that addressed the problem…

Attack Removed, it said.” 89 Nakamoto’s system was bulletproof;

87 http://www.newyorker.com/magazine/2011/10/10/the-crypto-currency88 http://www.newyorker.com/magazine/2011/10/10/the-crypto-currency89 http://www.newyorker.com/magazine/2011/10/10/the-crypto-currency

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“I’ve never seen anything like it,” 90 an awed Kaminsky reported.

While individual coinholders remain vulnerable to hackers and

human error, Bitcoin itself was demonstrated a cryptographic

fortress.

News of Kaminsky’s failed attempts to undermine the currency

compounded upon popular frustrations with traditional financial

institutions to encourage faith in Nakamoto’s new currency.

Ironically even Ben Bernanke, the chair of the Federal Reserve,

came to cautiously endorse the strength of Bitcoin’s code in

2013, when he was forced to acknowledge that cryptocurrencies

“may hold long-term promise.”91

Bolstered by its newfound “street-cred”, interest in Bitcoin

gradual began to swell. By 2010 Nakamoto was forced to enlist the

aid of a handful of cryptographers to help accommodate the code

to an increased user-base. Gavin Andresen was one of this

handful. From June 2010 to April 2011 Andresen worked to

streamline the system, corresponding with the mysterious Satoshi

Nakamoto a few times a week.92 Andresen reported to Newsweek

90 http://www.newyorker.com/magazine/2011/10/10/the-crypto-currency91 http://www.newyorker.com/magazine/2011/10/10/the-crypto-currency92 http://mag.newsweek.com/2014/03/14/bitcoin-satoshi-nakamoto.html

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magazine that Nakamoto’s evasiveness was his/her defining

characteristic—“In fact, he never even heard Nakamoto's voice,

because the founder of Bitcoin would not communicate by phone.

Their interactions, he says, always took place by ‘email or

private message on the Bitcointalk forum,’ where enthusiasts meet

online.”93 Andresen’s final virtual interaction with Nakamoto

occurred in April of 2011, when he told Nakamoto that he had

accepted an invitation to speak at the Central Intelligence

Agency headquarters. Andresen told Nakamoto:

"I hope that by talking directly to them and, more importantly,listening to their questions/concerns, they will think of Bitcoin

the way I do - as a just-plain-better, more efficient, less-subject-to-political-whims money, not as an all-powerful black-market tool that will be used by anarchists to overthrow the

System." 94

Satoshi Nakamoto never replied. Not only did Bitcoin’s enigmatic

creator stop responding to emails from Andresen and the rest of

the motley crew of Bitcoin’s cryptographic curators, he/she

disappeared from Bitcoin’s virtual forums and mailing lists as

well. Without so much as a word of explanation, the creator fell

silent. For all intents and purposes the individual called

93 http://mag.newsweek.com/2014/03/14/bitcoin-satoshi-nakamoto.html94 http://mag.newsweek.com/2014/03/14/bitcoin-satoshi-nakamoto.html

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Satoshi Nakamoto ceased to exist. Satoshi Nakamoto the myth,

however, was born.

The entire history of Satoshi Nakamoto was one lingering

question mark in the minds of Bitcoin’s supporters. Who was

Satoshi? What was “his” background; was “he” an academic? An

anarchist? A government spy? A Newsweek article from 2013 noted

that online conspiracy theorists linked Nakamoto and Bitcoin to

everything from the National Security Agency to the International

Monetary Fund. 95And how to account for his sudden disappearance;

was “he” dead? Murdered?

For many, the whole story just didn’t add up. As one forum-

posted on bitcointalk.org put it, “He doesn't act like the

average human. Not taking advantage of his creation, leaving

without telling anybody anything. Is he even a single person or a

group? How can someone create something so great and not be

stepping out to get the credit?”96 The biggest question of all—

the one that still has every participant in the crypto-economy

95 http://mag.newsweek.com/2014/03/14/bitcoin-satoshi-nakamoto.html 96 https://bitcointalk.org/index.php?topic=5951.0

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scratching their heads—what has kept Satoshi Nakamoto from

cashing in on his creation? 97

Bitcoin’s key feature—elaborated at length in the following

section—is something called the block-chain, which functions as

an unforgeable public ledger documenting the creation and

transaction of every individual bitcoin ever made. As every

bitcoin-holder can personally verify in reference to the block-

chain, the first coins “mined” in 2009, the genesis block, are

still in possession of the original owner, none other than

Satoshi Nakamoto. The 1,191,852 bitcoins are a virtual goldmine;

a treasure trove equating to some 448 million US dollars by

today’s98 exchange rate.99 And yet this vast wealth has sat

untouched, abandoned in a digital vault, for almost 6 years.

Moreover, as Leah McGrath Goodman of Newsweek Magazine notes, “in

a world where almost every big Silicon Valley innovation seems to

erupt in lawsuits over who thought of it first, in the case of

Bitcoin the founder has remained conspicuously silent for the

past five years.”100 If Nakamoto were dead, murdered say for

97 http://mag.newsweek.com/2014/03/14/bitcoin-satoshi-nakamoto.html98 December 2nd 201499 From https://bitcointalk.org/index.php?topic=37333.0100 http://mag.newsweek.com/2014/03/14/bitcoin-satoshi-nakamoto.html

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instance, why would the killer not have claimed the cash prize?

Could an assassin really have been so naïve as to take-out

Nakamoto without first gaining access to his digital keys?

Unlikely. Apparently, for Satoshi Nakamoto, it really was never

about the money.

So to review the facts: an anonymous individual or group

of individuals emerges on a little-known virtual cryptography

mailing list; demonstrates a familiarity with high political and

economic theory; apparently single-handedly develops a bullet-

proof digital currency now estimated at a net worth in the

billions of dollars; overnight disappears without a trace—a ghost

in the web— leaving a vast fortune entirely abandoned in his

passing. Nakamoto’s character profile still has hobbyists and

financial investors in Bitcoin understandably intrigued. Who or

what is Satoshi Nakamoto? A forum-post from bitcointalk.org user

“Wobbler” offers some suggestions:

1. Satoshi is a group of people. Subscenario 1: Foundedby some powerful entity, to create an experiment or to destroy the banking system. Or make drug trafficking easier. 2. Satoshi is dead. He didn't really know that bitcoin might have such success, he died before seeing it grow so much and that's all. Subcenario 2: Satoshi was killed because of Bitcoin. 3. Satoshi is afraid of

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Bitcoin and how it turned up. 4. Satoshi is a person that has no life other than programming (21.000.000% nerd) and he creates things under different identities.Maybe was behind Napster too. 5. Satoshi is ET or AI orGOD or S8TN 101

Recognizing this real-world cyberpunk mystery narrative as

the stuff of journalistic dreams, Newsweek’s Leah McGrath Goodman

set out to find some answers in 2013. Unconvinced by the

conventional wisdom that Satoshi Nakamoto was simply a digital

pseudonym (“a story repeated by everyone from Bitcoin's rabid

fans to The New Yorker”102) Goodman followed a shaky trail of clues

back to a 64-year-old Japanese-American man really named Dorian

Satoshi Nakamoto. Goodman reported, “He is someone with a

penchant for collecting model trains and a career shrouded in

secrecy, having done classified work for major corporations and

the U.S. military.”103 Her story made the cover of the March 14th

edition of Newsweek in 2014, and went viral in Bitcoin related

virtual forums (See Fig. E).

101 http://www.newyorker.com/magazine/2011/10/10/the-crypto-currency102 http://mag.newsweek.com/2014/03/14/bitcoin-satoshi-nakamoto.html103 http://mag.newsweek.com/2014/03/14/bitcoin-satoshi-nakamoto.html

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Fig. E: Leah McGrath Goodman’s The Face Behind Bitcoin, March 14th 2014 104

Goodman’s portrait of the enigmatic Satoshi Nakamoto raised

as many questions as it purported to answer. Was it really

possible that Bitcoin’s ingenious creator was holed up in his

family home in Los Angeles’s San Gabriel foothills; a reclusive

model-train enthusiast living off of a modest government pension

while leaving a multi-million dollar fortune untouched?105 Goodman

herself notes, “It seemed similarly implausible that Nakamoto's

first response to my knocking at his door would be to call the

cops.”106 It is difficult to imagine the crypto-anarchist

revolutionary credited with spearheading a digital arms race

against Big Government and “the Banks” as reflexively falling

104 http://www.newsweek.com/2014/03/14/face-behind-bitcoin-247957.html105 http://mag.newsweek.com/2014/03/14/bitcoin-satoshi-nakamoto.html106 http://mag.newsweek.com/2014/03/14/bitcoin-satoshi-nakamoto.html

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back on the police to dodge a reporter. And yet, Dorian

Nakamoto’s initial response to Goodman’s inquiry certainly seemed

promising; "I am no longer involved in that and I cannot discuss

it…It's been turned over to other people. They are in charge of

it now. I no longer have any connection.”107 Days after Goodman’s

article went public, Dorian Nakamoto retracted his statement, and

under council from a family lawyer sent the following message to

Newsweek, which was quickly uploaded to Goodman’s article on the

publication’s website:

My name is Dorian Satoshi Nakamoto. I am the subject ofthe Newsweek story on Bitcoin. I am writing this statement to clear my name. I did not create, invent orotherwise work on Bitcoin. I unconditionally deny the Newsweek report. The first time I heard the term "bitcoin" was from my son in mid-February 2014. After being contacted by a reporter, my son called me and used the word, which I had never before heard. Shortly thereafter, the reporter confronted me at my home. I called the police. I never consented to speak with the reporter. In an ensuing discussion with a reporter fromthe Associated Press, I called the technology "bitcom."108

In some sense, Dorian Nakamoto needn’t have bothered denying

his affiliation with Bitcoin; the internet was already ablaze

with forum and blog posts denouncing Goodman’s claims as well as 107 http://mag.newsweek.com/2014/03/14/bitcoin-satoshi-nakamoto.html108 http://mag.newsweek.com/2014/03/14/bitcoin-satoshi-nakamoto.html

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her journalistic integrity.109 The web-based version of Goodman’s

article contained photographs of the Nakamoto family’s house with

street signs and license plates in full-view, which as one

commenter on the Newsweek website summed up, “turned this man--

someone who clearly wanted his privacy to be respected--into a

target with a billion-dollar bounty [on his head]. If this turns

out badly, blood will be on the hands of yourself and

Newsweek."110 In any event, on the 7th of March, an individual

posted the message “I am not Dorian Nakamoto” on the P2P

foundation’s Ning website from the same untraceable email address

that originally posted the Bitcoin whitepaper in 2009.111 For the

bitcointalk.org forums, this was all the proof required to

irrefutably discredit Goodman’s article. One commenter,

“em3rgentOrdr” summarized the pervasive attitude of Bitcoin’s

supporters in the following post:

The Satoshi conspiracy theories never end and never gettired.  Someone always comes up with a new one.  One day there will be a TV series just focusing on satoshi conspiracy theories. Satoshi is everywhere and nowhere.

109 http://www.huffingtonpost.com/2014/03/06/newsweek-bitcoin-founder_n_4912206.html110 http://www.huffingtonpost.com/2014/03/06/newsweek-bitcoin-founder_n_4912206.html111 http://techcrunch.com/2014/03/06/satoshi-dorian/

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Satoshi could be all of us, or none of us. Satoshi camefrom nowhere and disappeared to nowhere, but his coins are everywhere. Satoshi has no past, no future, and no present, but his creation is immortal. Satoshi is an idea.  Satoshi has inspired all of us.  Satoshi is a legend. 112

In short, Satoshi Nakamoto’s true identity shouldn’t really

matter. Bitcoin was built so that trust would never have to be

invested in any one entity—be that an individual, a bank, a

corporation, or a state government—and regardless of Satoshi

Nakamoto’s mythic pull, the network itself was designed to

flourish without anyone ever having to know who Nakamoto was, or

trust in Nakamoto’s intentions. As Joshua David puts it,

“Bitcoin, in other words, survives because of what you can see

and what you can’t. Users are hidden, but transactions are

exposed. The code is visible to all, but its origins are

mysterious. The currency is both real and elusive—just like its

founder.”113 For participants in the crypto-economy then, the

take-away from Bitcoin’s etiological myth of Satoshi Nakamoto and

the genesis block mirrors the novel gift of Bitcoin itself, that

is, we are privileged with the opportunity to focus on the

112 https://bitcointalk.org/index.php?topic=5951.0113 http://www.newyorker.com/magazine/2011/10/10/the-crypto-currency

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technology rather than the personality behind it. That being

said, in the spirit of economic anthropologist Mark Granovetter

as channeled through cryptographer Vili Lehdonvirta, “it’s hard

to stop new technology, particularly when it has a compelling

story. And part of what attracts people to bitcoin is the mystery

of Nakamoto’s true identity. Having a mythical background is an

excellent marketing trick”114

The Mytho-Historical Embeddedness of the Crypto-Economy

One might be understandably overwhelmed by this mytho-

historical genealogy; in hopes of a coherent impression then,

let’s take stock. From the vantage point of the early 1980’s,

cyberneticists and cryptologists like Timothy C. May and David

Chaum saw the foreshadowed digital net of McLuhan’s global

village being cast. They saw both its radical emancipatory

potential (the global exchange of free information and ideas, the

virtual nightmare of every despotic regime) as well as its

probable hazards (the realization of the Orwellian surveillance

state, the birth of a world-wide digital panopticon). These

digital pioneers noted that the utility of the net would run two

114 http://www.newyorker.com/magazine/2011/10/10/the-crypto-currency

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ways—individuals might just as likely become the fish as the

fishermen of the new digital tides. From the dystopian fever

dreams of the 1970’s hippie-hacker counterculture and the

technological breakthroughs of cyberneticists in the 1980’s, the

ethic “crypto-anarchism” was formed. Through cyberpunk

narratives, the core components of crypto-anarchism entered into

the cultural mainstream, where, in the wake of the 2008 financial

crisis, they reemerged to galvanize Satoshi Nakamoto’s formation

of an alternative market, dealing in the cryptocurrency Bitcoin,

independent from the State and traditional financial

institutions. This is not just the developmental history of the

crypto-economy, but the web of modern mythic narratives within

which the cryptoeconomy is entangled or in Granovetter’s terms,

embedded.

In The Problem of Embeddedness, Granovetter posits that “Actors

do not behave or decide as atoms outside a social context, nor do

they adhere slavishly to a script written for them by the

particular intersection of social categories that they happen to

occupy. Their attempts at purposive action are instead embedded

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in concrete, ongoing systems of social relations.”115 This

observation, that even in market contexts, individuals’ actions

are affected and in part directed by exogenous social factors, is

known as the theory of embeddedness. I encourage the reader to

return briefly to the words of Hakim Bey from the opening of this

section, and to consider the mythic narratives we have reviewed

as “the epics, songs, genealogies and legends of the tribe;

[providing] the secret caravan routes and raiding trails which

make up the flowlines of tribal economy [.]”116 In other words, a

common engagement with the anarcho-capitalist sentiments outlined

by Timothy May and Samuel Konkin constitutes the ongoing system

of social relations that binds the crypto-economy together, all

the while guiding its market trends.

Even non-radical or non-political actors in the crypto-

economy, individuals like Gavin Andresen who see Bitcoin “as a

just-plain-better, more efficient, less-subject-to-political-

whims money” rather than “an all-powerful black-market tool that

115 Granovetter, M. "Economic Action and Social Structure: The Problem of Embeddedness." The American Journal

of Sociology 91 (3): 487 (1985). Print. pg. 487

116 Hakim Bey. T.A.Z.: The Temporary Autonomous Zone, Ontological Anarchy, Poetic Terrorism. Brooklyn, NY: Autonomedia, 1991. Print. Pg.108

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will be used by anarchists to overthrow the System[,]" 117 are

still very much affected by the crypto-economy’s roots in crypto-

anarchist thought. Proponents of Bitcoin who seek to legitimize

the currency in the eyes of the cultural and institutional

mainstream are hard-pressed to distance themselves from the

technology’s politically-charged mythic-heritage, as well as from

its many vocally anti-establishment users. The next section will

analyze this internal tension—and its economic consequences—at

greater length.

Of course, Granovetter is right to emphasize that “culture

is not a once-for-all influence but an ongoing process,

continuously constructed and reconstructed during interaction.”118

That is to say, the mythologies of the crypto-economy—colored as

they are by anti-institutional and crypto-anarchist ideals—are by

no means over-determining social forces. They not only shape the

actions of participants in the crypto-economy but are shaped by

them in turn—often, as Granovetter suggests, “for their own

strategic reasons.” 119 The next section takes an ethnographic

117 http://mag.newsweek.com/2014/03/14/bitcoin-satoshi-nakamoto.html118 Granovetter. Pg. 486119 Granovetter. Pg. 486

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turn to observe precisely how individuals strategically engage

the myths and mechanisms of the crypto-economy in pursuit of

their own enlightened (culturally, ideologically, and mythologically

mediated) self-interest.

Economic Mechanisms of the Crypto-Economy

The nature and effectiveness of money is not to befound simply in the coin that I hold in my hand; its

qualities are invested in the social organizations andthe supra-subjective norms that make this coin a toolof endlessly diverse and extensive uses. –Georg Simmel

120

The question of how Bitcoin is socially embedded canperhaps best be traced by looking at how people aretalking about and using Bitcoin in a social context,and the best way to assess these connections in thecase of a digital currency is to go online.—Henrik

Karlstrøm121

The crypto-economy’s socio-political and mythological

embeddedness is best demonstrated through the economic behaviors

of its participants. The intersection and enmeshment of ideology

and economics in the crypto-economy—a relationship summed up by

Granovetter’s theory of embeddedness—results in the digital

120 Simmel, Georg. "The Philosophy of Money." Social Theory: Roots and Branches. By Peter Kivisto. New York: Oxford UP, 2011. Print. Pg. 123-124121 Karlstrøm, H. (2014). Do libertarians dream of electric coins? the materialembeddedness of bitcoin. Distinktion: Scandinavian Journal of Social Theory, 15(1), 23-36. Pg. 5

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economy’s most defining characteristic, namely, its dependence

upon and vulnerability to its own reputation. It is through the

strategic negotiation and manipulation of social factors like

reputation and hype that participants in the crypto-economy

produce and obtain “real” economic value from Bitcoin and other

cryptocurrencies. A theoretical account of the production of

“real” financial value from the perception of value alone is

given in Wolfgang Fritz Haug’s New Elements of a Theory of Commodity

Aesthetics (2005)122 as well as in Anna Tsing’s Friction (2005), where

this phenomenon has been appropriately described as an economy of

appearances .123

While the sensational modern mythic-narratives outlined in

the previous section have imbued Bitcoin with a certain

popularity—and consequently its value—these same narratives can

also be strategically levied by Bitcoin’s detractors (or

competitors) to besmirch the currency’s reputation. In an

economic environment largely determined by speculative investment

122 Haug, Wolfgang Fritz. "New Elements of a Theory of Commodity Aesthetics." (2005). Print.123 Tsing, Anna Lowenhaupt. Friction: An Ethnography of Global Connection. Princeton, NJ: Princeton UP, 2005.

Print.

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the threat of devaluation alone is often enough to produce a real

decrease in value. If an investor begins to suspect that the

value of a particular cryptocurrency is dropping, they will

attempt to sell or exchange what they have in order to switch to

a more successful or valuable brand of coin. As the ethnographic

materials is this section will demonstrate, a significant portion

of participants’ daily activities in the crypto-economy are

concerned with strategically navigating this volatile economy of

appearances.

For the purposes of this study, a discussion of these kinds

of practical economic engagements is primarily valuable not for

the insight it provides into the economics of the crypto-economy

(though such knowledge is sociologically valuable in its own

right), but rather for the insight it provides into the socio-

cultural self-conception of participants themselves.

An understanding of the multiplicity of ways that

participants in the crypto-economy practically and symbolically

frame their economic activities helps situate the culture of the

crypto-economy in Zygmunt Bauman’s Liquid Modernity. Individuals

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dealing or investing in cryptocurrencies have actively removed

themselves from the domain of the state-backed or fiat economy as

well as from the control of traditional financial institutions

(banks, credit companies, multinational corporations, etc.). This

is not only a direct reflection of Bauman’s assertion of the

divorce between power and politics but an affirmation of his even

bolder claim that the cultural construct of the nation-state

itself is increasingly becoming “anachronistic and short-

sighted”124 in our Liquid Modern times. By directly engaging

participants in the crypto-economy at the site of their departure

from traditional market and state institutions we can determine

the degree to which they themselves harbor such Liquid Modern

sentiments.

