The Bitcoin Moral Panic

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Avatar for dave_gutteridge
2 years ago

Bitcoin wastes two iPhone's worth of electronic garbage with every transaction, claims a new study. This is similar to the claims that Bitcoin wastes more energy than the state of Denmark first made a couple of years ago. And, of course, there are enough pundits to fill a terracotta army, who will talk about how Bitcoin is a Ponzi scheme, a casino, a vehicle for the rich to run pump and dump schemes to fleece the poor.

Within the Bitcoin and cryptocurrency communities, many were quick to point out that this latest study was backed by the Dutch central bank. Which feeds into pervasive narratives in the crypto space about how the traditional banking system is actively trying to suppress Bitcoin. It's about the only thing fans of various cryptocurrencies can agree on, when they aren't attacking each other. Many conspirophiles will have you believe this latest study is clearly part of a psy-ops campaign organized by the old world banking Illuminati to discredit Bitcoin by evoking people's rage against environmental irresponsibility.

What the conspirophiles tend to discount is how much humans are capable of coalescing around a shared perception, then acting on it with individual motivations. There doesn't need to be a cohesive group of people intentionally coordinating anything for there to be a general social push in one direction. All it takes is enough consensus that there's a problem, real or imagined, until it evolves into a moral panic.

Moral panics happen all the time, and come in many shapes. Probably the most exemplary moral panic was the "satanic panic" in the eighties. An idea took hold in society at large, mainly in the US, that there were networks of satanic cults engaged in frequent child sacrifices, sexual abuse, and just about any kind of reprehensible behavior you can think of. What makes this moral panic stand out from many others is that it was based on absolutely nothing. There were literally no satanic cults, it all started with the unfounded claims of one woman with paranoid delusions. But by the time society at large came to accept that there was literally nothing going on, people had gone to jail, and lives and reputations were ruined.

The "red scare" of the 1950s is another example. People believed that communists were everywhere in society, trying to undermine democracy. In this case, there was possibly some more credible foundation to kick start everyone's fears. There were, after all, whole nation states openly advocating for international communism. But, even still, there comes a point where people wondered, if there are as many communist agents as is being claimed, shouldn't they have easily taken over already?

The red scare was exposed as being just a witch hunt, and the term "witch hunt" comes from another famous moral panic, the Salem witch trials in the seventeenth century. The term "witch hunt" refers to when you make up targets for your crusade, just as the puritanical Christians of the time accused women of doing things they definitely weren't doing, labeling it "witchcraft", and then burning innocent women at the stake.

Moral panics are are largely cobbled together out of exaggerations that may or may not be based in truths, and sometimes accelerated by the self interests of people who can use them to their advantage. Accusing a political rival of being a communist in the 1950s, for example, might help reduce your competition, regardless of whether or not you actually think that person is a communist.

Still, even though there will always be people willing to ride any wave that can take them further, with no concern for the ethical implications, there is no conspiracy behind a moral panic. They just catch fire in the public sentiment, finding a home on the edge between how we think the world should be and our fears about what might threaten it.

With Bitcoin, it's true that it's unregulated and chaotic, it's exaggerated how much significance it has, and it plays into common fears about how the world of money is unfair, exploitative, and corrupt. Just about everybody outside of the top 1% feels they are poorer than they should be, and believe there are systematic reasons why they don't get fairer opportunities. General suspicions of social inequity are easily turned into outright rage when seeing people get wealthy off of something as ethereal and seemingly meaningless as Bitcoin.

And, on top of that, it's a whole new technology, which is almost always met with suspicion. While some people embrace new technologies with Utopian hopes of problems being solved, as many or more fear that if the world moves under their feet too much, then they will lose their place in it. For them, new technologies are generally dangerous. Televisions will ruin your eyesight and rot your brain. Video games are addictive and leech time from anything productive. Genetically modified foods will destroy your health. Bitcoin will destroy the environment while it steals from the poor and gives to the rich.