However, to even begin to make sense of the economic

practices of participants in the crypto-economy, a more in-depth

technical understanding of cryptocurrency is necessary. Luckily,

as was discussed more generally in the previous section, the

first fully-functional cryptocurrency Bitcoin (which will here

serve as a technical case study for cryptocurrencies in general)

124 Bauman & Bordoni. Pg. 15

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was created to serve a particular political agenda; as such, even

highly technical aspects of its operation reflect socio-cultural

and political principles of considerable interest to this study.

A Technological Primer on Cryptocurrency

By now the reader has no doubt acquired some basic

understanding of what cryptocurrency is and where it came from,

but just to be certain let’s re-hash the basics. Created by the

pseudonymous Satoshi Nakamoto in response to the 2008 financial

crisis, the first cryptocurrency, Bitcoin, was developed as an

alternative to fiat currencies. A kind of wunderwaffe for crypto-

anarchism, Bitcoin—and indeed all other imitation

cryptocurrencies—are decentralized, untraceable125, and regulated

by mathematical algorithm (by central code) rather than by

central authority. But what exactly is this code, and how does it

work? And what exactly makes Bitcoin’s code different from any

other digital payment system (like PayPal say for instance)?

125 In fact cryptocurrencies can be designed with varying degrees of user anonymity, though the gross majority of economically competitive cryptocurrencies currently protect the privacy of users’ real-world identities.

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What makes Bitcoin, and all other cryptocurrencies,

different from any other form of digital payment is something

called the block-chain. Here’s how it works: The block-chain is

both a mint and a public ledger which every coin holder has

access to at all times. Every transaction that ever occurs with

Bitcoin is recorded in this ledger, however the identity of every

coin-holder remains completely anonymous. As Nakamoto put it,

for each transaction, “the "tape", is made public, but without

telling who the parties were.”126

Each individual bitcoin has a unique and unforgeable code

(you might imagine a single bitcoin as a 20 digit number for

instance), and when Alice transacts her bitcoin with Bob127, it is

this code which is recorded in the public ledger along with a

precise time stamp. X gave 20digit# to Y at Z time. X and Y here

refer to the unforgeable ID’s of Alice and Bob’s respective

digital wallets; while X cannot be traced back to Alice (nor Y to

Bob), both X and Y will always appear as X and Y in every future

126 Nakamoto. Pg. 6127 Alice and Bob are conventional placeholder names in the cryptography world;as David Chaum put it, “it’s a lot easier to follow ‘Alice sent a message to Bob encrypted with his public key’ than ‘Party A sent a message to Party B encrypted by Party B's public key.’

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transaction recorded on the block-chain.128 This allows for

accountability—X can develop a reputation— while nevertheless

fundamentally preserving Alice’s real-world anonymity. Many users

prefer an added degree of anonymity, and so create and use a new

digital wallet for each new transaction. This has become common

practice129 and is even recommended to new users on bitcoin.org’s

tutorials page.130

In order to create new coins—notably this is called

“mining” rather than minting— any coin holder in the network can

run a software program which reviews the entirety of the ledger

to verify that there has been no dishonest transaction—like

double spending of the same coin. This verification process is

called proof-of-work. When this review of the ledger is complete,

the responsible coin holder is entered into a lottery with all

other participating coinholders, and a certain quantity of new

bitcoins are rewarded to a randomly selected winner.131 This

occurs about every 10 minutes and will continue to do so until

the last Bitcoin is mined in the year 2140 (but we’ll get to that128 Nakamoto. Pg. 2129 https://bitcointalk.org/index.php?topic=322377.0130 https://bitcoin.org/en/how-it-works131 Nakamoto. Pg. 4

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later). It’s easy to overlook the socio-political significance,

to say nothing of the sophistication, of this set-up.

If a unit of electronic currency is essentially just so-many

lines of code, what’s to keep Alice from first copying down the

code, paying Bob, and then paying Charlie with the same code?

This is called the double-spending problem, and it’s an old

favorite in cryptography circles.132 With tangible currencies

there’s no problem, you’re either holding some monetary token or

you’re not, and once you’ve given it away it’s gone for good.

Clearly, with electronic payments things aren’t so simple. With

traditional forms of electronic payment—what’s occurring behind

the scenes every time you swipe your credit card –a third party

(a bank or credit provider) intermediates the transaction,

verifying that you actually have the funds you’re looking to

spend and ultimately processing the payment itself. As Henrik

Karlstrøm notes, in traditional markets “the issue of how to

establish trust between actors which act in their own self-

interest is solved by having a robust system of third-party

132 https://en.bitcoin.it/wiki/Double-spending

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regulators, which can arbitrate in case of disputes and enforce

sanctions in case of contractual breaches.”133

In the case of Bitcoin, which was created to free

individuals from dependence upon third party intermediaries, the

solution to the double-spending problem is far more creative. In

Bitcoin’s peer-to-peer network, every individual acts to keep

every other individual honest by running a proof-of-work on the

public ledger of transactions (the block-chain). In other words,

anyone can review the ledger to spot for double-spending and be

rewarded with freshly created bitcoins for the effort. This is

what lends Bitcoin—and cryptocurrency in general—its disruptive

potential; there is no need for a central regulatory authority,

or banks, or mints, or treasuries. Instead, managerial

responsibility is evenly, equally and transparently distributed

across every participating node in the network. This system

perfectly embodies Bauman’s assertion that Liquid Modern society

is tending towards a state of “self-reforming selves [;]”134 a

133 Karlstrøm. Pg.10

134 Bauman. Pg. 508

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rather lofty socio-cultural and political vision to be embodied

in just a few lines of code.

While the notion of a decentralized network of peers equally

invested with managerial authority conjures up a strikingly

egalitarian image, in reality, Bitcoin has come to present a far

from level socio-economic playing field. In the early days of

Bitcoin, the block-chain was relatively simple, with few

transactions demanding verification in the ledger. Over time,

however, the ledger has become more and more complex, requiring

more and more processing-power to successfully review and

rewarding less and less coinage with each successful completion

of a proof-of-work. Economic anthropologist Bill Maurer explains

that by 2011, mining had become a full-time and expensive

operation. Maurer describes the mining rig of a Kentucky

repairman named Kevin Groce as a wall of home-made computers

“which cost $4000, [and] give off so much heat that Groce’s

uncle, who offered to invest $30,000 in the mining operation,

predicted that ‘they’ll heat the whole building this winter.’”135 135 Maurer, Bill, Taylor C. Nelms, and Lana Swartz. "“When Perhaps the Real Problem Is Money Itself!”: The

Practical Materiality of Bitcoin." Social Semiotics 23.2 (2013): 261-77. Print. pg. 11

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While every individual in the network does indeed still have

access to the block-chain, clearly the financial costs of

actively participating in the mining process are exclusionary.

The dramatic increases in the difficulty and costs of mining

Bitcoin described above have produced a considerable level of

economic stratification among coinholders. Moreover, as Karlstrøm

observes, “even an effort like Bitcoin…quickly runs into some of

the same issues that have plagued money since its inception:

indebtedness, unsustainable investment cycles and speculation –

none of which is necessarily against the libertarian agenda, of

course.”136 While Bitcoin’s developing issue with economic

stratification presents some serious food for thought, our

present investigation demands that we return our attention to

Bitcoin’s other encoded economic mechanisms.

The system is further designed with a coin-cap in place

which ensures that there will only ever be at most 21 million

Bitcoins in existence, and that these 21 million coins will be

“mined” at a mathematically certain and predictable rate.137 The

136 Karlstrøm. Pg.14137 https://bitcointalk.org/index.php?topic=7269.0

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increasing difficulty of producing new coins, coupled with the

systems’ simulated tendency towards scarcity (producing less

coins over time and eventually ceasing to produce them all

together in 2140) has the effect of lending Bitcoin a

fundamentally deflationary character. In other words, the value

of an individual Bitcoin increases over time. While a seemingly

undesirable trait for a currency, Bitcoin’s deflationary

character was fully intended by Satoshi Nakamoto, who created

Bitcoin in response to the multiple-billion dollar bailouts which

followed the financial crisis and subsequent fears of hyper-

inflation. Though its deflationary tendencies often prompt a

consideration of Bitcoin as a commodity rather than a currency

(deflation disincentives exchange), an individual bitcoin can be

subdivided into smaller fragments—like a dollar’s division into

cents—which lend themselves more readily to transactions. The

atomic unit of Bitcoin is called the Satoshi, in homage to the

currency’s mythic creator, and makes up just one hundred

millionth of a single Bitcoin.138

138 https://bitcointalk.org/index.php?topic=7269.0

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In The Practical Materiality of Bitcoin (2013), Bill Maurer

investigates the deflationary character of Bitcoin, noting a re-

occurring semiotic association between Bitcoin and gold— a

phenomenon he terms digital metallism. In Satoshi Nakamoto’s 2009

abstract, the pseudonymous founder gave a knowing tip of the hat

to the gold standard, explaining that “the steady addition of a

constant of amount of new coins [to the network] is analogous to

gold miners expending resources to add gold to

circulation.”139This, Maurer argues, is why Bitcoins are “mined”

rather than minted, in a “deliberate nod to precious metal-based

monetary systems.”140 Unlike precious metal-based coinage

however, Bitcoin is all but impossible to counterfeit: “This is

accomplished by the use of powerful cryptography many times

stronger than that used by banks.  Instead of simply being "sent"

coins have to be cryptographically signed over from one entity to

another, essentially putting a lock and key on each token so that

bitcoins can be securely backed up in multiple places, and so

that copying doesn't increase the amount you own.”141

139 Nakamoto pg. 4140 Maurer. Pg. 8141 https://bitcointalk.org/index.php?topic=7269.0

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In spite of Bitcoin’s technological advantages over gold,

Maurer’s claim about the cryptocurrency’s underlying trope of

digital metallism holds true. Recall that the consequence of

Bitcoin’s programmed coin-cap is the simulation of “an ideal-

typical gold-standard economy, [where] there is a limit to the

total amount of currency that will eventually circulate [.]”142

Proponents of Bitcoin find the regularity and predictability of

the systems’ coin-creation, often compared to the relative

predictability of gold, to be a significant improvement upon the

opaque processes behind the minting of fiat currencies—which are

frequently derided as being overly subject to political whims.143

But there’s more to the reoccurring gold-motif than the

acknowledgment of a shared deflationary tendency. A number of

participants in the crypto-economy express a fondness for the

ensured value of “good old gold bullion,”144 upon which the value

of the US dollar was rooted until the mid-1970s. The break from

the gold standard and subsequent transition of the international

monetary system to pure fiat money introduced an unprecedented

142 Maurer, pg. 8143 http://mag.newsweek.com/2014/03/14/bitcoin-satoshi-nakamoto.html144 http://newsbtc.com/2014/12/04/gold-bitcoin-join-hands-bitreserve/

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need for trust into the global economy. It is precisely this

element of trust—trust in central state authorities to regulate

and back the value of their currencies—that Bitcoin upends. This

too can be interpreted as a reflection of the Liquid Modern

crisis of the State.

The important thing to remember with regards to Maurer’s

thesis about Bitcoin’s digital metallism is that cryptocurrencies

are not inherently deflationary; this is a character of Bitcoin

in particular. In fact a cryptocurrency can be designed to

behave according to whatever economic principle or monetary

recipe its creator(s) find(s) desirable.

Alt-coins & Branding

The adaptability of open source block-chain technology has

encouraged the development of a plethora of alterative

cryptocurrencies. As one anonymous forum poster on a 4chan.org

thread titled “what cryptocoin will survive the long run”

described the situation, “Right now dozens of shitcoins are made

every week, most without innovation.” While each of these

cryptocurrencies is predicated on the same underlying block-chain

technology, they differ from one another in terms their encoded

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algorithms as well as their distinct “brand” identities.

Cryptocurrencies form brand identities in much the same way any

other set of competing commercial products—think Pepsi vs Coke

for instance—they engage in creative PR and marketing campaigns

to set themselves apart from the competition and develop loyal

consumer bases.

Just like brand name commercial products, various

cryptocurrencies appeal to varying demographics of consumers.

Distinct communities associated with particular brands of

cryptocurrency often have their own intra-communal features,

their own brand image in a sense, developed through everything

from brand-related memes (viral images or phrases) to a

particular style of inter-personal exchange. The anonymous 4chan

poster from above outlines his/her own conception of a few such

brand images, beginning with Bitcoin:

Bitcoin is the first ever crypto… Entry to mining is impossible without a $15k+ budget. It's still a commodity, an investing man's currency, and the community is filled with a bunch of super-srs asswipes who believe every crash is something positive and manage to delude themselves into believing bad news is long-term good news. This is not a tipping coin or community asset, this is "I'm in it to win it".

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Among the panoply of cryptocurrencies currently in circulation,

Bitcoin is by far the most valuable. This makes perfect sense

given the brands popularity and relative age. Just as the US

dollar is the global economy’s dominant reserve currency, Bitcoin

remains the dominant reserve of the crypto-economy. However, this

same value places Bitcoin out of many participants’ ideal price-

range—rendering it the choice brand for serious investors (“an

investing man’s currency”). By contrast, as the anonymous

commenter notes, Litecoin—a runner-up in hierarchy of

cryptocurrencies—presents a more accessible alternative:

Litecoin is basically a not-so-serious version of Bitcoin with a different algo. The community is half-decent (better than BTC's) and it's maintained a relatively stable value compared to the massive Bitcoinfluctuations... A lot of people are predicting Litecoinis dying but no one that says this has any other proof besides "lol bitcointalk told me"

Situated outside of the media spotlight, Litecoin has been less

susceptible to dramatic shifts in investment—consequently, the

currency’s value has remained relatively stable compared to that

of Bitcoin (which has fluctuated from nearly $1200 to the coin

earlier this year, to $376 this month145). Moreover, Litecoin’s 145 http://www.coindesk.com/price/

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central algorithm is not designed to simulate scarcity like

Bitcoin, rendering it a more inflationary and so more liquid

currency. Litecoin’s liquidity has discouraged the kind of

speculative investment that occurs with Bitcoin—whose

deflationary character incentivizes investment over exchange. As

the commenter hints, however, rumors of Litecoin’s devaluation—

apparently originating in the bitcointalk forums—have damaged the

currency’s reputation (the consequences of these kinds of rumors

are discussed further on). By contrast, Dogecoin has retained a

strong reputation and a sizeable communal following, largely

thanks to its unorthodox branding strategy:

Dogecoin is more or less Litecoin with a shiba inu, a huge volume of coins and a broader community. Many of the participants have been described as circlejerky butit isn't really pertinent to the technical aspect, and the coin hopes to achieve long term success. Every yearwill have a 5% inflation for miners to keep the coin alive and maintain a low and stable value. There is skepticism as to whether it'll be accepted by corporates as the shiba inu and comic sans might be a turn off (inb4 "but iz still money nd ppl will accept it cause value"; no, because PR and company image is a thing, and the coin just doesn't look professional, nordoes it try to be).

On a Dogecoin related sub-forum on Reddit, the user FatMiller

recently announced that based on average trade volume, Dogecoin

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is now the third most successful cryptocurrency, averaging 774

thousand dollars in trades a day.146 Confirming the anonymous

4chan poster’s characterization of the Dogecoin community,

FatMiller’s announcement was set in comic sans. While Dogecoin’s

central algorithm more or less mirrors that of Litecoin (the coin

maintains a “low and stable value”) its brand image is entirely

unique. Dogecoin takes its name from a meme that made its way

across online forums like 4chan and Reddit in 2013. For those of

you that have more important things to do than browse online

forums, the “Doge” meme typically features “a Shiba Inu dog(e)

whose inner monologue is written in broken English, using the

Comic Sans font.”147 (See Fig. F)

Fig F: the Shiba Inu Doge meme of 2013 148

146http://www.reddit.com/r/dogecoin/comments/25xxo2/dogecoin_now_is_number_3_in_the_crypto_world/147 http://www.digitaltrends.com/social-media/wow-dogecoin-bitcoin/148 http://www.digitaltrends.com/social-media/wow-dogecoin-bitcoin/

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In what has been described by Andrew Couts of

digitaltrends.com as the most internet-y thing to ever happen149,

Dogecoin, developed by Jackson Palmer in December of 2013,

adopted the Shiba Inu meme as the official mascot of its open-

source peer-to-peer digital currency (See Fig. G).

Fig. G: Dogecoin, “wow, much coin, how money, so crypto, very currency” 150

The “serious investor” types devoted to Bitcoin were

understandably perplexed by the absurdity of Palmer’s new

currency. A comment left on the Bitcointalk forums fairly well

sums up their confusion, “Is this supposed to be retarded on

purpose?” The answer, Couts says, “is yes. But considering that

we’re talking about the Internet here, ridiculousness is

Dogecoin’s most valuable feature.”151 Many participants in the

149 http://www.digitaltrends.com/social-media/wow-dogecoin-bitcoin/150 http://www.forbes.com/sites/matthickey/2014/03/17/such-generosity-most-expensive-tweet-ever-sends-11000-to-kenyan-water-charity-via-dogecoin/151 http://www.digitaltrends.com/social-media/wow-dogecoin-bitcoin/

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crypto-economy were eager to embrace a coin whose creators were

not, as one anonymous 4chan commenter put it, “doomer loons.”

Another commenter approvingly noted that while, “Literally every

other coin developer on the market is too much of a neckbeard

shut in or a scammer who doesn't want to show their face,”

Dogecoin’s Jackson Palmer actually quit his job to move to San

Francisco and work with investors to push the currency forward.

Just three months after Dogecoin’s take-off, Palmer was offered

$500,000 for rights over the currency by a major investment firm.

Palmer turned down the offer, stating “It’s the internet’s

currency, and doesn’t rest in the hands of any one person or

entity.”152

Unlike Bitcoin, Dogecoin is worth only fractions of a penny

at 4,355 dogecoins to the US dollar.153 And yet, it is precisely

Dogecoin’s status as a micro-currency that has made it the go-to

coin for an increasingly common practice called “tipping.”

Tipping provides a meaningful way to show appreciation for others

on the Internet. For example, beyond just liking, retweeting, or

152 http://thenextweb.com/insider/2014/02/17/dogecoin-founder-says-he-rejected-500000-investment-offers/153 http://dogepay.com/

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sharing content, you can ‘tip’ someone 100 Dogecoins, which is

around $0.02.154 While this may not seem like much, these micro-

payments add up quickly. In February of 2014 thousands of tips

from Dogecoin users raised enough money to send the Jamaican

Bobsled Team (yes, the same Jamaican Bobsled Team of 1993 film

Cool Runnings’ fame) to the Sochi Winter Olympics.155 Just one month

later in March, a grassroots charity campaign called Doge4Water

raised over $30,000 (more than 100 million dogecoins) to build

new wells and improve access to clean drinking water in Kenya.156

It’s worth noting that the tipping phenomenon is uniquely a

byproduct of cryptocurrency. In traditional electronic payment

systems, processing fees imposed by intermediary third parties

make these kinds of micro-transactions highly impractical, and in

most cases, impossible.

While researching Dogecoin online in March of 2014 I became

acquainted with Jane.157 From the grounds of the US embassy in

154 http://thenextweb.com/insider/2014/02/17/dogecoin-founder-says-he-rejected-500000-investment-offers/155 http://www.forbes.com/sites/matthickey/2014/03/17/such-generosity-most-expensive-tweet-ever-sends-11000-to-kenyan-water-charity-via-dogecoin156 http://www.forbes.com/sites/matthickey/2014/03/17/such-generosity-most-expensive-tweet-ever-sends-11000-to-kenyan-water-charity-via-dogecoin157 Informants’ names have been substituted with pseudonyms of their own choosing.

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Cairo, Jane and a group of 20 friends formed a pool to mine

Dogecoin in January of 2014. Jane told me that, “Although the

dollar value [of mining] was small, as a pool the potential for

earnings increased, and over time there could be a valuable

reward for little to no personal effort.” As students, Jane and

the other individuals in her pool would set up their rigs

overnight, coming online “around 10 pm and then stay[ing] on

until around 7 am,” closing up shop just in time for morning

classes. Though the mining power of her single computer was all

but negligible, by joining a pool of miners Jane says she was

able to “see exponential growth in [their collective] shares and

productivity overnight.”

When I asked Jane how she first got involved with

cryptocurrency, she told me that she first heard about the

digital phenomenon over the news. It was simple curiosity that

drove her to join her friends’ mining-pool. Jane told me that she

and her friends settled on Dogecoin for a couple of reasons;

first “its novelty” was an attractive quality for newcomers to

the crypto-economy. Dogecoin’s meme-centric brand image made it

seem less serious and more “newb-friendly” than other competing 102

currencies. Jane stressed that ultimately though, it came down to

the simple fact that mining Dogecoin was “not as hardware-

intensive as other, more mature cryptocurrencies [,]” like

Bitcoin.

Jane primarily uses her share of the pools’ Dogecoin for

tipping and asserts that “The majority of people I’ve met use

cryptocurrencies (if at all) for similar things, like small

online purchases or donations.” While Jane acknowledges that many

people unfamiliar with the realities of cryptocurrency “think

that it is used mainly for illegal transactions[,]” she posits

that the association of cryptocurrency with illegality “is not

necessarily accurate and stems from an opposition to

cryptocurrencies’ independence from the centralized economy.”

While Jane is clearly aware of the implicit political

connotations of cryptocurrencies (independent as they are from

the centralized economy), she herself is by no means a primarily

politically motivated actor—she does not think that

cryptocurrency will “replace current generation fiat money any

time soon,” but instead suggests that “it will continue to have

its place in small transactions online.” But perhaps it is 103

precisely these kinds of small transactions that best demonstrate

cryptocurrency’s disruptive potential. The popularity and real-

world efficacy of tipping demonstrates the unique potential of

decentralized peer-to-peer proof-of-work systems—cryptocurrencies

—to disrupt the traditional financial system by introducing new

(institutionally non-mediated) avenues of exchange.

While neither Jane nor Dogecoin founder Jackson Palmer

position themselves as radical political agents, they both

happily embrace a departure from the traditional centralized

economy. Might we then consider their actions a less radical

articulation of what is fundamentally the cryptoanarchist ideal?

In a word, Yes. As Palmer put it, Dogecoin—which sprang from a

comedic meme rather than a political agenda—is nevertheless “the

internet’s currency, and doesn’t rest in the hands of any one

person or entity.”158 While the “doomer loon” rhetoric of

cryptoanarchism may be missing from many of Bitcoin’s younger

cryptographic cousins, the distinct touch of the Liquid Modern

remains apparent in their operations. From Palmer in San

158 http://thenextweb.com/insider/2014/02/17/dogecoin-founder-says-he-rejected-500000-investment-offers/

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Francisco to a bobsled team in Jamaica, from Jane in Cairo to a

community in rural Kenya, the transnational networks of

alternative cryptocurrencies like Dogecoin demonstrate the

emergence of a novel form decentralized, non-institutional power

in the space of flows. For these transnational peer-to-peer

networks, the territorially fixed nation-state and its

institutional affiliates are understandably seen as

“anachronistic and short-sighted.”159

As the success of Dogecoin demonstrates, an effective brand-

image and a positive reputation are more than enough to conjure

up real financial value in this digital economy of appearances.

However, the inverse of this statement holds equally true. As we

shall see, it is through the manipulation of diffuse social

phenomenon like reputation and popular perception, rather than

through mining, that most participants in the crypto-economy

generate profit. But if, unlike Jane and her friends, most

participants in the crypto-economy are not themselves mining

coins, how do they acquire cryptocurrency in the first place? How

does one buy-in to the crypto-economy?

159 Bauman & Bordoni. Pg. 15

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Buying In & Cashing Out

In March of 2013, I found myself sitting cross-legged on

the carpeted floor of a notably unfurnished room in Tamerlane’s

small apartment in South West Portland. Tamerlane and I sipped

from ceramic mugs filled precariously high with cheap red wine.

Before the interview began, Tamerlane lit up a cigarette,

notifying me that he was self-conscious about being recorded; he

said he hated the sound of his own voice. From what I could

gather this was an individual who valued his privacy, and was

probably more comfortable in front of a computer screen than

another human being. A few minutes into our interview, and with a

good portion of the mug of wine in him, Tamerlane’s apparent

discomfort was assuaged. I asked Tamerlane to walk me through the

process of buying-in to the crypto-economy. He said it all begins

with setting up your digital wallet:

There’s applications that you can easily download— you can even do it on your phone, I got mine straight off the Droid app market, so its totally mobile— or you cando it online. Anyways there are a bunch of different wallet apps you can choose from, with different levels of security and stuff. I just downloaded a really rudimentary one on my computer. The whole thing is really simple, it has all your different wallet addresses catalogued for easy access.

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You might recall from earlier that it has become common practice

for coinholders to utilize multiple wallets, sometimes a

different wallet for each transaction. This maximizes

coinholders’ anonymity. As Tamerlane put it:

You never want to have the wallet that you’re initially putting your bitcoins in be the same one thatyou actually use for transactions. You always want to be using a new wallet or account with each transaction,this makes it harder to trace your coins back to your actual financial or personal information or whatever. So you end up with just a bunch of different wallets, essentially different names, one of which you can transfer all of your coins into for storing.

Once a wallet has been downloaded, a cryptographically secure

key, basically a pin-number, is required to gain access to your

account balance and funds:

So, basically there’s a huge code, like 20 something, 26, 27 letters, that is your specific wallets key whichyou type in to access your coins. I have it written down somewhere…I don’t remember it off-hand… but when you need it, you find it, type it in, and it you can view and access your current balance.

With a digital wallet set up, a would-be coinholder is ready

to actually purchase coins. As Tamerlane explained to me, there

are lots of ways to initially buy-in, some more anonymous or

secure than others. A coin-seeker might privately contact an

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individual in possession of coins seeking to sell (or “cash-

out”); the two might then arrange a suitable deal based on

current exchange rates. Generally the coin-seeker will send the

vendor funds in the form of a traditional electronic payment

(PayPal presents an attractive option, since transactions can be

invalidated in case of non-performance). Upon receiving the funds

the coin-holder will send coins from their wallet to the buyers’.

In such cases, both buyer and vendor will utilize anonymous

communications programs like Tor (more on this later) to maintain

the privacy of both parties. The process is mostly anonymous up

to the point of the payment itself, which inevitably requires

both buyer and vendor to reveal information that might be traced

back to their real-world identities (i.e. PayPal or bank

accounts).

While a number of online venues exist to match buyers and

vendors in this way, the risk of fraud is often high for both

parties—for instance a buyer might receive their coins but still

invalidate the payment (PayPal has no way of verifying if

cryptocurrency has been sent or received). For this reason, most

people buy-in through central exchanges which pair buyers with

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reputable vendors while hosting escrow services as an added

insurance policy. In these exchanges, a buyer sends funds to the

exchange—which holds the payment in escrow—until the coins are

verified as received, at which point the funds are released from

escrow and sent to the vendor. The exchange itself takes a small

cut of the payment for services rendered. While this process

reduces the risk of fraud, it also re-introduces the same kind of

third party intermediary action that cryptocurrencies were

designed to avoid. The notable difference being that in this

case, the intermediaries are not affiliated with traditional

financial institutions or “the establishment” in any way, and

neither is the value of the currency being exchanged. It was

through one such central exchange that Tamerlane bought in to the

crypto-economy:

I initially tried to buy-in through PayPal, but most people wouldn’t take it. Apparently it’s not anonymous enough, which is surprising to me because plenty of people even use their credit cards on central exchanges. Maybe it’s because the information that theyhave on you in the PayPal account is more accessible orsomething, I have no idea…ultimately I just used my actual bank account, foregoing anonymity. I figured it wasn’t such a big deal if I could be traced back to buying coins, because I’d transfer them around into

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different wallets, and ultimately my purchases and stuff would be basically anonymous. So I made a classicelectronic payment over an exchange and they just straight up deposited coins into one of my wallets.

Between its mysterious origins and its highly technical

cryptographic mechanisms, Bitcoin and other cryptocurrencies can

appear woefully esoteric. The concrete processes of buying in and

cashing out of the crypto-economy are all-to-easily mystified by

the modern-mythic narratives that shroud the whole phenomenon.

And yet, as Tamerlane puts it, “Everything that I’ve ever had to

deal with has been explained to me pretty much on a pretty step

by step basis, and it’s been fairly simple, far simpler than I

would have ever thought.”

You may recall how proponents of Bitcoin like Gavin Andresen

eagerly emphasis the accessibility of the cryptocurrency. This

emphasis is meant to disabuse prospective coin-holders of the

notion that it’s some kind of secretive “all-powerful black-

market tool that will be used by anarchists to overthrow the

System." 160 Tamerlane accurately surmises that “if you want [the

currency] to be successful, it needs to be accessible, people

160 http://mag.newsweek.com/2014/03/14/bitcoin-satoshi-nakamoto.html

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need to understand how it works and how easy it is to use.” The

perception of accessibility that Bitcoin’s proponents seek to

foster reflects the crucial role that reputation plays in

determining Bitcoin’s (and all other cryptocurrencies’) actual

market value. This is the hallmark of a discursive economy, an

economy of appearances.

Discursive Economy

In 1971 Richard Nixon proclaimed that the U.S. dollar could

no longer be redeemed for gold; in essence the government had

officially changed the definition of the dollar.161 Nixon’s

announcement ushered in the age of fiat, and ever since the value

of the U.S. dollar has been a product of the collective faith we

invest in it. As Joshua David of The New Yorker puts it, “We trust

that dollars will be valuable tomorrow, so we accept payment in

dollars today.” But what factors determine our collective faith

in the dollar, where does its value truly come from? In broad

strokes, our faith stems from a trust in the U.S. government to

effectively regulate and responsibly issue the currency; to keep

its value stable— to prevent the kind of hyper-inflation that has

161 http://www.newyorker.com/magazine/2011/10/10/the-crypto-currency

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affected the national currency of Zimbabwe, which now features a

100 trillion dollar note (worth around $300 U.S. at the time of

its issuance).162 Moreover, we trust in the U.S. dollar’s staying

power, which hinges upon our conviction that the U.S. government

isn’t going away any time soon. In short, our assumptions about

the stability and longevity of the dollar are contingent upon a

collective social perception of the U.S. government, its

reputation.

The crucial role that reputation plays in the fiat monetary

system foregrounds Georg Simmel’s assertions about the

fundamental nature money, assertions posited in The Philosophy of

Money (1900) long before the transition of global finance to

fiat. According to Simmel, the “nature and effectiveness of money

is not to be found simply in the coin that I hold in my hand; its

qualities are invested in the social organizations and the supra-

subjective norms that make this coin a tool of endlessly diverse

and extensive uses.”163 This is precisely the core sentiment of

Mark Granovetter’s theory of embeddedness, discussed at length in

162 http://thefinanser.co.uk/fsclub/2013/07/zimbabwes-currency-crisis-and-the-100-trillion-dollar-note.html163 Simmel, Georg. "The Philosophy of Money." Social Theory: Roots and Branches. By Peter Kivisto. New York: Oxford UP, 2011. Print. Pg. 123-124

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the previous section. Of course, supra-subjective norms and

social relations like reputation and perception can be fickle

things. They can be manipulated to break bonds of trust, or to

maintain them when they are unwarranted. It is of the later of

these two manipulations that Satoshi Nakamoto accuses the Federal

Reserve in Bitcoin’s foundational whitepaper. Through the

“mysterious machinations” of the Federal Reserve, faith has been

maintained in the U.S. dollar, in spite of its being backed by a

government that is more than fourteen trillion dollars in debt. 164

And yet, the value of Bitcoin, while predicated on faith in

a central algorithm rather than a central authority, is just as

bound by the fickle nature of reputation and trust as fiat money.

Joshua David notes, “You have to trust that the system won’t get

hacked, and that Nakamoto won’t suddenly emerge to somehow

plunder it all.”165 Of course, those who understand Bitcoin’s

underlying cryptography note that these are impossibilities,

based on a misunderstanding of how Bitcoin—and in particular the

block-chain—works. The code is solid, it safeguards against

attack not only through strong cryptography but by providing a 164 http://www.newyorker.com/magazine/2011/10/10/the-crypto-currency165 http://www.newyorker.com/magazine/2011/10/10/the-crypto-currency

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monetary incentive such that anyone with the computing power to

potentially disrupt the code would stand to gain much more by

simply reinforcing its integrity by participating in the proof-

of-work. Moreover, the supposed threat of Nakamoto returning to

“plunder it all”, which essentially suggests that the whole

system is a Ponzi scheme,166 fails to recognize the fact that the

value of the system really is concretely distributed—Nakamoto has

no more control over Bitcoin than anyone else in the network.

Bitcoin’s core algorithm, its source of value, actually is

distributed and shared by every node in the network. Regardless

of these observations, the perception of risk, however unjustified,

is enough to impact, even destroy, Bitcoin’s monetary value.

Moreover, even if you believe in Bitcoin, in the soundness

of the code and the legitimacy of the distributed network, “the

actual cost of a bitcoin—five dollars or thirty [or 376] ?—

depends on factors such as how many merchants are using it, how

many might use it in the future, and whether or not governments

ban it.”167 Notably these are all factors that are determined by

the social perception of Bitcoin, its reputation rather than its 166 https://bitcointalk.org/index.php?topic=7815.0 167 http://www.newyorker.com/magazine/2011/10/10/the-crypto-currency

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operational realities. Wolfgang Fritz Haug describes this

discursive process of valuation, stating, “aesthetics thus

functions as a missionary wonder-drug for market-acceptance in an

environment where the market does not exist, or is still marginal

and embryonic. Images of desire draw peoples into the markets.”168

In short, the perception of value produces value. This is the

essence of a discursive economy.

Granovetter observes that there is always a “widespread

preference for transacting with individuals of known

reputation”169 While this observation appears to be bound to

individuals, it is also scalable to the level of networks—or, as

in the present case, currencies. Recall that in the

cryptoeconomy, there exist a number of competing

cryptocurrencies. Just as with Bitcoin, the relative success or

failure of all of these currencies is fundamentally determined by

their reputation. This provides an opportunity for individual

participants in the crypto-economy to transmute the diffuse

168 Haug, Wolfgang Fritz. "New Elements of a Theory of Commodity Aesthetics." (2005). Print. Pg. 49

169 Granovetter pg. 490

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social phenomena of reputation and perception into cash. To see

how this is accomplished lets return to the discursive crypto-

economy itself.

Reputation & (De)Valuation

While conducting a series of structured interviews across

various virtual forums, I found myself observing the process of

valuation (or devaluation as the case may be) outlined above

occurring in real time:

Anonymous 02/23/14(Sun)08:11 UTC-8 No.119394I just woke up. What is happening? Are PND and DOGE falling? Is panic selling happening? Will I be able to buy these on the cheap soon?

Anonymous 02/23/14(Sun)08:11 UTC-8 No.119395they're already cheap, buy it all up.

Anonymous 02/23/14(Sun)08:11 UTC-8 No.119396PND is dying, everyone is fighting for scraps

Anonymous 02/23/14(Sun)08:12 UTC-8 No.119408The pussy PND whales are dumping. Buy them now while they're cheap. Once the whales are finished this shit is going to the moon

The first commenter, having observed a number of individuals

frantically selling off their supply of PandaCoin (PND), assumes

that the currency is going under. PandaCoin’s reputation has been

instantaneously tarnished. The next individual notes that as

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more PND coins are being dumped, they are becoming increasingly

cheap—the devaluation of the currency has sparked a feedback loop

—and suggests that the first commenter take advantage of the

opportunity to buy up as many PND coins as possible. The final

commenter explains why the first should do such a thing,

asserting that the panic selling of PND is only a superficial

occurrence, and by no means indicative of the currency’s actual

failure; he/she goes on to assert that once the ditched coins

have been snatched up by new participants, their value will be

restored, and the new owners will find themselves in possession

of more value than they started with, in other words, they will

have made a considerable profit off of the scare (this is a crash

course in making profit through arbitrage, buying low and selling

high).

While it did not occur in the case of PandaCoin observed

above, a currency’s reputation can become so tarnished that it

cannot recover from the devaluation it sustains. In such cases,

the currency actually “dies” and passes out of circulation. All

of this indicates the significant role that reputation plays in

establishing a cryptocurrency’s value, and demonstrates how a

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tarnished reputation can spell the death of a particular coin.

After scoring a large quantity of PND from the scare, the

participants above will exchange their earnings for Bitcoin,

which as the crypto-economy’s reserve currency, functions as a

better long-term store of value.

Hoarding

As Joshua David notes, “The truth is that most people don’t

spend the bitcoins they buy; they hoard them, hoping that they

will appreciate.”170 This point of slippage from currency to

commodity occurs when deflation—a process intentionally written

into the cryptographic protocols of Bitcoin—causes coins to

become more useful as stores of value than as mediums of

exchange. When an individual coin becomes particularly valuable,

its function shifts from that of a currency to that of a

commodity, to be invested in, protected, and hoarded, especially

if it shows prospects for future growth. This is precisely the

case with Bitcoin.

The extreme volatility of lesser cryptocurrencies (like

PandaCoin for instance) provides participants in the crypto-

170 http://www.newyorker.com/magazine/2011/10/10/the-crypto-currency

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economy with opportunities for profitable arbitrage. The coins

earned are then either cashed-out (converted back into fiat

currency through an exchange) or converted into Bitcoin, where

they stand to generate further surplus value. This process of

gambling with alt-coins and storing the earnings in Bitcoin—not

to be exchanged but to sit and appreciate in value—is known as

“hoarding,” and is really no different than the kind of

speculative investment that occurs in the traditional fiat

economy’s stock market. In a series of structured interviews I

conducted on 4chan and Reddit, a majority of respondents admitted

to some degree of hoarding Bitcoin:

(ID: tkL5twaC) 05/02/14(Fri)16:29:28 No.314021▶>What is your current relationship with cryptocurrency? Why do youuse it/ what for?

I OWN & TRADE CRYPTOCURRENCIES.I DO NOT SPEND MUCH; I MOSTLY HOARD; ESPECIALLY "BITCOIN".

It should be understood that market behaviors like hoarding,

which stem from financial self-interest, by no means overrule the

political connotations of an individual’s participation in the

crypto-economy. As Granovetter’s theory of embeddedness would

have us recall, “Actors do not behave or decide as atoms outside

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a social context [.]” 171 Rather, their economic behaviors should

be understood as negotiations between financial self-interest and

the socio-cultural norms of their embedded market environments.

The reply of a second online correspondent, “FOBglDar”, clearly

demonstrates the potential for a coupling between financial self-

interest and political preoccupation—even in the context of

hoarding:

(ID: FOBglDar) 05/02/14(Fri)20:33:21 No.314335▶>What is your current relationship with cryptocurrency? Why do youuse it/ what for?

I play poker at sealswithclubs but in my country it isn't possible to gamble online with easy and simple cash out options. It wasn't until I called my credit card company and asked the person why I can't use my VISA to play, she told me her spouse uses google walletto circumvent the CC policy. I found bitcoin instead. Also, Speculative investment/hoarding.

While FOBglDar’s uses for Bitcoin are all directly related to

financial gain (gambling, speculative investment, and hoarding—in

a certain sense all three are the same thing), the factors that

lead him to buy-in to Bitcoin in the first place are explicitly

political; after all, FOBglDar turned to Bitcoin to circumvent

his home country’s repressive policies toward online gambling.

171 Granovetter. Pg. 487

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While one might go so far as to say that FOBglDar’s

deliberate engagement in “actions that evade, avoid and defy the

State[,]”172 reflects the counter-economic strategy outlined in

Samuel Konkin’s 1985 manifesto—or that the use of untraceable

cryptographic currency to see this act through resonates with

Timothy May’s crypto-anarchism—it is safest only to posit what we

already know; namely, that FOBglDar has successfully undermined

his home country’s ability to regulate his market behaviors

online. This more ideologically neutered observation still

clearly demonstrates the increasing futility of nation-states’

attempts to maintain their hegemony in Liquid Modernity.

Not all participants in the crypto-economy frame their

activities in terms of financial self-interest. This may seem

peculiar given that we’re discussing market behaviors, however, a

number of individuals I communicated with both online, and in

person, explicitly cited exogenous political and ideological

factors as the most significant motivating forces behind their

participation in the crypto-economy. While neither Timothy May

nor Samuel Konkin were ever directly invoked, the views expressed

172 Konkin. Pg. 18

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by these more explicitly politically motivated individuals often

resonated with crypto-anarchist and libertarian ideals. One of my

informants, who chose to adopt the pseudonym Excelsior, clearly

demonstrates the continued salience of these political ideologies

to the economic practices of participants in the crypto-economy.

Excelsior & Exogenous Factors

My interview with Excelsior occurred in the early afternoon

of March 6th, 2014, at a Mexican eatery (La Sirenita) in South-

East Portland. Over the remains of wet burritos and crumb-sullied

basins of guacamole, I asked Excelsior to explain his experience

with and perception of the crypto-economy. Tele-novellas played

in the background as he eagerly demonstrated the depth of his

theoretical engagement with the subject, in the process

expressing an unmistakable sympathy for anarcho-capitalist

ideologies:

I first heard about Bitcoin in November of 2012; a friend of mine who was interested in code and programming introduced me to the idea, he pitched it asa fully-encrypted untraceable online currency—an optimistic and ambitious innovation among other generally ‘anarchistic’ projects, like Wikipedia or WikiLeaks. Not investing in Bitcoin was the biggest mistake of my life. If I had invested a hundred dollarsin November, I would have made $186k by March.