One of the core symptoms that you can use to determine that criticisms might be more about resistance to change is when they ignore how the world might already be suffering, just maybe not for the person being critical. It may be true that Bitcoin chews through hardware and energy at a rate that doesn't seem to be justifiable. But, where are our standards for measurement? Are we asking the same questions about the established monetary systems we take for granted?

How much energy is burned by the computer networks that underpin traditional banking? How much hardware and waste goes into everything that moves physical money around, from mints to armored vans to ATMs? Is it more or less than two iPhones per transaction? By how much? How much truly egregious exploitative labor, sometimes including children, goes into mining gold and other precious resources? I don't have the answers, but the point is not to make a comparison with Bitcoin to see which might be better or worse. The point is that the asymmetry of where questions are pointed reveals biases.

Like just about everything else in the world, Bitcoin could absolutely be made more environmentally sustainable. Both in terms of renewable energy to drive it, and the material infrastructure that underpins it. But, to me, that's merely an engineering objective, not a moral judgment. Every technology starts out largely wasteful and inefficient compared to what it becomes. Or at least, what it could become. We could have had electric cars from much earlier on, so we can't ignore the fact that a lot of inefficiency comes from human greed and mismanagement that should be challenged, it's not just a matter of sterile technical evolution.

Bitcoin is just a thing, an idea made manifest in engineering, like any other technology we have. Just as a hammer can be used to beat someone to death or build a house, what our technologies are for isn't inherent in the technologies themselves, it's in our collective choices about what opportunities those technologies represent.

Bitcoin was originally intended to remove middlemen who charge a toll for the simple act of two people buying and selling from each other. All Bitcoin is, or was supposed to be, is money without a government. Or, if you like, money without a bank. It replaces middlemen with middle-machines, who we can trust more because they have no opinions, and who will do the work of ensuring our transactions for way less than a human would charge. If I buy something from you on the internet, why can't I just send you money like I send an email, and have it all handled by computers for almost zero fees instead of having to give some bank or credit card company a percentage? Bitcoin, the idea if not the actual technology in its current abused state, is really that simple.

I doubt anyone would have a problem with that. If the general consensus was that Bitcoin was just about letting people do business online without banks, people would probably still think crunching through two iPhones per transaction is overly wasteful, but the criticism would likely be framed in terms of simple inefficiency, not moral bankruptcy.

But, somewhere along the way, Bitcoin started to become worth something, and that attracted the financial class who care way more about price than value. Their insatiable lust for profit invaded the cryptocurrency space, and then turned around and presented to the world their view on the technology as if theirs was the original intent all along. Their voice, fueled by the money and influence they brought into the space with them, became louder than the technocratic pioneers who wanted to solve largely mundane economic problems.

As a result, Bitcoin and crypto are seen the same way by both those on the outside who see nothing but criminal and cult-like behavior, and those on the inside who hope to see numbers go up and cash out, having made nothing for anyone in the process. One side might think it's bad, and one side might think it's good, but they're both orienting themselves around a shared perception, that crypto is essentially about profit for profit's sake.

The greed that follows the potential for big returns has overheated the crypto market, creating profits and losses that will continue to attract speculators who hope to earn for themselves by having accomplished nothing more than picking one number at the right time, and another number at a better time. This will in turn keep fueling the moral panic around Bitcoin, because anyone critical of it will be partly right that, in its current widest use case, all Bitcoin does is make "hodlers" three percent richer or poorer every second minute.

Most moral panics eventually fizzle out one way or the other. Bitcoin, and crypto in general, is likely to be the target of lingering, slow burning, moral panic so long as there are speculators making price the most prominent point of discussion. The markets may cool now and again, and the moral panic in response may cool with it, but with every advancement in adoption or utility, the price noise and the resentment of it, is likely to return.

Two iPhones of waste per transaction is stupidly wasteful, and deserving of criticism. Unfortunately, like most moral panics, the target of anger will be misplaced, and probably the attempted solutions too.