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Notably, Excelsior situates the crypto-economy among

“anarchistic projects,” like Wikipedia or WikiLeaks—both of which

are culturally transformative, transnational and non-

institutionally affiliated enterprises (in short, not just

‘anarchistic,’ but fundamentally Liquid Modern).

Excelsior’s comparison of Bitcoin to WikiLeaks, a powerful

virtual outlet for political whistle blowing, clearly indicates a

conception of the crypto-economy as not just facilitating

transnational economic arrangements, but as potentially impacting

territorially fixed nation-states themselves. There’s much more

to be said about the association between the crypto-economy and

WikiLeaks—a connection which is investigated at length in this

study’s final section. Of course, we mustn’t overlook Excelsior’s

dramatic claim that failing to invest in Bitcoin in 2012 was the

“biggest mistake of his life,” a comment which signifies that—

regardless of his socio-political take on the crypto-economy—he

is still somewhat financially preoccupied. When I asked Excelsior

why he didn’t buy-in to the crypto-economy in 2012, he told me:

I don’t know, I guess I just wasn’t thinking about it terms of profit. I was interested in the idea; I liked

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that it presented a chance to change the rules of tradeand finance—it had the potential to impact the entire high organizational economy.

While Excelsior acknowledged the opportunity for financial

gain at first presented by Bitcoin, what really piqued his

interest was not the cash, but the broader concept. Excelsior

felt that Bitcoin stood poised to “impact the entire high

organizational economy[,]” a sentiment which echoes the goals of

anti-institutional crypto-anarchist and libertarian ideologies.

Recall that Excelsior himself characterized Bitcoin as an

‘anarchistic’ innovation.

A few months after missing out on the Bitcoin boom,

Excelsior came around to buying-in to the cryptoeconomy,

acquiring a number of less expensive litecoins. Even as a fully-

fledged coinholder, Excelsior explained that for most,

cryptocurrencies are hardly a lucrative investment:

You know, that’s the funny thing, trading in Bitcoin isactually a very non-lucrative thing. You lose a lot of money in exchanging out of Bitcoin, or any cryptocurrency, to cash—through taxes and fees etcetera. Also when you pull out of Bitcoin you weaken the virtual economy as well, so the only way to make a real profit is just to trade between currencies.

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Excelsior is here referring to the practices of arbitrage and

hoarding described in the previous sub-sections. Noting the

precariousness of value in the discursive crypto-economy—pulling

out of Bitcoin weakens Bitcoin’s value—Excelsior suggests that

the only way to “make a real profit” is to engage in these forms

of speculative investment. And yet, as a participant motivated by

the exogenous factors of political or ideological interest,

Excelsior is loath to participate in these profit-seeking

behaviors, which he asserts are at best parasitic:

Look, you can gun on a volatile market, but it makes you a shitty person—that’s why war profiteering is looked down upon. Personally I’m interested in watchingBitcoin become stable—which is what’s really lucrative;I think people acknowledge that.

Not only did Excelsior challenge the profitability of the

crypto-economy, he went so far as to compare those gunning the

markets—individuals profiting from arbitrage and speculative

investment— to war profiteers. Again, Excelsior’s invocation of a

dramatically politicized subject, war profiteering, suggests

something of the political framework through which he views the

entirety of the crypto-economy. Coinholders like Excelsior see

the crypto-economy’s long-term “potential to impact the entire

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high organizational economy,” as threatened by parasitic economic

behaviors, which produce short-term gains at the expense of the

virtual economy’s stability. Excelsior’s fears are not altogether

unfounded. In an economy of appearances, a reputation for

volatility is more than enough to scare off new-comers, and to

thereby dash hopes of cryptocurrencies’ mass adoption in the

future.

Excelsior’s concerns about the effect of volatility on

cryptocurrencies’ long-term disruptive potential highlight an

intriguing tension within the culture of the crypto-economy.

While the politically motivated often see profit-seeking

behaviors as damaging the crypto-economy’s political efficacy,

more financially motivated participants see the virtual economy’s

lingering political connotations as harmful to economic growth.

This same internal tension is fully apparent in the

correspondence that took place between Gavin Andresen and

Bitcoin’s founder Satoshi Nakamoto in April of 2011. Andresen

summed up the dominant perception of Bitcoin as split between “a

just-plain-better, more efficient, less-subject-to-political-

whims money, [and an] all-powerful black-market tool that will be

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used by anarchists to overthrow the System." 173 While this

depiction fails to capture the nuances of most participants’

beliefs about Bitcoin and the crypto-economy, the broader

perceptual schism it highlights is certainly a real phenomenon.

Goldbug participants gamble away on speculative investments,

holding dear to the mantra of financial self-interest,

“cryptocurrency, get rich quick!” Meanwhile theoretically preoccupied

commentators pontificate about cryptocurrency’s radical potential

to shake the foundations of global finance, “cryptocurrency, it’s

the alternative!” Mystifying the rhetoric of both these camps is a

pervasive sense of techno-optimism, a sense that the crypto-

economy and its underlying block-chain technology are things of

the future. As one of my correspondents, Daniel Horses put it,

“for most people, the average layman or whatever, it’s more just

a fun, exciting, futuristic thing—it’s a technological

development that you can be a part of.”

By engaging the crypto-economy, a participant isn’t just

engaging a market; they’re entering into a dynamic cultural

sphere, complete with its own rich tapestry of mytho-historical

173 http://mag.newsweek.com/2014/03/14/bitcoin-satoshi-nakamoto.html

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narratives. As Daniel Horses’ comment suggests, these mytho-

historical narratives—which span from McLuhan’s vision of a

global village to the real-world cyberpunk mystery of Satoshi

Nakamoto– act as compelling motivational forces in their own

right. As the blogger Lui notes, it was one such narrative, the

story of a digital black market called the Silk Road that first

brought the mainstream media’s attention to Bitcoin in 2011

(increasing the currency’s financial net worth overnight).

Ironically, this same narrative now presents one of the greatest

threats to Bitcoin’s reputation.

The Criminal Element

In her blog on Bitcoin, Hype, and the Future of Digital Currencies, Lui

first puts Bitcoin on the map in February of 2011, when the

launch of the Silk Road—an infamous virtual black market dealing

in cryptocurrencies—piqued the interest of the mainstream media.

A number of my informants likewise recall first being introduced

to Bitcoin through media coverage of the Silk Road. In the case

of Tamerlane, it was the Silk Road that ultimately drew him to

buy-in to the crypto-economy in the first place:

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The first time that I ever heard about it was from my friend **** in high school, he mentioned it in regards to the Silk Road, as a way of obtaining like, crazy drugs and all sorts of nonsense. It was when I became a freshman; I believe that was the first time he ever proposed going down on a deal together.

Even if Bitcoin was cast in criminal association with the

nefarious goings-on of the Silk Road, it was still receiving

attention. Lui asserts, “As the currency accumulated attention it

increased in value, which warranted more media attention, which

fuelled further price growth.”174 Bill Maurer similarly

recognizes the crucial role that the Silk Road played in

Bitcoin’s growth:

[Bitcoin] attracted those hoping to buy illegal goods and services online. This proved to be a popular, if sensationalist, angle for Bitcoin press coverage. Through articles like Adrian Chen’s (2011) unsubtly-titled ‘‘The Underground Website Where You Can Buy Any Drug Imaginable,’’ Bitcoin became associated with the website Silk Road, a ‘‘digital black market’’ accessible only through [an] anonymized browsing service. Bitcoins, the article explained, were the ‘‘online equivalent of a brown paper bag of cash [. . .] championed by cyberpunks, libertarians and anarchists who dream of a distributed digital economy

174 Lui. "Bitcoin, Hype, and the future of Digital Currencies" Simulacrum. Web.Pg. 1

http://simulacrum.cc/2013/04/13/bitcoin-hype-and-the-future-of-digital-currencies/>

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outside the law, one where money flows across borders as free as bits.’175

Adrian Chen’s article was the spark that set the mainstream

media’s coverage of Bitcoin alight. Years later, when major news

distributors such as The New York Times and USA Today address Bitcoin

and the crypto-economy, it is almost solely in connection to the

criminal underworld of digital black markets like the Silk Road.

Lui notes that the crypto-economy’s dependence on criminal

activity is likely overstated, citing a “survey of 1,000 Bitcoin

users [which demonstrated that] far more reported making gifts

and donations than buying drugs.” 176 Nevertheless, for both

Bitcoin and the broader crypto-economy, reputation matters. The

crypto-economy’s frequent association with the online drug trade

poses the threat of a formal State condemnation.

Beyond facilitating the online drug trade, Bitcoin has been

flagged as aiding in financial crimes as well.177 As Henrik

Karlstrøm notes, “One of the things Bitcoin proponents extol is

the impossibility of taxation in a Bitcoin regime. When peoples’

175 Maurer. pg. 6176 Lui pg. 1177 http://www.reuters.com/article/2014/04/14/us-usa-crime-bitcoin-idUSBREA3D1RU20140414

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actual financial holdings are impossible to trace, evaluating the

actual worth of their assets for the purpose of taxation becomes

equally difficult.”178 In recognition of Bitcoin’s potential use

for money laundering and tax evasion, the U.S. Securities and

Exchange Commission and the Treasury Department have already set

policies into effect that carefully oversee registered bitcoin

companies (exchanges, wallet designers, merchants, etc.). These

measures require companies to obtain special licenses and hire

compliance officers in an effort to ward off money-laundering and

enforce tax codes.179 Of course, most coinholders are not

affiliated with registered companies and act as wholly anonymous

and independent actors. This has regulators understandably on

edge.

Though a government effort to outlaw Bitcoin would be

largely ineffective—after all, the cryptocurrency was

fundamentally designed to be untraceable and decentralized—a

formal condemnation would go a long way in tarnishing Bitcoin’s

reputation, in effect dashing its hopes of mass adoption. Lui

178 Karlstrøm, Pg. 11-12179 http://blogs.wsj.com/totalreturn/2014/08/12/five-questions-about-the-bitcoin-crackdown/

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notes that “Bitcoin’s value is subject to a network effect…the

more people that use Bitcoin, the more valuable it is[;]” 180 and

of course the inverse of this statement holds equally true. I

asked Excelsior, who expressed a desire to see Bitcoin become

more stable, what a governmental crack-down would mean for the

future of the crypto-economy. He suggested that a condemnation

of Bitcoin would be not only ineffective, but fundamentally

illegitimate:

Crime lies in the activity not the medium of purchase. Yes, so it can present an avenue for criminal activity,but it doesn’t create crime. People buy contraband goods with cash every day—that doesn’t mean you indict cash…

While Excelsior’s claim holds some merit, the fact remains that

Bitcoin is incredibly attractive to those seeking to purchase

illegal goods or services online. While some of my informants,

like Jane, cited tipping as their main use for cryptocurrency, an

overwhelming portion admitted to having purchased drugs from

online markets like the Silk Road. Another informant, Ishmael,

firmly brings this point home:

What do you think people are actually using bitcoins for? To buy consumer products? To pay off their

180 Lui pg. 1

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mortgage? To give to their spouse as a gift ? To pay their children’s allowance? With all these other applications that we have with fiat currency, it seems ludicrous to make that switch into being just like ‘oh,hey there son, for your paycheck I’m going to give you Bitcoins’, I mean that just seems…look, I don’t think that people are buying poems off of Silk Road, even if you can.

It seems about time to turn our attention to the Silk Road

itself. A digital black market place fostering consensual

economic arrangements outlawed by the State and transcending

national boundaries, the Silk Road is more than just a drug

emporium; its inherently political, and distinctly Liquid Modern

in its mode of execution. To take a look at the Silk Road we

must first venture out on an ethnographic voyage into the Deep

Web, the much-mystified virtual terra incognita where illicit market

services like the Silk Road thrive.

Cartography in Cyberspace:

Go tell the king of England, go tell him this from me /If he reign king of all the land, I will reign king at sea.

– Child Ballad #287, “Ward the Pirate”, (17th Century) 181

These nomads practice the razzia, they are corsairs, they are viruses; they have both need and desire for Temporary Autonomous Zones, camps of black tents under the desert stars, interzones, hidden fortified oases

181 Wilson, Peter Lamborn. Pirate Utopias: Moorish Corsairs & European Renegadoes. Brooklyn, NY: Autonomedia, 2003. Print. Pg. 64

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along secret caravan routes, ‘liberated’ bits of jungleand bad-land, no-go areas, black markets, and underground bazaars. These nomads chart their courses by strange stars, which might be luminous clusters of data in cyberspace, or perhaps hallucinations.

–Hakim Bey 182

What is the Deep Web, and what is its relation to the

crypto-economy? Broadly speaking, the Deep Web, also known as the

darknet or the hidden web, refers to all web content that is not

indexed by standard search engines. In short, it is everything

that you can’t Google. 183 Mike Bergman, the man credited with

coining the phrase “Deep Web” in 2001, states that searching the

Internet today can be compared to dragging a net across the

surface of the ocean; while a great deal might be caught in the

net, an untold wealth of deeper information is missed.184 As of

2001, the Deep Web was 400 to 550 times larger than the commonly

defined World Wide Web, containing an estimated 7,500 terabytes

of information (as compared to the 19 terabytes of web content on

the so-called “Surface Web” of the time).185 While the range of

182 Hakim Bey. Pg. 104-105183 http://quod.lib.umich.edu/j/jep/3336451.0007.104?view=text;rgn=main184 http://brightplanet.com/wp-content/uploads/2012/03/12550176481-deepwebwhitepaper1.pdf pg. 1185 http://brightplanet.com/wp-content/uploads/2012/03/12550176481-deepwebwhitepaper1.pdf pg 1

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available Surface Web activities and content has increased by

several orders of magnitude since the turn of the millennium, the

Deep Web has more than kept pace with this explosive growth—it

remains the largest and fastest growing category of information

online (See Fig. H). 186

Fig. H: The Deep Web187

But what kind of Web content are we talking about here? The

reader might already have considered that a substantial portion

of the average netizen’s information output would not turn up

search results: private emails, online purchases (etc.).

Similarly the internal electronic archives of private

institutions—whether commercial or governmental in nature—would

lie beyond the reach of standard search engines. It’s true that

186 http://brightplanet.com/wp-content/uploads/2012/03/12550176481-deepwebwhitepaper1.pdf pg 1187 http://securityaffairs.co/wordpress/wp-content/uploads/2012/05/deep-web.jpg

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both of the information categories listed above comprise a

portion of the Deep Web, and yet, an overwhelming majority of

Deep Web content—fully 95% in 2001—is “publicly accessible

information” not subject to fees, subscriptions, or sanctioned

access to institutional databases. 188 Rather, the total content

of the Deep Web is largely comprised of what are known as “hidden

services”, websites and servers configured to receive inbound

connections only through anonymous browsers (like Tor, discussed

below) that can re-route data behind firewalls and network

address translators (which mask IP-address spaces behind dummy

IP’s).189

Because hidden services on the Deep Web cannot be found

through traditional search engines, they are accessible only to

individuals in possession of their exact URLs. This seriously

deters web traffic, and, by extension, surveillance. As such,

Deep Web sites serve as ideal virtual spaces for clandestine and

or illicit activities. How many of these hidden services exist in

the Deep Web you ask? In truth, it’s impossible to be certain, no

188 http://brightplanet.com/wp-content/uploads/2012/03/12550176481-deepwebwhitepaper1.pdf Pg. 1189 https://www.torproject.org/docs/hidden-services.html.en

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central authority or repository of these Deep Web spaces

exists.190 While individuals like Mike Bergman have endeavored to

gauge the total content of the Deep Web, no accurate map of this

virtual terra incognita has yet been produced. In short, this

uncharted sea houses whole “criminal” communities existing, as

Hakim Bey would put it, in temporary autonomous zones, “fractal

dimensions invisible to the cartography of Control.”191

In his 2001 whitepaper on the Deep Web, Bergman notes that

“Until Van Leeuwenhoek first looked at a drop of water under a

microscope in the late 1600s, people had no idea there was a

whole world of "animalcules" beyond their vision.” 192 Just as

for Van Leeuwenhoek in the 17th century, taking a closer look at

what we consider to be familiar today—the Web—has the potential

to reveal whole new worlds; liquid modern worlds with novel communal

and economic arrangements that may challenge our assumptions

about criminality, viable social structures, and even the

necessity of traditional modes of governance.

190 https://trac.torproject.org/projects/tor/wiki/doc/HiddenServiceNames191 Hakim Bey. Pg. 101192 http://brightplanet.com/wp-content/uploads/2012/03/12550176481-deepwebwhitepaper1.pdf pg. 1

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To access the liberated “bad-lands, no-go areas, black

markets, and underground bazaars [,]”193 of the Deep Web—the

digital architecture, spaces and places of the crypto-economy— we

must follow in the footsteps of participants in the crypto-

economy themselves. Our first task is to equip ourselves for the

ethnographic voyage ahead; to gain access to the digital tools

that grant passage into the Deep Web, tools like Tor. Following

the advice of Hakim Bey, let us “study invisibility, webworking,

psychic nomadism—and who knows what we might attain?”194

A Trusty Vessel: The Onion Router

To keep our nautical metaphor afloat,195 if the internet is

an ocean, and the Deep Web some uncharted sea, than Tor is no

doubt a ship— the trusty vessel dreamed up by cryptographers and

cyberneticists in the 1980’s—and for the purposes of this ethno-

cartographic endeavor, we, dear reader, its crew. So what is Tor?

Tor is an acronym for “the onion router”, a free software network

that essentially functions as a web browser (comparable to

Internet Explorer, Safari, or Firefox [see Fig. I]). What makes

193 Hakim Bey. Pg. 104-105194 Hakim Bey. Pg. 132195 Pun fully intended, no apologies.

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Tor special is the unique service it reportedly provides its users;

namely, cryptographically sound anonymity and protection from

institutional or third party surveillance (commonly known as

traffic analysis).196

Fig. I: The Tor Browser “You are now free to browse the Internet anonymously.” 197

This service is of immense practical use to a wide-range of

individuals: journalists can circumvent national firewalls to

report on current events in real-time; activists and

whistleblowers can anonymously report abuses of power and human

rights; business executives can keep sensitive information

confidential; and military and intelligence operatives can

196 https://www.torproject.org/about/overview.html.en197 https://www.torproject.org/images/tbb-screenshot3.jpg

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communicate securely in the field.198 The “average” internet-user

can use Tor to protect their personal information from marketers,

irresponsible corporations, and identity thieves.199 And last but

not least, Tor grants its users entry into the virtual markets of

the crypto-economy. The Tor network’s diverse user-base is part

of what provides its security; it’s an intriguing fact that an

individual is most anonymous when they’re part crowd—but we’ll

get back to this technicality in a moment.

At present, the Tor Project exists as a 501(c)(3) non-profit

organization based out of the United States. Its mission

statement declares that the project is dedicated to developing,

improving and distributing “free , publicly available tools and

programs that promote free speech, free expression, civic

engagement and privacy rights online[,]” as well as to educating

“the general public around the world about privacy rights and

anonymity issues connected to Internet use.”200 As a non-profit,

the Tor Project is maintained by a volunteer staff and funded

entirely through charitable donations. It’s worth noting that

198 https://www.torproject.org/about/torusers.html.en199 https://www.torproject.org/about/torusers.html.en200 https://www.torproject.org/donate/donate.html.en

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Tor, true to its core principle of anonymity, accepts donations

in Bitcoin.201

So how does Tor work? Before I downloaded the Tor browser

from the project’s “surface” web site, my IP address was recorded

leaving a series of digital breadcrumbs from place to place, a

trail easily detected by concerned parties. When I opened the Tor

browser however, my IP was instantaneously shrouded in multiple

layers of encryption (hence the “onion” router) and bounced to

one of thousands of volunteer routers placed around the world.202

Every digital step I took from the Tor browser’s start-up page,

my heavily encrypted digital footprint was re-routed to another

volunteer router, effectively transporting my digital identity

into a new host-IP address—a new virtual body, rooted in a new

real-world location (perhaps somewhere in the UK one instant, and

Zimbabwe or Curacao, Guatemala or Malaysia the next).203 In

metaphorical effect, this hardy ship can speed across the high

seas, always a step ahead of would-be pursuers. This strategy of

displaced identities has proven tried and true for centuries; as

201 https://www.torproject.org/donate/donate.html.en202 https://www.torproject.org/about/overview.html.en203 https://www.torproject.org/about/overview.html.en

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Peter Lamborn Wilson notes of the Barbary Corsairs of the 17th

century, “Naturally every corsair vessel would carry a fine

collection of the flags and pennants of all nations, and would

first attempt to pass as English to an English ship or Spanish to

a Spanish; their own flag, the Man in the Moon, was doubtless

rarely seen.”204 Old world anonymity in a nutshell.

A Cloak and Dagger Detour

Tor’s developmental history is a narrative worthy of the big

screen, yet another modern-myth whose practical entailments

continue to affect the beliefs and behaviors of participants in

the crypto-economy. The Tor Project’s theoretical and

cryptographic foundations were laid by David Chaum in the late

1970’s and early 80’s.205 Chaum’s 1981 whitepaper, Untraceable

Electronic Mail, Return Addresses, and Digital Pseudonyms outlined a prototype

system that would enable anonymous digital communications by re-

routing or mixing users’ identities rather than by just

encrypting the content of their messages, the essence of the

204 Wilson, Peter Lamborn. Pirate Utopias: Moorish Corsairs & European Renegadoes. Brooklyn, NY: Autonomedia, 2003. Print. Pg. 153205 http://www.bbc.com/news/technology-29032399

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modern Tor system.206 While Chaum does not consider himself a

crypto-anarchist, his innovation echoed the concerns of the more

politically radical cyberneticists of the day (like Timothy May).

Chaum distinguished himself not only by predicting concerns about

institutional surveillance that would arise 15 to 20 years down

the line, but by providing a practical solution to the

foreshadowed predicament as well.207 I asked Chaum what his

intentions were at the time:

You know I thought that everyone with half a brain was interested in this sort of thing; I realized that the powers that be couldn’t really keep us academics and researchers from working on the stuff that we wanted towork on. We could create all of these structures with academic credentials and accreditation that would act as a kind of a trapdoor, a way that we could kind of move society in a positive direction, away from the military industrial complex. You know my work is an example of those kinds of efforts, but it wasn’t reallya lot, not everything at least. From what I understand from Paul Syverson whose name is in [the Tor] project, it really was picked up by the CIA and funded by them all along.

The greatest irony behind the Tor project as it stands today, the

great twist in its developmental narrative, is that the tool

206 Chaum, David. Pg. 84-90.207 http://www.bbc.com/news/technology-29032399

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lauded for freeing individuals from institutional surveillance

was in fact created by the ultimate institutional menace, the

U.S. government.

In the late 1990’s, DARPA and the U.S. Naval Research

Laboratories picked up the scraps of Chaum’s design, which had

been augmented over the course of the intervening decade by the

ZeroKnowledge Privacy Foundation and a host of independent

cryptographers similarly working on anonymous communications

systems.208 An anonymous poster on a Deep Web chat room sums up

the rationale behind this move:

An undercover spook sitting in a hotel room in a hostile country somewhere couldn’t simply dial up CIA.gov on his browser and log in — anyone sniffing hisconnection would know who he was. Nor could a military intel agent infiltrate a potential terrorist group masquerading as an online animal rights forum if he hadto create an account and log in from an army base IP address.209

Seeking a novel platform to protect classified intelligence

communications online, The U.S. Naval Research Labs employed

mathematician Paul Syverson and cryptographer Roger Dingledine as

the chief developers of the first generation of Tor.210

208 http://www.bbc.com/news/technology-29032399209 http://rrcc5uuudhh4oz3c.onion/?cmd=topic&id=2158210 http://www.bbc.com/news/technology-29032399

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The Project came to fruition in 2002, and just two years

later was released from governmental control in the form of an

open-source code.211 However, Syverson and Dingledine continued

their work on Tor, now classified as an independent non-profit,

backed by funding from the Electronic Frontier Foundation.212

Essentially, Tor had been gifted to the virtual public, but were

there strings attached? After all, why would the U.S. government

relinquish its control over a cherished security asset?

The State’s move might be explained in a technical light. So

long as the Tor network was entirely comprised of U.S.

intelligence operatives and their allies, the system could never

actually ensure anonymity. Even if a foreign government could not

effectively pin-down the location of a Tor user, they could still

unequivocally assert that some form of intelligence gathering was

occurring every time the network showed signs of activity. By

releasing Tor to the public, the State Department was ensuring

its own interests, allowing its foreign operatives to disappear

among the virtual crowds, and their sensitive chatter to be

become obscured in the white noise of non-state actors’ activity.

211 http://pando.com/2014/07/16/tor-spooks/212 http://pando.com/2014/07/16/tor-spooks/

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Moreover, the U.S. government’s continued interest in Tor is

undeniably demonstrated by its ongoing financial support of the

project. As of 2012, 80% of the Tor Project’s $2 Million annual

budget was being supplied by the U.S. government.213 So is our

trusty vessel in fact trustworthy at all? Unsurprisingly, the

Project’s founders say it is. According to Roger Dingledine, the

State Department’s funds are more like a research grant than a

procurement contract.214 Still, many of Tor’s users—often its

harshest critics—remain unconvinced:

“NSA? DoD? U.S. Navy? Police surveillance? What the hell is going on? How is it possible that a privacy tool was created by the same military and intelligence agencies that it’s supposed to guard us against? Is it a ruse? A sham? A honeytrap? Maybe I’m just being too paranoid...”215

Unfortunately for the anonymous forum commenter quoted above, a

number of professional cryptographers share these same fears. In

2007 a Swedish researcher-cum-hacker running a volunteer Tor

router discovered that he could actually access and unencrypt

much of the traffic passing through his particular node in the

213 http://wayback.archive.org/web/20120312225126/http://articles.boston.com/2012-03-08/business/31136655_1_law-enforcement-free-speech-technology214 http://wayback.archive.org/web/20120312225126/http://articles.boston.com/2012-03-08/business/31136655_1_law-enforcement-free-speech-technology215 http://rrcc5uuudhh4oz3c.onion/?cmd=topic&id=2158

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Tor network. With a little effort he was even able to access the

login names and passwords of NGOs, private companies, even the

embassies of India and Iran.216 When I asked David Chaum for his

thoughts on the integrity of the Tor system, he proved similarly

skeptical of the project’s claims about providing strong

anonymity for users:

You see, you have an untraceability system that allows people to send and receive large messages, messages of varying sizes, at unpredictable times. Well you have a real problem; it’s pretty easy to see the size of messages. People who really understand the nature of these technologies recognize that this type of system is inherently unprotectable because of it fails to encrypt the size of messages. By following the size or filing of specific messages, someone who can see all the traffic going into and out of the network can potentially figure out who’s communicating with whom.

And who exactly has the ability to monitor traffic going into and

out of a section of the Tor network? Simply put, anyone who

controls a “volunteer” router, one of the nodes that bounce

users’ IP addresses across the system. What troubles Tor users

most is the hard fact that there is no way of knowing if any

particular node in the Tor network is being provided out of

216 http://searchsecurity.techtarget.com.au/news/2240022106/Embassy-hacker-Dan-Egerstad-and-the-Tor-network

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genuine goodwill or a desire to subvert and surveil Tor users. As

one pseudonymous commenter puts it, “running 50 Tor nodes doesn’t

seem like it would be too difficult for any of the world’s

intelligence agencies — whether American, German, British,

Russian, Chinese or Iranian. Hell, if you’re an intelligence

agency, there’s no reason not to run a Tor node.217

In May of 2013, fears about governmental control over Tor

routers were confirmed as fact, ironically through one of the

anonymity network’s most stalwart supporters—the great

whistleblower himself, Edward Snowden. In an interview with Kevin

Poulsen of Wired magazine, one of the Tor Project’s developers

(Runa Sandvik) revealed that she was contacted by Snowden just

two weeks before he went on to leak information on the NSA’s

PRISM surveillance program to Glen Greenwald of The Guardian.218

The subject of their correspondence? Stickers. Poulsen reports:

In his e-mail, Snowden wrote that he personally ran one of the “major tor exits”–a 2 gbps server named “TheSignal”–and was trying to persuade some unnamed coworkers at his office to set up additional servers. He didn’t say where he worked. But he wanted to know ifSandvik could send him a stack of official Tor stickers. (In some post-leak photos of Snowden you can

217 http://rrcc5uuudhh4oz3c.onion/?cmd=topic&id=2158218 http://www.wired.com/2014/05/snowden-cryptoparty/

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see the Tor sticker on the back of his laptop, next to the [Electronic Frontier Foundation] sticker).219 (See Fig. J).

Fig. J: Edward Snowden with laptop conspicuously sporting a Tor sticker (top right)220

As Sandvik herself soon discovered, at the time of their brief

exchange Snowden had in fact been stationed in Hawaii running

multiple high-bandwidth Tor nodes as a contractor for the NSA.221

Does this revelation punch a hole in the hull of our trusty

vessel? Is the Tor network irredeemably compromised; are we sunk?

As the documents released by Snowden suggest, not exactly.

It took The Guardian a few months to sift through the mounds

of classified information Snowden had provided them. While the

insights into the NSA’s foreign and domestic surveillance

programs were first brought to the public’s attention in June of 219 http://www.wired.com/2014/05/snowden-cryptoparty/220 http://www.wired.com/2014/05/snowden-cryptoparty/221 http://www.wired.com/2014/05/snowden-cryptoparty/

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2013, it was not until October that The Guardian reported on a

top-secret slide deck entitled “Tor Stinks.”222 The document

verified that the NSA had repeatedly tried to de-anonymize the

entirety of the Tor network, but that in spite of their many

attempts they had failed to compromise the system’s core

security. Stating, “We will never be able to de-anonymize all Tor

users all the time," the document revealed that the NSA might

nevertheless successfully “de-anonymize a very small fraction of

Tor users [,]" through various forms of manual analysis.223 In

essence, the “Tor Stinks” document indicates that—in spite of

critics’ claims to the contrary—Tor is largely secure. However,

individual users might still be compromised through the usual

faults of human error (improper set-up of Tor, lax end-point

security, etc.).

After beating a stealthy retreat from the U.S. to Hong Kong

on May 20th, Snowden renewed communications with The Guardian after

its publication of the leaks in June. In a live Q&A style event

222 http://www.theguardian.com/world/2013/oct/04/nsa-gchq-attack-tor-network-encryption

223 http://www.theguardian.com/world/2013/oct/04/nsa-gchq-attack-tor-network-encryption

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called “AskSnowden” hosted on The Guardian’s home webpage, Snowden

himself confirmed the effectiveness of encrypted communications

systems like Tor, stating “Encryption works. Properly implemented

strong crypto systems are one of the few things that you can rely

on.” 224 As Snowden has elsewhere put it, “encryption is the

defense against the dark arts for the digital realm.”225 But, as

usual, there’s a caveat, “Unfortunately, endpoint security is so

terrifically weak that NSA can frequently find ways around it.”226

You might think of this in terms of something a little more

familiar, like the postal system for instance. Even if a letter

remains sealed for the entire duration of its journey to your

front door, someone can still snatch it from your unlocked

mailbox or “read it over your shoulder once it’s in your hands.”

227 For readers further concerned with end-point security (after

all, who wants some jerk snooping through their mailbox), I am

afraid that here I can do no more than beseech you to go forth

and Google—or better yet, use Tor. And for the rest, to quote a 224 http://www.theguardian.com/world/2013/jun/17/edward-snowden-nsa-files-whistleblower?CMP=twt_gu225 http://www.bbc.com/news/technology-29032399226 http://www.theguardian.com/world/2013/jun/17/edward-snowden-nsa-files-whistleblower?CMP=twt_gu227 http://techcrunch.com/2013/06/17/encrypting-your-email-works-says-nsa-whistleblower-edward-snowden/

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well-timed sales pitch from the Code Academy, “may the digitally

illiterate proceed at their own risk. Once again, you have been

warned.”228

The cloak and dagger developmental history of Tor

demonstrates more than just the contested nature of digital

technologies—something even McLuhan understood in the 1960’s

—it reflects the realization of Bauman’s Liquid Modernity.

According to Bauman, in a Liquid Modern society, “Conditions

of action and strategies designed to respond to them age

quickly and become obsolete… in no time, assets turn into

liabilities and abilities into disabilities.” 229 The

ambiguity of Tor’s status (safe-haven or honeytrap,

compromised or not) maps the essential ambiguity of liquid

modern life (“a precarious life, lived under conditions of

constant uncertainty”230) onto the daily routines and nightly

terrors of the denizens of the Deep Web—most of whom are by

necessity Tor users.

228 http://www.codecademy.com/blog/83-the-nsa-code-literacy-and-you229 Bauman. Pg. 503230 Bauman. Pg. 503

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Fascinating as the pervasive paranoia and essential

uncertainty of the Deep Web is—and by extension the market

spaces of the crypto-economy as well—what is more important

for the purposes of this study is how Tor’s employment

actualizes Bauman’s assertions about the Liquid Modern

crisis of the State. As the “Tor Stinks” document leaked by

Edward Snowden reveals, the Tor Project has culminated in a

slippage of technologically mediated power from hegemonic

institutional and State actors (the U.S. government and its

subsidiary agencies) to institutionally unaffiliated rogue

agents on the Web. Anonymity networks like Tor have resulted

in a concrete disturbance of traditional state apparatuses’

abilities to enforce their laws in the digital space of

flows. Troels Oerting, the head of Interpol’s cybercrime

center, has himself been forced to concede that, “Our

detection rate is dropping[,]" that strong cryptography is

opening up channels for "risk-free crime."231 Moreover, Tor

has taken off in a way the U.S. government did not

anticipate, for whistleblowing against the U.S. itself,

231 http://www.bbc.com/news/technology-29032399

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which as the “Tor Stinks” document revealed, the State is no

longer capable of fully or effectively preventing.232 Seldom

is the Liquid Modern divorce between power and politics

predicted by Bauman clearer than it is here.

Beyond just threatening the State’s practical ability

to regulate cyberspace, Tor has come to jeopardize the

hegemony of the nation-state as a cultural construct as

well. In a recent report, the BBC noted Tor’s empowering

effect on political dissidents in regimes which censor or

surveil online activity, “such as Syria, Iran and China.”233

For socio-political malcontents previously bound by the

restrictions of territorially fixed nation-states, Tor has

come to provide a means of jacking-in to the global culture

of the Web (a kind of passport to McLuhan’s global village).

The unfiltered exposure to international news and global

discourse this connection provides has served to weaken the

hold of what Luis Althusser has termed the ideological state

apparatus over the political beliefs and cultural self-

232 http://www.bbc.com/news/technology-29032399233 http://www.bbc.com/news/technology-29032399

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conceptions of State subjects.234 This too is indicative of

Liquid Modernization, wherein, as Bauman are Bordoni argue,

“nationalism is becoming increasingly anachronistic and

short-sighted.”235 We’ll return to this socio-cultural sea-

change in the study’s concluding sections.

But the Tor browser—which the NSA has called “the king

of high-secure, low-latency internet anonymity”236— is not the

primary object of our concern, regardless of its Liquid Modern

signification. For our ethno-cartographic purposes, Tor is just a

tool, the ship that will grants us passage into the hidden

autonomous zones of the Deep Web.

A Pirate’s Map of Autonomous Zones

So our trusty vessel might have some sprung some leaks since

lifting anchor, but don’t worry, it’s nothing that can’t be

patched up. We can’t let a few mutinous mutterings delay our

voyage, after all, sea-farers (especially of the virtual variety)

are a notoriously superstitious lot. There’s wind in our sails as

234 Althusser, Louis, and Gregory Elliott. "Ideology and the Ideological State Apparatus." Philosophy and the

Spontaneous Philosophy of the Scientists & Other Essays. London: Verso, 1990. Print. Pg. 140-160235 Bauman & Bordoni. Pg. 15236 http://rrcc5uuudhh4oz3c.onion/?cmd=topic&id=2158

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we speak; all that’s left is to lay in a course and heading. But

to find our way in the terra incognita of the Deep Web we need some

kind of pirate’s map—or, in more prosaic terms, an index of URLs

corresponding to Deep Web sites.

This is where the Hidden Wiki comes into play.237 The Hidden

Wiki (Wiki referring to a page of peer maintained content) is a

censorship-resistant index existing as a Tor hidden service (or

“.onion”), a website hidden in the Deep Web. It functions as a

directory of links to other Deep Web sites (See Fig. K).

Fig. K: The Hidden Wiki 238

237 The Hidden Wiki can be accessed via Tor at http://zqktlwi4fecvo6ri.onion/wiki/Main_Page238 http://www.thehiddenwiki.net/wp-content/uploads/2012/02/thehiddenwikicrop.jpg

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While it is hosted by a small number of dedicated administrators,

the contents of the Hidden Wiki can be altered anonymously by

anyone. This relatively anarchic structure comes with its own set

of strengths and weaknesses; it makes the Hidden Wiki

exceptionally adaptable—with sites being added or struck from the

index in response to the real-time dynamics of the Deep Web—but

also allows for the proliferation of scams:

rayn0ldz on March 25, 2014 at 11:57 pm said:Guys beware of the many scams on hidden wiki. better google “hidden wiki scams” to find some reports and lists about them.Also I warn you about the Real Cards Team. They are a scam. I lost 120 bucks today.239

Most scams involve what is known as “phishing,” the illegitimate

acquisition of a user’s private information—anything from

usernames and passwords to credit card information—gained by

masquerading as a trusted entity. Of course, the same

malleability that allows scams to sneak onto the Hidden Wiki

allows them to be shot down just as easily.

It’s worth noting that while the Hidden Wiki’s index of

URLs in truth reflects a mere infinitesimal portion of the total

number of .onions, it nevertheless provides a crucial reference

239 http://www.thehiddenwiki.net/what-is-the-hidden-wiki/

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point for newcomers to the Deep Web. From the Hidden Wiki’s home

page, a Tor user can gain access to various forums and chatrooms,

where individuals freely exchange directions to other, more out-

of-the-way sites. One of my correspondents, Tamerlane, provides

an illuminating account of these Deep Web forums, as well as of

the de facto orientation process they provide for newcomers:

Accessing the Deep Web can seem like a pretty esoteric process. I mean there is a lot of mysticism around it, and a lot of skepticism about the kind of stuff that you’ll find. But actually it’s pretty easy to figure itall out. I was trying to find chat rooms and went through four or five that were not what I wanted and were—well at least one of them—was like fairly dark. Itwas devoted to some pretty crazy sexual stuff, and if that’s what you’re looking for, yeah you can find it inthe Deep Web. But there’s also just a genuine communityof people who are just trying to make it work for them.A lot of it is just people asking around, trying to figure it out, trying to get names of people, locations, websites to buy from, to find domain names; Just people genuinely being like ‘hey, I’m kind of lost, this is like my first time trying to do this kindof crazy shit, so…can anybody help me out?’ and, surprisingly so, people are friendly and actually pretty helpful. Even though it’s very anonymous, it’s an open, welcoming community simply because nobody truly knows you and everybody’s that way. There’s a certain sense of equality in that.

My first foray into the Deep Web confirmed Tamerlane’s

comments about the mysticism that pervades the entire subject.

158

After configuring the Tor browser on my laptop—a process which

took no more than 10 minutes—I made my way to a friend’s home in

South East Portland. Seated on a veteran college-home couch in

their living room, I braced myself for the endeavor ahead. With

no small degree of trepidation I forged my way to the Hidden

Wiki, following a link I had uncovered on a surface web chatroom.

Stories about the “criminal underworld” of the Web ran rampant

through my mind; I recalled half-whispered accounts from a

distant dorm-room about assassination markets, arms traffickers,

and child-pornography rings. Frankly I had no idea what I might

encounter. As I browsed the list of services on the Hidden Wiki,

my gracious host, glancing uncertainly over my shoulder, politely

requested that I not get him arrested. “So, is the FBI going come

crashing through my window in a week or what?” Not at all, I

assured him; after all, Tor would keep us safe…right? Even so, I

thought it would be best to start off small, to gain some sense

of orientation in this clandestine domain. So, following

Tamerlane’s advice, I made my way to a forum called the “Intel

Exchange.”240

240 The Intel Exchange forums can be accessed via Tor at: http://rrcc5uuudhh4oz3c.onion/

159

The forums accessible from the main page of the Hidden Wiki

act as all-purpose information exchanges for the Deep Web,

constituting temporary autonomous zones (TAZs) that exist free

from institutional and State controls. According to Hakim Bey,

“The TAZ is like an uprising which does not engage directly with

the State, a guerilla operation which liberates an area (of land,

of time, of imagination) and then dissolves itself to re-form

elsewhere/elsewhen, before the State can crush it.” 241 Of course,

forum dwellers do not physically inhabit these far-corners of

cyberspace, for most of their lives they are living-breathing

bodies subject to the legal and social sanctions of the nation-

states that house their non-virtual selves. It is in this sense

that the hidden spaces of the Deep Web are temporary autonomous

zones, fundamentally liminal in nature.

And yet, when they take to the virtual tides, their real-

world identities and online behaviors made anonymous through

digital encryption, Deep Web forum dwellers are empowered to

exchange information and ideas, strategies and tactics that can seep

out from the confines of cyberspace to impact the “real” world of

241 Hakim Bey. Pg. 99

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physical bodies and nation-states. As Hakim Bey notes, “….The TAZ

is thus a perfect tactic for an era in which the State is

omnipresent and all-powerful and yet simultaneously riddled with

cracks and vacancies.” 242 Within minutes of arriving at the Intel

Exchange forums I stumbled upon the following post, which

perfectly shows how forum-spaces act as TAZs (impacting the

“real-world” from a virtual space of flows):

Xpietrex: I’m going to expose what has been going through my mind for a long time…please, feel invited to comment. If not, it will be good for me to write it down anyways. So I’m trying to change some things where I live. Like, for example, in my country we havea huge statue of a bloody dictator and murderer of many, many innocent people. One of my dreams is to make that statue go BOOM. Make it dust (of course, no civilians or animals can get hurt in any way, that’s the tricky part)….For all of this, and more, for a guerilla to begin, and hopefully change something, or some things at least, I feel like I need a team I can trust, at least two more persons to rely on…But, on the other hand, I really don’t trust anyone enough. Should I relax and trust someone else? Or keep solo?

Zyx: Don’t trust anybody, try to keep solo and anonymous for as long as possible. As far as the statue goes, itmay be more politically powerful to deface the statue in a manner consistent with the crimes he committed. This can be VERY poignant, especially since it is in apublic place, and there have to be many people that see it every day that feel as you do about it. Not to mention the inevitable embarrassment of TPTB that allow it to remain standing...Without knowing anythingabout this particular asshole's effigy, ie; size,

242 Hakim Bey. Pg. 99

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composition, ease of access, CCTV installations, exposure, etc., I will use a generic approach to this:1. Find a deployment method for a Blood-Red Oil-Based Exterior or Marine paint like a sprayer, balloons workwell too. If there are enough brave souls out there, they may even start throwing paint up on their own as time goes on. (A fire can begin with a single spark.)2. Create a nice looking plaque or three or five, for the base, or the ground in front of it. On which you can say whatEVER you want people to see. Get creative,use images of his actual atrocities. (Assuming it tookplace after film was invented.) Use an industrial strength adhesive, and make it permanent! There are several ways of making these VERY difficult to remove,while affording you fast deployment to minimize your exposure, and maximize the LULZ ( ;3. Detonating ANY device capable of destroying a structure is ultimately very dangerous for many reasons which I don't think needs any further explanation. Except one thing- If caught, being charged with vandalism will likely be far easier to live through than an outright act of what will CERTAINLY be labeled as terrorism. I truly wish you the best of luck in your endeavors!!(if you actually do it) Do NOT report back, it will disclose your location. Just by posting what you did, you may have already done so. 243

The discussion above clearly shows how Deep Web forums link

radicals and dissidents from across the world together in single

discursive network. These hidden locales are effective testing-

grounds for direct, real-world, political action—from defacing

politicized installations to planting explosives (what State

authorities would categorize as straight-up terrorism).

243 http://rrcc5uuudhh4oz3c.onion/?cmd=topic&id=7607

162

Like any proper pirate’s map the Hidden Wiki also points us

towards ample opportunities for pillage and plunder; its main

page sports an impressive rogues-gallery of links to shady

services; from forged documents, fake IDs, and stolen credit

cards to arms dealers, contract killers and drug emporiums.

Independent vendors running suggestively titled operations like

“Old Man Fixer’s Fixing Services” offer everything from “ Hacking

to immigration services [,] Insider trading info to exotic pets

[,] Crooked government officials to the best discrete lawyers [,]

Real university degrees to snuff films. You name it, and [they]

can get it for you or connect you with someone who can get it for

you [,]”—all for a reasonable fee, of course.244 Crowds of

competing drug peddlers offer “Heroin, Cocaine, Ecstasy, Speed, Cannabis,

Prescriptions,”—naturally “offering the best quality products at

competitive prices and making every effort to go above and beyond

when it comes to customer satisfaction!”245 Welcome to Pirate

Utopia, welcome to the crypto-economy. The coin of the realm?

Bitcoin, the cryptocurrency par excellence.

244 Old Man Fixer’s Fixing Services can be accessed via Tor at http://yth5q7zdmqlycbcz.onion/index.html245 The People’s Drug Store can be accessed via Tor at http://newpdsuslmzqazvr.onion/

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Wacky Pirate Money

The untraceable character of Bitcoin, coupled with the

anonymity provided by the TOR browser, together provide the

security which allows virtual black-markets to thrive in the Deep

Web. Bitcoin is therefore, and perhaps understandably, often

thought of as little more than a kind of virtual “wacky pirate

money” fuelling the online drug trade.246 Over an encrypted email

exchange with Gavin Andresen in 2011, Satoshi Nakamoto himself

expressed some concern over Bitcoin’s shady characterization. He

told Andresen, "I wish you wouldn't keep talking about me as a

mysterious shadowy figure, the press just turns that into a

pirate currency angle [;]” to which Andresen responded, “Yeah,

I'm not happy with the 'wacky pirate money' tone, either.”247 And

yet, perhaps “pirate money” isn’t so denigrating a misconception

as Andresen and Nakamoto believe. In truth, it may not be much of

a misconception at all. As Hakim Bey notes:

The sea-rovers and corsairs of the 18th century createdan ‘information network’ that spanned the globe: primitive and devoted primarily to grim business, the net nevertheless functioned admirably. Scattered throughout the net were islands, remote hideouts where

246 http://www.usatoday.com/story/news/nation/2013/10/21/fbi-cracks-silk-road/2984921/247 http://mag.newsweek.com/2014/03/14/bitcoin-satoshi-nakamoto.html

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ships could be watered and provisioned, booty traded for luxuries and necessities. Some of these islands supported ‘intentional communities,’ whole mini-societies living consciously outside the law and determined to keep it up, even if only for a short but merry life.248

As we have already seen, hidden services in the Deep Web—like the

remote island enclaves of 18th century corsairs—similarly support

intentional communities; communities devoted to upholding the

crypto-anarchist and libertarian principles of free and

consensual exchange (especially of goods and services

criminalized by the arbitrary decree of institutional

authorities). And just like the sea-rovers of the 1700’s, todays

virtual pirates have established vast information networks that

span the globe, circumventing or subverting outright the imposed

sovereignty of nation-states—relaying information and ideas that

challenge the hegemony of the established social order.

It’s easy to dismiss the pirate of popular imagination as a

“wacky” caricature trivially devoted to the pursuit of his own

petty self-interest. But as Peter Lamborn Wilson would have us

note, “[the history of] piracy must be studied as a form of social

resistance. The pirate, who (in the words of one of Defoe’s

248 Hakim Bey. Pg. 95

165

interviewees) ‘warred against all the world’, was first and

foremost the enemy of his own civilization.”249 Just as common

sailors in 18th century Europe would turn to piracy to escape

from being “the virtual slave of wealthy merchants and ship-

owners, and of penny-pinching kings and greedy princes[,]”

individuals today take to the Deep Web and the crypto-economy to

free themselves from the devices of corrupt financial

institutions and repressive State regimes.250

In short, many of the motivations and ideals—as well as the

operational strategies— of 18th century corsairs and modern-day

participants in the crypto-economy can be said to overlap,

perhaps vindicating a conception of Bitcoin as a “pirate”

currency. Moreover, this characterization is often reified by the

rhetoric of participants in the crypto-economy themselves. Case

in point: the Deep Web’s most (in)famous virtual black-market,

the Silk Road, was managed by an individual operating under the

alias of Dread Pirate Roberts and backed by an elite cohort of

249 Wilson. Pg. 22250 Wilson. Pg. 22

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wholesale drug-distributors known as “the scurvy crew” (See Fig.

L) 251

Fig. L: the Silk Road 252

Dread Pirate Roberts & The Saga of Silk Road

One of my informants, Ishmael, told me that he was first

introduced to Bitcoin through the Silk Road in 2011. When I asked

Ishmael to give a brief account of his experience with the 251 https://news.vice.com/article/what-its-really-like-to-be-one-of-the-silk-roads-biggest-drug-lords 252 http://i.kinja-img.com/gawker-media/image/upload/s--DVLdDpqa--/17vccnmtctq1ljpg.jpg

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virtual black-market, he informed me—taking a deep drag from his

cigarette—that:

Silk Road is an anonymous… [exhales] ‘bazaar’, as I like to call it, that exists through the deep web—so it’s completely anonymous, or so it was, and it was highly successful, a place for purchasing nearly anything. Truth be told, I was using it to buy various drugs for pleasure, and which I would also then re-sellonline for profit.

Just like the pirate communities of the 17th and 18th centuries,

however, the Silk Road was always about more than contraband

exchange. As NPR’s Steve Henn notes, “From the start, the Silk

Road was more than just a Craigslist for illegal drugs. There was

a philosophy to the site - a belief that people should be able to

buy and sell pretty much anything without government interference

[.]”253 This philosophy was articulated often and ardently by the

Silk Road’s creator, the Dread Pirate Roberts (DPR):

Silk Road was founded on libertarian principles and continues to be operated on them. It is a great idea and a great practical system… It is regulated by marketforces, not a central power (even I am subject to market forces by my competition. No one is forced to behere). The same principles that have allowed Silk Road to flourish can and do work anywhere human beings come

253 http://www.npr.org/blogs/thetwo-way/2013/10/02/228491496/fbi-arrests-owner-of-black-market-site-silk-road

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together. The only difference is that the State is unable to get its thieving murderous mitts on it.254

Over the Silk Road’s Tor-hidden forums, DPR would post

full-length “manifestos, philosophical and political musings,

love-letters to Silk Road’s users, and even [hosted] a Dread

Pirate Roberts Book Club,” devoted to the political and economic

theories of agorism, counter-economics, and anarcho-capitalism.255

Of the Dread Pirate, Andy Greenberg of Forbes magazine states, “He

was kind of the emcee of this whole party. People talked about

him as this Che Guevara-like figure and a job creator and a

modern hero of our times. And the Silk Road community just loved

him.”256 The image of DPR that emerges from these accounts is not

that of a common cybercriminal, a shadowy king-pin hiding out in

the Deep Web. Rather, DPR was heralded as the philosopher king of

Silk Road, a modern folk-hero on par with other principled

254 http://www.forbes.com/sites/andygreenberg/2013/04/29/collected-quotations-of-the-dread-pirate-roberts-founder-of-the-drug-site-silk-road-and-radical-libertarian/255 http://www.forbes.com/sites/andygreenberg/2013/04/29/collected-quotations-of-the-dread-pirate-roberts-founder-of-the-drug-site-silk-road-and-radical-libertarian/256 http://www.npr.org/blogs/thetwo-way/2013/10/02/228491496/fbi-arrests-owner-of-black-market-site-silk-road

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libertarian and crypto-anarchist figureheads like Satoshi

Nakamoto or WikiLeaks’ Julian Assange.257

Beyond his allure as a near-mythic persona, DPR is

approvingly acknowledged as having introduced (along with a hand-

picked team of site administrators) a highly-successful escrow

system into the mechanics of Silk Road, something previously

lacking in Deep Web markets. Steve Henn explains that escrow

accounts greatly reduced the amount of trust required between

buyers and vendors on the Deep Web, “When you bought something on

the site, you'd send your money - your bitcoin to the Pirate. He

would hold it, and when the drugs showed up, then the dealer

would get his money. And this worked. The site exploded. It did

more than a billion dollars in business.”258 As Tamerlane’s

account below demonstrates, big business quickly attracted big

players, heavy-hitting drug distributors dealing in bulk

quantities:

There was this one time, when **** was in Florida for about six months when he bought—I want to say somethinglike a pound and a half— of rock crystal MDMA, and

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immediately realized that he had no way of moving it, nothing to do with it. So he immediately cancelled the funds, made sure that everything was ok; and that the guy knew that the funds were cancelled and the purchasewas done. But he ended up receiving the package three months later anyways, and the guy was so devoted to remaining anonymous, to just keeping up his business, that he just said ‘don’t send it back, there’s no way for you to send it back without revealing too much information.’ You know the people that do this kind of shit are huge wholesale distributors who realize the ease of distributing en-masse to so many people. So that amount, a pound and a half, while it could seem astronomical to somebody like my friend, to this personit’s like a small portion of a much, much larger thing.

An escrow system isn’t the only thing that distinguished the Silk

Road from other virtual black-markets. While other venues placed

virtually no restrictions on the kinds of products or services

that users might vend (guns, contract kills, child porn, etc.),

DPR was “very clear about only selling victimless contraband.”259

By the Dread Pirate’s decree, the Silk Road operated under a

simple code: no weapons, no hit-men, no stolen credit cards, no

child-pornography.260 While these restrictions might seem like an

infraction upon the libertarian principle of consensual free-

exchange, I would encourage the reader to give further

259 http://www.npr.org/blogs/thetwo-way/2013/10/02/228491496/fbi-arrests-owner-of-black-market-site-silk-road260 http://www.npr.org/blogs/thetwo-way/2013/10/02/228491496/fbi-arrests-owner-of-black-market-site-silk-road

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consideration to the abuse of consent that follows from the

barred goods and services above. Moreover, even the Dread

Pirate’s historical forebears, the 18th sea-rovers themselves,

were known to follow certain restrictive self-imposed codes; as

Wilson relates below:

The notion of a pirate society is a contradiction in termsin most theories of history, whether Marxist or otherwise—but the Buccaneers of Hispaniola constituted just such a society… they banded together under ‘Articles’ or ships’ constitutions…Corporal punishment was outlawed, and disagreements even between officers and men were resolved at a drumhead court, or by the Code Duello… [Notably] Liquor was never forbidden.261

Demonstrating the ability of virtual arrangements to practically

and positively impact the “real” world, the Silk Road’s non-

violent ethic of victimless exchange spilled out of cyberspace to

affect the dynamics of the international drug trade itself.

By connecting growers, chemists, and consumers directly

online, the Silk Road effectively cut violent street gangs and

oppressive cartels—the middlemen of traditional drug markets— out

of its narcotics’ supply-chain. Academics and Silk Road users

alike argue that this radically reduced the risk of violent crime

commonly associated with the drug trade, “where organized crime 261 Wilson. Pg. 191

172

groups use serious, often lethal force to eliminate competitors

and establish control over drug-retailing territory and

trafficking routes.” 262 As James Martin puts it, “The inability

of dealers to use violence is one of the most striking and

potentially socially beneficial implications associated with the

rise of the online drug trade.” 263

In fact, the Silk Road has been lauded as not only taking

crime off the streets (by removing cash and power from the hands

of cartels) but for improving the quality and safety of the drugs

themselves. When geographical constraints are removed from the

drug trade, dealers are left to compete for loyal customers by

improving the quality of their products and customer service

rather than by gunning down the competition. Consequently,

narcotics merchants on the Deep Web have come to adopt the

familiar rhetoric of corporate retailing, employing everything

from seasonal sales and money-back guarantees to responsibility

campaigns advertising “fair-trade cocaine” and “conflict-free

262 https://theconversation.com/fair-trade-cocaine-and-conflict-free-opium-the-future-of-online-drug-marketing-30127 263 https://theconversation.com/fair-trade-cocaine-and-conflict-free-opium-the-future-of-online-drug-marketing-30127

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opium”.264 Inevitably, commentators have half-jokingly observed

that Deep Web markets like the Silk Road are “gentrifying” the

drug trade. 265 While these claims are difficult to confirm, it

seems undeniable that projects like the Silk Road present “a

range of advantages over the violence and exploitation associated

with the conventional drug trade.” 266

Furthermore, the Silk Road’s potential to reduce the levels

of violent crime associated with the drug trade factors in as a

major-victory for libertarians and anarcho-capitalists (as well

as a virtual nightmare for law enforcement’s “War on Drugs”).

With online drug exchanges, prosecutions can be very difficult to

come by. The drugs often arrive from foreign countries and the

financial transactions are all but impossible to trace (courtesy

of cryptocurrencies). Because there is so little evidence

connecting the contraband to the consumer, a buyer can simply

deny having purchased the drugs in the first place.267 Moreover,

264 https://theconversation.com/fair-trade-cocaine-and-conflict-free-opium-the-future-of-online-drug-marketing-30127 265 https://news.vice.com/article/cryptomarkets-are-gentrifying-the-drug-trade-and-thats-probably-a-good-thing 266 https://theconversation.com/fair-trade-cocaine-and-conflict-free-opium-the-future-of-online-drug-marketing-30127 267 https://news.vice.com/article/cryptomarkets-are-gentrifying-the-drug-trade-and-thats-probably-a-good-thing

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as James Martin argues, digital black-markets like the Silk Road

present a serious strategic dilemma to the State; while “the war

on drugs' rhetoric relies on creating and sustaining this

stereotype of drug dealers as these sort of violent, homicidal

maniacs that are out there to get your kids hooked[,]” the online

drug trade reveals that dealers are more often just normal

entrepreneurs, attentive to the needs of their costumers and

committed to non-violence.268 In short, the Silk Road, with its

underlying libertarian principle of non-violent consensual

exchange (as mediated by crypto-anarchist technologies), weakened

both the disciplinary and symbolic power of the State—no small

accomplishment for a liquid modern community of self-regulating

selves online.

Reducing violent crime, skirting the long arm of the law,

gentrifying the drug trade, these are bold claims; but how

widespread is all this really? The answer, as Monica Barratt

concludes in her 2014 study on the use of Silk Road, is quite

widespread. Under the auspices of the National Drug Research

Institute of Australia, Barratt collected data from a sample of

268 https://news.vice.com/article/cryptomarkets-are-gentrifying-the-drug-trade-and-thats-probably-a-good-thing

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9,470 self-reported drug users in the UK (4315, median age 24),

Australia (2761, median age 32), and the United States (2394,

median age 21).269 She found that 65% of respondents in the U.S.,

53% of respondents in Australia, and 40% of respondents in the UK

had heard of the Silk Road. 270 More importantly, 18% of her

American correspondents (compared with 10% in the UK, and 7% in

Australia) had themselves consumed drugs purchased through the

Silk Road. 271 Respondents most common reasons for purchasing from

the virtual black-market were, “wider range (75-89%), better

quality (72-77%), greater convenience (67-69%) and the use of

vendor rating systems (60-65%). [By contrast] The most common

reasons for avoiding [Silk Road] purchases were adequate drug

access (63-68%) and fear of being caught (41-53%).”272 This last

fear, it turns out, was not altogether unfounded.

The Siege of Pirate Utopia

269 Barratt, Monica J., Jason A. Ferris, and Adam R. Winstock. "Use Of Silk Road, The Online Drug Marketplace, In

The United Kingdom, Australia And The United States." Addiction 109.5 (2014): Web. Pg. 1270 Barratt et al. Pg.1271 Barratt et al. Pg.1272 Barratt et al. Pg.1

176

After Adrian Chen’s article on the “underground website

where you can buy any drug imaginable” went viral in 2011, the

FBI embarked on a Hollywood-style sting operation to take down

the Silk Road. 273 The operation unfolded over the course of

nearly two years, headed by FBI agent Christopher Tarbell and

backed by an enigmatic investigator known only as Agent-1, who

“had the hacking skills necessary to penetrate Roberts’s domain.”

274

There has been a great deal of speculation as to the true

identity of Agent-1; many believe that he is actually Hector

Xavier Monsegur (a.k.a Sabu), a high profile member of the

hacktivist collective Anonymous, and formerly a member of the

elite hacking group LulzSec.275 In June of 2011, Monsegur was

arrested by the FBI—by agent Tarbell himself, in fact—and was

turned, “like a Cold War spy…to track down other members of

LulzSec.” 276 Monsegur’s trial has since been postponed by the

FBI, leading to the reasonable conclusion that Monsegur has

273 http://gawker.com/the-underground-website-where-you-can-buy-any-drug-imag-30818160274 http://www.newsweek.com/how-federal-agents-closed-silk-road-206275 http://www.newsweek.com/how-federal-agents-closed-silk-road-206276 http://www.newsweek.com/how-federal-agents-closed-silk-road-206

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defected to the other side, now an informant and hired hand for

the FBI.

For this unlikely duo, a veteran FBI agent and legendary

turn-coat hacker, the challenge was not in verifying that

criminal activity was occurring on the Silk Road—after all, “

undercover FBI agents had been buying drugs and employing hackers

[on the site] since November 2011”— but rather in uncovering the

true identity of the Dread Pirate Roberts. 277 For Agent-1, the

game was afoot.

Scouring the Web for months—from its high-trafficked surface

to its hidden depths—Agent-1 sought tirelessly for a clue. At

last, he stumbled upon a series of forum posts dating back to

January of 2011, just around the time of the Silk Road’s

inception. The posts were made under the name “altoid” and

appeared to be drumming up business for the fledging Silk-Road.

278 Agent Tarbell was confident that this was their man, and set

Agent-1 to follow altoid’s activity with a watchful eye. Eight

months later the investigators caught a lucky break when altoid

277 http://www.newsweek.com/how-federal-agents-closed-silk-road-206278 http://www.newsweek.com/how-federal-agents-closed-silk-road-206

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resurfaced on the bitcointalk.org forums, this time, as

Newsweek’s Ryan Neal reports:

[Altoid was] looking to hire an ‘IT pro’ for a ‘venture backed Bitcoin startup company.’ The post instructed interested parties to email [email protected]. It was a breakthrough for Tarbell and Agent-1. They now had a name. The email address was linked to a Google+ account – Google’s social network – and included a photograph of Ulbricht.This matched a "Ross Ulbricht" LinkedIn profile picture, which gave Tarbell the first personal details of his main suspect.

Who was this Ross Ulbricht? He was 27 years old; formerly

attended the University of Texas in Austin; graduated from the

University Of Pennsylvania School Of Engineering in 2010 with a

master’s degree in physics; had recently moved to San Francisco.

But for Tarbell, it was Ulbricht’s LinkedIn profile which truly

revealed the man: “On the profile, Ulbricht said his personal

goals changed after grad school, shifting to ‘creating an

economic simulation to give people a firsthand experience of what

it would be like to live in a world without the systemic use of

force.’"279

279 http://www.newsweek.com/how-federal-agents-closed-silk-road-206

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Tarbell believed he had successfully tracked down the Dread

Pirate Roberts, but he needed proof; he needed access to

Ulbricht’s computer, which he suspected would connect the suspect

to the virtual private network—the specific IP address—that would

allow access to the control panel (the captain’s quarters if you

will) of the Silk Road. But to get his hands on Ulbricht’s

computer, Tarbell would need more than the circumstantial

evidence Agent-1 had turned up. So the investigator’s kept

patient, and waited for Ulbricht to slip up. Meanwhile, as Ryan

Neal explains:

Oblivious that Federal agents were now tracking his every move, Roberts came under heat from an unlikely source. A [distributor] on Silk Road with the username "FriendlyChemist" threatened to reveal a long list of real names and addresses of Silk Road vendors and customers unless Roberts paid $500,000. One of the world’s most successful drug dealers was being blackmailed.280

With the integrity of the Silk Road compromised, the Dread Pirate

Roberts had no choice but to turn to desperate measures; “I have

never killed a man or had one killed before, but it is the right

move in this case.”281 DPR hired a hitman.

280 http://www.newsweek.com/how-federal-agents-closed-silk-road-206281 http://www.npr.org/blogs/thetwo-way/2013/10/02/228491496/fbi-arrests-owner-of-black-market-site-silk-road

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What are we to make of the Dread Pirate’s violent recourse?

Can we continue to put stock in the Silk Road’s purported

dedication to non-violence? Peter Lamborn Wilson counsels that,

“One mustn’t imagine…any sensible pirate…as lusting for violence

[;] the truth is that combat in dangerous and its hard work... And

therefore they resorted to trickery and camouflage first, and

only whipped out their flintlocks and scimitars as a last

resort.”282 Indeed, with the Silk Road—the pirate’s utopia— at

risk, this was Roberts’ last resort. Newsweek reports what

happened next:

With his multimillion-dollar business at risk, [DPR] contacted someone using the username "redandwhite" and agreed to pay him $150,000, in Bitcoins, to kill FriendlyChemist. Redandwhite told Roberts he had made the hit and that he would no longer hear from FriendlyChemist. He showed him photographs of FriendlyChemist's corpse as proof. If a killing did take place, there is no official record of it. Canadianpolice say they do not have any record of a homicide that matches what little is known of the victim and thepurported assassin.283

Canadian police could find no corpse because the killing never

happened. As was later revealed by the FBI, the hitman was

actually an undercover DEA agent, and FriendlyChemist, the

282 Wilson. Pg. 151283 http://www.newsweek.com/how-federal-agents-closed-silk-road-206

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“murdered” blackmailer, a mole for the FBI. 284 This was more than

enough for Tarbell, who sent a team of federal agents to follow

DPR’s digital trail back to a library in San Francisco, “back,

they say, to a laptop and Ross Ulbricht.”285 Ryan Neal’s account

of the final takedown reads like a passage from a cyberpunk

novel:

The Glen Park public library in San Francisco is usually a quiet, calm place. No more so than the science-fiction section, where nerds congregate to readtheir emails on the free Wi-Fi. On Tuesday that tranquility was rudely interrupted when half a dozen FBI agents descended on the startled sci-fi guys and surrounded, then arrested, a 29-year-old man quietly working on his laptop. 286

Pining Ulbricht’s arms to his side, the agents seized the laptop,

which allegedly revealed that at that very moment Ulbricht was

online acting as the Dread Pirate.287And so, the 2 year operation—

complete with its requisite turn-coat hacker, undercover

operative playing a hit man, and staged death —culminated in 2013

with the arrest of Ross Ulbricht a.k.a Dread Pirate Roberts, the

284 http://www.npr.org/blogs/thetwo-way/2013/10/02/228491496/fbi-arrests-owner-of-black-market-site-silk-road285 http://www.npr.org/blogs/thetwo-way/2013/10/02/228491496/fbi-arrests-owner-of-black-market-site-silk-road286 http://www.newsweek.com/how-federal-agents-closed-silk-road-206287 http://www.npr.org/blogs/thetwo-way/2013/10/02/228491496/fbi-arrests-owner-of-black-market-site-silk-road

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seizure of nearly 50,000 bitcoins from Silk Road’s escrow service

(about $20 Million by todays exchange), and the demise of the

crypto-economy’s most reliable market (See Fig. M).

Fig. M: The FBI’s notice of seizure which greets visitors to the Silk Road today288

Ross Ulbricht was hit with some serious charges: narcotics

trafficking (“including more than a kilogram of heroin, five

kilograms of cocaine, 10 grams of LSD and 500 grams of

methamphetamine”); computer hacking; money laundering; and of

course, attempted murder.289 More importantly, the fall of the

Dread Pirate and the Silk Road seemingly put the future of the

crypto-economy in jeopardy—Bitcoin’s value dropped by 20% (though

it quickly recovered) and its reputation became forever linked to

the sensational “criminal” hijinks of the Deep Web. But it is in

288 http://silkroadvb5piz3r.onion/289 http://www.newsweek.com/how-federal-agents-closed-silk-road-206

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the nature of distributed networks—the defining feature of the

crypto-economy, from its virtual currencies to its anonymous

user-base and scattered (hidden) markets—to persist. What Hakim

Bey states of the temporary autonomous zone applies just as well

to the crypto-economy itself, “The TAZ is an encampment of

guerilla ontologists: strike and run away. Keep moving the entire

tribe, even if its only data in the Web.”290 And “keep moving” is

exactly what participants in the crypto-economy did.

For those of you familiar with William Goldman’s Princess’ Bride

(1973) or its later cinematic adaptation, the name of Dread

Pirate Roberts likely strikes a chord. In Goldman’s novel the

Dread Pirate Roberts is a legendary marauder who the tales’

eponymous Princess believes to have killed her “one true love,” a

wayward farm boy named Wesley. As it happens, Wesley not only

survived his encounter the Dread Pirate, but inherited his title,

just as the previous Dread Pirate inherited his title from the

Dread Pirate Roberts before him. It should come as no surprise

then that just three months after the FBI’s crackdown, the Silk

290 Hakim Bey, Pg. 100

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Road rose from the dead, once again headed by a Dread Pirate

Roberts (See Fig. N).

Fig. N: The heroic Dread Pirate Roberts of William Goldman’s The Princess Bride291

The reincarnated Silk Road quickly grew to the match the

success of its predecessor, at its prime overseeing an estimated

$8 Million in “criminal” transactions each month.292 Just like

the first Dread Pirate, the Roberts of Silk Road 2 framed the

entire enterprise as “a social experiment in free market

libertarianism rather than [a] mere money-making venture [;]”

again forbidding the exchange of all contraband that wasn’t

considered victimless.293 Unfurling the colors of this digital

domain—the billowing skull and cross bones atop this floating

291 http://www.trulyace.com/images/pirateroberts3.jpg292 http://arstechnica.com/tech-policy/2014/11/silk-road-2-0-infiltrated-from-the-start-sold-8m-per-month-in-drugs/293 http://www.wired.com/2014/11/feds-seize-silk-road-2/

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republic—the Dread Pirate announced, “You are writing history

with every item purchased here; Silk Road is not a marketplace.

Silk Road is a global revolt. The idea of freedom is immortal.”294

Now, for those of you familiar with the tenacity of the

Federal Government, it should come as no surprise that on

November 6th of 2014, almost exactly one year after its

inception, the second Silk Road was taken down. In a joint

operation with Europol’s cybercrime commission, the Department of

Homeland Security and FBI spearheaded “Operation Onymous”

(symbolically de-anonymizing anonymity itself), which resulted in

the seizure of a dozen Deep Web marketplaces and the arrest of

Blake Benthall, the alleged mastermind behind Silk Road 2 .295

Still, participants in the crypto-economy are undaunted; as the

following comments allude, there is a well-founded suspicion that

this hit-and-run style cyber-warfare will continue indefinitely:

[–]Sovereign_Curtis 15 points 4 hours ago ‘I am not the Dread Pirate Roberts' he said. 'My name is Ryan; I inherited the ship from the previous Dread Pirate Roberts, just as you will inherit it from me. The man I inherited it from is not the real Dread Pirate Roberts either. His name was Cummerbund. The

294 http://www.wired.com/2014/11/feds-seize-silk-road-2/295 http://uk.businessinsider.com/fbi-silk-road-seized-arrests-2014-11?r=US

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real Roberts has been retired 15 years and living like a king in Patagonia.'

“[–]boonies4u 15 points 4 hours ago The Dread Pirate Roberts is dead! Long live The Dread Pirate Roberts!

In spite of the recent defeat, the libertarian and anarcho-

capitalist ethic of participants in the crypto-economy remains

alive and well (as does their characteristic penchant for irony):

“[–]kyledrake 37 points 2 hours ago Thank god. My violent street gang was losing business to these guys.

Nevertheless, the State’s successful takedown of a major

player in the crypto-economy bears heavily on the central thesis

of this study; in light of this victory, can the power of the

State truly be said to be in crisis (as Bauman’s liquid modernity

suggests)? In fact, it may. The Silk Road, successful as it was,

was by no means the crypto-economy’s only hidden market. Just

like the animalcules beneath Van Leuwenhoek’s microscope in the

17th century, virtual black markets are subject to a kind of

natural selection. The seizure of the Silk Roads has driven Deep

Web markets towards further decentralization; a kind of hydra

effect that has multiplied the total number of hidden services

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now in existence, while radically increasing the difficulty of

shutting any one site down.

In a gesture embodying the maxim of adapt or die, many of

today’s digital black-markets have abandoned the system of

centralized escrow that made the Silk Road vulnerable to attack

and detection in the first place. In an unfortunate turn, this

has also meant abandoning the non-violent restrictions imposed on

the kinds of goods and services available for purchase on the

Deep Web (where guns, stolen documents, and child pornography are

now once again widely available)—in short, the State’s siege on

Pirate Utopia has prompted our virtual corsairs to move further

out beyond the admiralty’s reach. According to a recent study

conducted by the Digital Citizens Alliance, the Silk Road’s long-

time competitors Evolution and Agora have since surpassed either

of the Silk Road’s incarnations in terms of total listings (with

more than 15 and 16 thousand mostly-illegal products available

for purchase respectively). 296 It would appear then that however

successful the State’s efforts have been in the short-term, they

have largely served only to further the dream championed by

296 http://www.wired.com/2014/11/feds-seize-silk-road-2/

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cyberpunks, libertarians, and crypto-anarchists, the dream—as

Adrian Chen put it in 2011—“of a distributed digital economy

outside the law, one where money flows across borders as free as

bits [;]”297 the dream of the crypto-economy.

WikiLeaks & Whiffies Pies:

Let us admit that we have attended parties where for one brief night a republic of gratified desires was attained. Shall we not confess that the politics of that night have more reality and force for us than those of, say, the entire U.S. Government? Some of the ‘parties’ we’ve mentioned lasted for two or three years.Is this something worth imagining, worth fighting for? –Hakim Bey 298

Full fathom five thy father lies;Of his bones are coral made;

Those are pearls that were his eyes;Nothing of him that doth fade,But doth suffer a sea-change

Into something rich and strange.Sea-nymphs hourly ring his knell:

Burthen Ding-dong.Hark! Now I hear them — Ding-dong, bell.

–The Tempest, I.ii.397-405299

We have now established many of the sites, mediums, and

methods of exchange that make up the crypto-economy. Beginning 297 http://gawker.com/the-underground-website-where-you-can-buy-any-drug-imag-30818160298 Hakim Bey. Pg. 132299 http://www.shakespeare-navigators.com/tempest/TempestText12.html

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with a survey of the many mytho-historical narratives which

presaged the development of the crypto-economy, we investigated

the phenomenon’s politicized roots in libertarian and crypto-

anarchist ideologies—ideologies which at once reflect and reify

Bauman’s assertions about the Liquid Modern crisis of the State.

Next we turned to the economic mechanisms of the crypto-economy

itself, noting how cryptocurrencies (from their initial raison

d’etre to the technicalities of their underlying cryptographic

protocols) and the coinholders that deal in them have realized a

new form of decentralized, distributed economy which subverts the

hegemony of traditional State and financial institution; a

process which is likewise indicative of Bauman’s Liquid Modern

projections. At last we ventured online, embarking on an

ethnographic voyage through the Deep Web to view the spaces and

places of the crypto-economy—noting how virtual black-markets and

hidden forums (as well as the digital architectures which keep

them afloat) create temporary autonomous zones beyond State

control. In spite of institutional authorities’ repeated attempts

to police these virtual spaces, we have noted that they are

nevertheless becoming increasingly invulnerable to State

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intervention; a clear example of what Bauman has called the

divorce between power and politics. It would seem then that we

have already justified an understanding of the crypto-economy as

embodying the core qualities of Liquid Modernity. However, our

task is not yet complete; we have yet to determine the degree to

which the crypto-economy furthers the instantiation of Liquid

Modernity itself.

To address such a sweeping question we must now turn away

from the depths of the digital realm, redirecting our focus to

view how the crypto-economy factors in to a broader constellation

of social trends playing out in the “real” world. It is in

relation to concrete social enterprises—political whistleblowing,

popular uprisings, entrepreneurial innovations—that the true

extent of the crypto-economy’s effects on traditional political

and financial institutions becomes most apparent. The magnitude

of these effects (bound up as they are in the unfurling of other

decentralized, non-hierarchical, and—for lack of a better term—

anarchistic cultural formations) demonstrates how the crypto-

economy is itself further propelling the cultural process of

Liquid Modernization.

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Of course, it is the hallmark of our information age that

even concrete social enterprises often arise from the virtual

space of flows. This is precisely the case with WikiLeaks, the

online disclosure portal founded by Julian Assange in 2006, which

has since been proclaimed a kind of “open-source, democratic

intelligence agency.”300 While WikiLeaks operates online,

utilizing the same digital infrastructure that keeps hidden

services like Deep Web markets operational, its express purpose

is to provide an avenue for direct (real-world) political action

by providing a space for whistleblowers to anonymously submit—and

thereby publicly distribute— politically sensitive materials.

WikiLeaks & The Credit Blockade

Utilizing the Tor Project’s anonymity services, Chelsea

(then Bradley) Manning contacted the WikiLeaks team to blow the

whistle on U.S. war crimes in 2010.301 As an intelligence analyst

for the U.S. Army in Iraq, Manning had access to a number of

classified databases. In 2009, Manning uncovered a disturbing set

of classified field reports that revealed scores of human rights

300 http://www.theguardian.com/theguardian/2008/feb/23/internet.usa301 http://www.huffingtonpost.com/julian-assange/wikileaks-bradley-manning-testifies-cablegate_b_2215387.html

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violations committed by the U.S. Army and the independently

contracted Blackwater group.302 The 391,832 field reports (later

appellated the Iraq War Logs) covered over 14 unreported cases of

open attacks on unarmed Iraqi civilians as well as gruesome

accounts of the electrocution and mutilation of Iraqi prisoners

of war.303 In April of 2010—after Manning released over 500,000

Army reports and 250,000 U.S. diplomatic cables to WikiLeaks—

leaked footage of an American airstrike in Baghdad went viral

under the name “Collateral Murder.”304

The startling video depicts the “murder” of ten unarmed men,

two of whom were later confirmed to be journalists for the

international news agency Reuters.305 According to The Washington

Post’s David Montgomery, it was this video which first put

WikiLeaks on the map.306 Perhaps more significantly, as one of

Manning’s biographers puts it, the video’s publication was a

302 http://www.huffingtonpost.com/julian-assange/wikileaks-bradley-manning-testifies-cablegate_b_2215387.html303 http://www.huffingtonpost.com/julian-assange/wikileaks-bradley-manning-testifies-cablegate_b_2215387.html304 http://www.huffingtonpost.com/julian-assange/wikileaks-bradley-manning-testifies-cablegate_b_2215387.html305 http://www.huffingtonpost.com/julian-assange/wikileaks-bradley-manning-testifies-cablegate_b_2215387.html306 http://www.washingtonpost.com/lifestyle/style/what-happened-in-iraq/2012/02/17/gIQA08oCSR_print.html

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watershed moment, “the beginning of the information age exploding

upon itself.”307 While this observation might seem overly

dramatic, it isn’t too far from the truth—this was a public

demonstration of the State’s inability to effectively police the

digital space of flows. Try as they might, the State could not

stop “Collateral Murder” from making its way around the world;

they could not stop WikiLeaks’ signal. Appalling as the

information contained in the Iraq War Logs was, as we shall see,

it was ultimately Manning’s leaked diplomatic cables that would

have the most far-reaching consequences.

After the Iraq and Afghanistan War Logs were made public by

WikiLeaks, the organization came under fire from a number of

powerful institutions. The U.S. government, unable to terminate

WikiLeaks directly, rallied major credit card companies and

banking institutions to impose a financial blockade, cutting off

95% of WikiLeaks’ annual revenue (which had previously be

supplied entirely by online donations, typically in the form of

electronic credit payments).308 According to WikiLeaks’ staff:

307 http://mariamuir.com/i-am-bradley-manning/308 https://wikileaks.org/Banking-Blockade.html

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Since 7th December 2010 an arbitrary and unlawful financial blockade has been imposed by Bank of America,VISA, MasterCard, PayPal and Western Union…The blockadecame into force within ten days of the launch of Cablegate as part of a concerted US-based, political attack that included vitriol by senior right wing politicians, including assassination calls against WikiLeaks staff. The blockade is outside of any accountable, public process. It is without democratic oversight or transparency. The US government itself found that there were no lawful grounds to add WikiLeaks to a US financial blockade. But the blockade of WikiLeaks by politicized US finance companies continues regardless.

The credit blockade might well have spelled the end of WikiLeaks,

were it not for the aid of cryptocurrencies. Institutionally

unaffiliated, decentralized and untraceable, cryptocurrencies

swiftly became the go-to channel for financially supporting the

“condemned” organization. In January of 2014, WikiLeaks announced

over Twitter that the majority of its funding now comes from

donations in Bitcoin (closely followed by the competing

cryptocurrency Litecoin).309 Moreover, WikiLeaks’ early investment

in Bitcoin has raised a considerable sum of back-up funds which

have helped the organization endure a myriad of legal and

financial hardships since 2010.310 In short, in spite of the

309 https://twitter.com/wikileaks/status/426719134580097024310 https://shop.wikileaks.org/donate#dbitcoin

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State’s attempt to shut-down WikiLeaks’ disruptive project—

attempts which might have succeeded just a few years earlier—

aided by novel (censorship-resistant) payment platforms presented

by the crypto-economy, the subversive organization has survived

the blockade and continues to leak damning information on State

activities.

The most damning of all WikiLeaks’ reports have been the

251,287 State Department cables provided by Manning in 2010,

which are now collectively known as the “Cablegate” documents.311

The cables stem from 271 American embassies in countries around

the world (dating from as far back as 1966 all the way to the

very month of Manning’s leak in February of 2010), and constitute

the single largest set of classified documents ever released to

the public.312 The cables exposed an elaborate history of U.S.

espionage activity—from tactical threat assessments to the U.S.’s

support of despotic regimes; even outlining instances of

eavesdropping on the UN Secretary General Kofi Annan prior to the

invasion of Iraq (an act strictly prohibited under international 311 http://www.huffingtonpost.com/julian-assange/wikileaks-bradley-manning-testifies-cablegate_b_2215387.html312 http://www.huffingtonpost.com/julian-assange/wikileaks-bradley-manning-testifies-cablegate_b_2215387.html

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law).313 Embarrassing as these revelations were for the U.S.

government, they were all the more damaging to puppet dictators

abroad, whose flagrantly corrupt practices were laid out in the

open for the entire world to see.

The Netizen & Cyberactivism

The Cablegate revelations have been credited as catalyzing

the wave of popular uprisings now known as the Arab Spring.314 In

Tunisia, protests began on December 17th of 2010 after leaked

cables revealed the full extent of President Zine el-Abidine Ben

Ali’s corruption (one of the leaked cables even showed that the

President's daughter and her husband had their ice cream flown in

from Saint-Tropez!).315 With the State’s ideological apparatus

thus in disarray, Tunisia’s youth—enraged by the opulent

lifestyle of their despotic leader—organized mass protests over

Facebook and Twitter, pressing for reform of the coercive

machinery of the State itself.316

313 http://www.nytimes.com/2010/11/29/world/29spy.html?_r=2&ref=global-home&314 http://www.huffingtonpost.com/julian-assange/wikileaks-bradley-manning-testifies-cablegate_b_2215387.html315 http://www.theweek.co.uk/africa/wikileaks/8571/tunisia-wikileaks-had-part-ben-ali%E2%80%99s-downfall316 http://www.theweek.co.uk/africa/wikileaks/8571/tunisia-wikileaks-had-part-ben-ali%E2%80%99s-downfall

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As Tok Thompson states, the implications of the Arab Spring

are tremendous: “The reign of national media, national stories,

and national control of social discourse was annihilated—swept

aside—in a simple shift of public discourse and a refusal to

submit to an overbearing version of the national.”317 Not just in

Tunisia but across the Middle East, citizens became netizens,

actively engaged in the transnational culture of the Web, for

whom (as Bauman & Bordoni predict of all Liquid Moderns),

“nationalism is becoming increasingly anachronistic and short-

sighted.” 318

To put things in perspective, as of 2011, 74.8% of all

households in the United States had internet access in the home

and 88.1% of individuals aged 25-34 were considered Internet

users.319 Considering that the percentage of households with

internet access in 2010 (71.6%) was nearly double the percentage

of households with internet access a decade earlier in 2000 317 Thompson, Tok. "Netizens, Revolutionaries, and the Inalienable Right to theInternet." Folk Culture in the

Digital Age: The Emergent Dynamics of Human Interaction. By Trevor J. Blank. Logan, Utah):

Utah State UP, 2012. Print. Pg. 47318 Bauman & Bordoni. Pg. 15319 U.S. Census Bureau. Computer and Internet Use in the United States: May 2013. Web.

<http://www.census.gov/prod/2013pubs/p20-569.pdf>.

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(41.5%), it seems wholly justifiable to suggest that internet

access will be all but taken for granted in the United States

within the next decade.320 Similar trends have been observed

across the developed nations of the global North, where Marcusian

nightmares of a society split between a digitally well-endowed

technocratic elite and a technologically illiterate underclass of

exploitable labor have met with the market realities of Moore’s

law and the rapid incorporation of the tech-consuming public into

the digital fold.321

While disparities between rates of access to digital

communication technologies in the nation-states of the post-

industrial West and the “developing” world remain apparent, there

is every indication of a tendency towards increased access to

digital communication technologies globally. Over the course of

the last year alone, Angola, Burundi, Eritrea, Gambia, Niger,

Oman, Uganda, Zambia and Zimbabwe all experienced a 17% growth

in Internet usage—with the Congo, Ethiopia, Gabon , Guinea,

Liberia, Mauritania, Malawi, Mali, and Rwanda (among many others)

320 http://www.census.gov/prod/2013pubs/p20-569.pdf321 http://www.internetlivestats.com/internet-users-by-country/

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following close behind at a 16% growth. 322 All this points to the

rapid development of a techno-culture whose networks of

communication and exchange will increasingly transcend national

boundaries. More importantly, this global network will continue

to play an increasingly large role in shaping the socio-cultural

and political conceptions of its individual adherents. As Tok

Thompson puts it, “The ideal of the nation-state was already

cracking at the seams by the time of the Internet’s arrival,

which pushed globalizing, democratizing communications into

hyper-speed.”323

Not just in the Arab World, but across the globe,

governmental watchdog operations like WikiLeaks—now liberated by

the crypto-economy from any dependence on traditional State or

financial institutions—are challenging the hegemony of the

nation-state as a dominant social construct. As Bauman states,

“Citizens believe less and less that governments are capable of

delivering on their promises [,]” and are now, more than ever

before, being presented with the practical means of circumventing

322 http://www.internetlivestats.com/internet-users-by-country/323 Thompson. Pg. 49

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and subverting traditional institutional authorities.324

Political dissidents and malcontents can now find safe-harbor in

the temporary autonomous zones of the Deep Web, “beyond the reach

of [the State’s] instruments of political control—and there is

pretty little [the State] can do to stop this, let alone pre-empt

it, considering the amount of power left at its disposal.”325 In

the words of the late Mark Poster (Professor Emeritus of History,

Film and Media Studies at UC Irvine), “nation-states are losing

their cultural coherence by dint of planetary communications

systems.”326

Clearly then the crypto-economy factors in to a broader

cultural trend towards the decentralization of political

discourse and an ensuing wave of democratizing reforms; but we

must be supremely cautious of pre-maturely sounding the death-

knell of the nation-state (something which optimists like the

Electronic Frontier Foundation’s John Perry Barlow have been

over-eagerly declaring for decades).

324 Bauman & Bordoni. Pg. 21325 Bauman & Bordoni. Pg. 22326 Thompson. Pg. 53

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As Larry Diamond notes, while digital communications

technologies have opened up an exciting range of liberatory

possibilities, the same technologies have also been employed by

authoritarian regimes to identify and punish political dissent on

a historically unprecedented scale.327 In spite of the increasing

popularity of watchdog organizations like WikiLeaks, anonymity

networks like Tor and the untraceable economic arrangements made

possible by the crypto-economy, “The use of internet filtering

and surveillance by undemocratic regimes is becoming both more

widespread and more sophisticated…currently, more than three-

dozen states filter the Internet or completely deny their

citizens access.”328 Moreover, as the tumultuous aftermath of the

Arab Spring surely demonstrates, the stirring up of popular

protest by no means ensures substantive political reforms. Giving

voice to a healthy—if not somewhat disheartening—skepticism about

the efficacy of these digitally mediated social currents, David

Chaum states:

Look, I was doing this sort of stuff in [the 1970’s and80’s] when there were all kinds of cypherpunk types of folks with automatic weapons, who said they were ready

327 Diamond. Pg. 3-4328 Diamond. Pg. 14

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to blow stuff up and who felt they were operating outside of the control of the law, etcetera. But, even with this liberatory fantasy at heart, does any real social good come of that? I don’t think so…It’s like little kids building bombs or sending secret messages to their friends, I mean it’s kind of fun if you can get away with it, but if the adults wanted to stop you they could certainly stop you. Moreover they mostly serve to create a boogeyman, allowing the authorities to justify tactics of censorship and surveillance. If real [social] change derives from the rest of society being unable to stop it, than in fact [this presents a]false possibility, because they can stop it. So if the real change comes from the people becoming organized, than it’s also false because the effect is that dissidents reveal themselves and become targets.

Perhaps Chaum is right, after all, the real political

consequences of WikiLeaks and the Arab Spring have yet to be

fully determined; moreover, the radical crypto-anarchist and

libertarian end-games underlying the crypto-economy are

themselves far from realized—let alone vouchsafed. In truth then,

it is not at all unreasonable to be skeptical of the lasting

political efficacy of these related cultural formations—to be

skeptical of their ability to fully bring about an all-

encompassing Liquid Modern turn. One thing however remains

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undeniable; the fact of these cultural formations’ emergence in

the first place.

Might we then read these emerging phenomena as portents,

harbingers of a Liquid Modern future not yet fully come to pass?

I would argue that we can, even while maintaining an appropriate

degree of skepticism where their more radical political

articulations are concerned. Nowhere does this conviction hold

more true than with the crypto-economy itself. As we established

in the preceding sections of this study, the crypto-economy is

shot through by a perceptual schism; ideologically motivated

participants on one end (anarchists taking on the system!) and

more politically neutral participants on the other (those who see

cryptocurrency as a simply less-subject-to-political-whims kind

of money). Ironically, it may be the crypto-economy’s less

radical participants who will ultimately engender the

phenomenon’s lasting disruptive potential.

Changing the Financial System

At the Value Investors Conference in September of 2013,

Cameron Winklevoss (of Beijing Olympics and Facebook scandal

fame) famously declared that “Bitcoin is not money for the

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Internet; it’s the Internet of money.”329 This has become something of a

catch phrase for Bitcoin’s more ideologically mild-mannered

proponents. The enthusiasm and interest that well respected

investors like the Winklevoss twins have placed in cryptocurrency

has caught on with more forward thinking state governments, who

detect in the emerging technology not a political threat but a

possible “next-step” in the evolution of global finance.

Seeking to gain a foothold in what might be the next bull

market, the Canadian Senate recently held a conference on

cryptocurrencies, inviting a number of prominent Bitcoin

advocates to weigh in on a loose set of proposed regulations for

the digital currency. Among the invited speakers was Anton

Antonopoulos, an entrepreneur and Bitcoin investor whose book,

Mastering Bitcoin: Unlocking Digital Cryptocurrencies was released in December

of 2014.330 Addressing the Canadian Senate, Antonopoulos explained

that Bitcoin’s underlying block-chain technology has the

potential to radically disrupt the global financial system by

effectively transforming individual coinholders into their own

329 https://winklevosscapital.com/value-investors-congress-presentation/330 http://antonopoulos.com/

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banks and lending agencies.331 Because cryptocurrencies can be

used to transact payments of any size (ranging from fractions of

a cent to thousands of dollars), any willing coinholder might

engage in a dynamic, practical, and direct lending-relationship

with any other individual anywhere in the world; as Antonopoulos

explains:

[this] technology has the possibility of bringing economic inclusion to billions of people that do not have it today….it can empower billions of people aroundthe world in areas such as remittances, international finance, international credit, accessing liquidity, accessing loans, [etc.]. In the future national centralbanks may [even] utilize block chain technology to underpin national digital currency.332

At present, bitcoins can even be exchanged by way of SMS (or text

message), an ability that even a Sub-Saharan nomad’s Nokia 2140

(a mobile phone released in 1994) possesses.333 In short,

Antonopoulos envisions a radical overhaul in micro-finance that

will bring the distributed nature of the online crypto-economy

into the fore of global finance, radically altering the

circulation of global capital (and the existing social order with

it).

331 http://www.youtube.com/watch?v=xUNGFZDO8mM332 http://www.youtube.com/watch?v=xUNGFZDO8mM333 http://www.mobilephonehistory.co.uk/nokia/nokia_2140.php

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This vision represents an ironic divergence from Bitcoin’s

roots—after all, it was unregulated lending practices that lead

to the financial crisis of 2008 and the creation of

cryptocurrencies in the first place. Furthermore, Antonopoulos’

assertion about cryptocurrencies’ adaptability to centralized

banking systems seems a far cry from the technology’s political

heritage. Nevertheless, many participants in the cryptoeconomy,

including my informant Excelsior, relate Bitcoin back to State

institutions in a conscious effort to dispel a conception of the

currency as merely some kind of “wacky pirate money”:

In the long-term I think cryptocurrency is the next step in economic activity—it started with exchanging teeth, to metals, to paper, to credit—in view of the history of currency you tell me what sounds more absurd? In any event, some states are already taking itseriously; in particular, Germany is already investigating the long-term viability of Bitcoin. It’s the most functional national economy in the Eurozone, if their giving it due consideration, I think that’s anindication of its legitimacy, of where things will go from here.

Not all advocates for cryptocurrency put stock in the future

of Bitcoin itself, however. Addressing fears about Bitcoin’s

macro-level deflationary tendencies, commentators like the

blogger Kyle Drake (whose glib remark about street gangs appeared207

in the previous section as a forum post) note that the broader

crypto-economy functions like a classic marketplace of ideas,

where effective monetary recipes will eventually triumph over

defective ones; in other words, while Bitcoin may not survive the

long-haul, the larger category of cryptocurrencies will. 334 Drake

goes on to note yet another potentially disruptive quality of

cryptocurrencies, namely, that they can be encoded with economic

mechanisms that are all but impossible to simulate or enforce

with fiat currencies; mechanisms like demurrage:

If you must have money devalue to encourage spending, there is a solution: Demurrage. Demurrage makes it costmoney to hold onto money, it is significantly less damaging to economies than inflation and more predictable. Freicoin, a cryptocurrency in the early stages of development, perhaps improves upon the Bitcoin code by incorporating demurrage.335

It is difficult to imagine how an effective scheme of demurrage

might be set in place with fiat currencies without imposing some

kind of near-authoritarian system of centralized control. With

cryptocurrencies, such a system might be set in place

334 Drake, Kyle. "Bitcoin: The Cyberpunk Cryptocurrency." Bitcoin: The Cyberpunk Cryptocurrency. Web.

<http://www.slideshare.net/KyleDrake/bitcoin-the-cyberpunk-cryptocurrency>. Pg. 80-81335 Drake. Pg. 72-79

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cryptographically, while maintaining the fundamentally

decentralized and fully distributed nature of the crypto-economy

as it exists today.

Demurrage is just one example of the kinds of alternative

monetary recipes that can be experimented with through

cryptocurrencies, and there is no doubt that other, more novel

economic arrangements will be conceived of as the technology

matures. This gives commentators like Kyle Drake a sincere hope

for the future of the crypto-economy, where they assert there

will be, “numerous, competing designer cryptocurrencies, which

may stand to make our world a better, more stable, more

prosperous place.”336

Perhaps Antonopoulos and Drake are on to something. While

their visions of the function as well as the future of the

crypto-economy are far less politically charged than others we

have encountered, the reforms to global finance they see

cryptocurrencies as heralding nevertheless signal a Liquid Modern

chord. A near-future where individual actors have come to replace

financial institutions, where peers lend and trade and exchange

336 Drake. Pg. 80-81

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without regulatory oversight—all this appears to be a parallel

articulation of Bauman’s prediction of a “society of self-

reforming selves[,]” wherein the State has been reduced to a

severely restricted custodial position.337 And yet, if we were

right to remain skeptical of the crypto-economy’s ability to

depose the nation-state, than we must here too remain skeptical

of its ability to so dramatically disarm the institutional titans

of global finance. It is unlikely that traditional financial

institutions and the banking sector will be so easily—let alone

so fundamentally—reformed without a fight; a fight which in all

likelihood would ingloriously consign the fledgling crypto-

economy to the farthest corners of the Deep Web.

However, this is not to say that the crypto-economy and its

digital mediums of exchange will not have their place in the

economy of the near future. In fact, cryptocurrencies are already

making their way into the entrepreneurial mainstream. This

suggests that while the crypto-economy may not upset the

financial status quo (or redirect the flows of global capital) as

suddenly or as dramatically as Antonopoulos or Drake predict, it

337 Bauman. Pg. 508

210

will nevertheless certainly have a place in tomorrow’s markets.

As Excelsior told me, “You want to have foresight. For example,

Whiffies Pies on SE 12th and Hawthorne accepts Bitcoin—real

businesses are getting on board, that’s the kind of stability,

the kind of accessibility that I’m looking forward to.” (See Fig. O)

Fig. O: Whiffies Pies on SE 12th & Hawthorne, Portland, OR338

The Future of the Crypto-Economy

In fact, some half a dozen businesses in the Portland

metropolitan area currently accept bitcoins for goods or

services. As Joshua David notes, many small business owners are

attracted to cryptocurrencies’ ability to sidestep steep credit-

card fees, which take a few cents off of every transaction (while

these fees might appear to be negligible, they add up, seriously

338 http://s3-media3.fl.yelpcdn.com/bphoto/hQicIsT3fSbEtY6H0ZDqMQ/348s.jpg

211

cutting in to small businesses’ already limited profit

margins).339 When I asked the proprietor of Whiffies Pies why he

decided to start accepting payments in Bitcoin, he confirmed that

reduced fees were a major factor, but added:

Actually there’s a group of guys that comes around herepretty often, with like Bitcoin t-shirts and swag and everything. Anyways they started talking with me about it, and frankly we’re open to the idea of accepting allkinds of money, so it seemed like a reasonable thing todo.

That troupes of Bitcoin enthusiasts are making the rounds in SE

Portland trying to get businesses on board is a fairly eye-

opening reality. By all accounts these individuals are neither

revolutionaries nor high-stakes investors, they’re simply average

stakeholders in the crypto-economy who, like Excelsior, look

forward to seeing cryptocurrency become more accessible. When I

asked Tamerlane about the adoption of cryptocurrencies by brick

and mortar businesses, he stated that:

Businesses are starting to accept it, honestly, becausethere’s a market for it. There are people out there whobelieve in it and who engage in it and who are taking it more and more seriously every day. So if I’m a business owner, I’m going to want to open up every avenue for profit that I can…like, take for instance,

339 http://www.newyorker.com/magazine/2011/10/10/the-crypto-currency

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the Sacramento Kings, their arena has just started taking Bitcoin. So it might as well be legal tender and if there’s somebody out there who is willing to engage in that market then why not capitalize on it? Atleast that’s my personal view, I mean, I can’t speak for the Sacramento Kings [laughs] or for legitimate businesses, but yeah— I would say they’re investing in it just like anyone else who’s using bitcoins.

The Sacramento Kings aren’t alone in accepting Bitcoin. At

present a host of popular companies are open to payments in

cryptocurrency (Dell, Dish Network, Expedia, Etsy, OKCupid,

Reddit, and even Zappos, to name just a few).340

So is this how the crypto-economy factors in to the Liquid

Modern moment? No ringing death-knell of the nation-state, no

bombastic triumph over the junta of the market; but instead,

rosy-eyed hobbyists, penny-pinching food carts, a calculated

corporate embrace? For the present at least, maybe. But we must

remember that social change takes time; and even these

disenchanting realities may point us to an underlying tectonic

shift—the gradual slippage of a radical cultural formation into

the mainstream. While it might not sound like much, this kind of

engagement with the crypto-economy is (given our conceits to

340 http://www.panture.com/businesses-that-accept-bitcoin/

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skepticism) perhaps the most disruptive form of participation we

have viewed yet. By bringing the crypto-economy out of the

digital ether and into the peripheries of people’s everyday

lives, small business owners and Bitcoin enthusiasts are

effectively foisting the crypto-economy into the popular

imagination—paving the way for its future expansion. Even in this

seemingly ideologically inert context, the crypto-economy and its

mediums of exchange still maintain their political heritage—their

sensational narratives, their genealogies, their mythic-heroes—as

well as their underlying disruptive potential; their adoption

still signifies a very real break from traditional institutional

authorities.

A close friend recently told me an anecdote that well

summarizes the attitudes of the academy towards cryptocurrencies.

When Bitcoin was brought up in a discussion of radical political

economy, the professor literally laughed out loud, and perhaps

rightfully so. Were I a genuine crypto-anarchist, I would end

this study with some bold prediction of the inevitable Liquid

Modern breakdown of the State. I would note that the United

States’ first foreign conflict was waged against pirates off the

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Barbary Coast, a campaign which quelled three centuries of semi-

autonomous supranational corsair activity.341 I would go on to

suggest that the same conflict has been rekindled today, with

broad-sides and cannonades echoing through cyberspace. I would

state flat-out that that first campaign will serve as a mirror-

image of the last. But I am not an anarchist, crypto or otherwise,

or even a libertarian. These predictions, compelling as they may

be, are in all probability pipedreams. But it is the duty of the

anthropologist to pay particular attention to pipedreams, to pop

or counter-cultural flights of fancy. Far from laughing in the

face of this virtual phenomenon, I recognize something to be

taken seriously, a kind of cultural and psychic topography to be

inked onto the edges of the ethnographic map—I see a swell, a

tide, an attitudinal sea change carrying the ideological debris

of yesterday’s counter-culture side by side with the

transformative blueprints of tomorrow’s Liquid Modern mainstream.

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