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Avatar for dave_gutteridge
2 years ago


Great article with many insights. Well written, too.

Thank you, Dave!

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2 years ago

I liked the article, but there are some exaggerated assumptions built in. Assuming conspiracy theory believers have little or no basis for their beliefs caught my eye, of course. This is a good example: "There were literally no satanic cults". I am sure you were basically correct that there was no significant basis for the moral panic about satanic cults. I believe taking it a step further to claim there were none is an exaggeration. I'd bet money there were and still are tiny unpopular satanic cults. I do not think they are sacrificing human children or making any significant real impact on society, but I am pretty sure we do have some crazy nut-jobs that want to pray to satan in the USA.

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2 years ago

The satanic panic phenomenon was well documented, investigated in court, and studied by academics after the fact. I'm not just speaking frivoulosuly about it, using my own assumptions. I've read a great deal, and I can say with reasonable confidence, there were no satanic cults. None. Nowhere to be found. If you believe that to be incorrect, show me evidence of one.

Note that the "Church of Satan" that is, for example, fighting abortion laws in Texas, is actually a secular group leveraging America's laws to make stands on legal and ethical issues. They use the name ironically.

The assumption that there "must be" is precisely the kind of thinking that creates conclusions without evidence.

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2 years ago

Maybe a bit anecdotal for you and too current to respond directly...

I did not look hard. The existence of groups of people thinking they are a satanic cult seems obvious to me. Like many of your attacks on people's difficult to prove beliefs, proving old cults existed might be tough. As usual, I am just barely rising to your bait to look for evidence of what is really common sense.

This one looks fake, lol. Seems like it might be legit tho...

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2 years ago

Asking for evidence is not an "attack." It's the foundation of rational discourse.

As for the links, for the first one, I can only access the abstract, so there's no way for me to know if it's talking about actual satanic cults, or teenagers using the imagery of satanic cults as a form of rebellion or acting out. That kind of thing is common, and no more legitimately "satanic" than a lot of heavy metal bands.

As for the second one, that specific document was a product of the very satanic panic that I reference in the article. Note it does not provide case study evidence, just a lot of general advice for law enforcement. It says a lot of "cult rituals will often involve..." but it never says, 'the cult of X in place Y did Z." It does mention Anton LeVay, who I recommend you look into to find out what "satanists" really get up to.

I'm sorry you feel "baited" by being asked for evidence. Please understand that I don't care if you produce it or not. Just that I won't be convinced to change my mind by anything other than verifiable facts.

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2 years ago

No, the asking for evidence is not the attack.

Check out my new article with a link to some evidence you might not dismiss all of...

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2 years ago

Unless I'm missing something, your article essentially just directs to the post that MobTwo frequently copies and pasts on Reddit, which lists all, or most of, the actions by Blockstream and BTC maximalists to push their agenda. I've seen it posted many times before.

Just about everything in MobTwo's list appears to be true and verifiable, at least as far as I've bothered to look deeper into it. Though, I think the one about the former spy working for Blockstream is an over reach. Just because someone formerly worked at a government agency does not mean they are forever an agent. Sometimes people just change jobs.

Other than that, yeah, Blockstream and BTC maximalists have engaged in hiring troll armies, they broke the Hong Kong agreement, and more.

But none of this is evidence of any conspiracy. Not only is Blockstream not acting at the behest of anyone else, they're largely open about everything they do, they just think of it differently. Everything that Bitcoin Cash supporters see as an attack, Blockstream sees as a necessary defense. Everything Bitcoin Cash supporters think is "crippling" BTC, Blockstream and BTC maxis think is just part of an obvious business model.

Everyone thinks they're the good guy in the story of their life.

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2 years ago

Good to hear you already knew about the evidence and just don't see the "big picture" the same way many do. Blockstream and most all corporations act at the behest of their shareholders/investors. If using dishonesty, censorship and immoral tactics makes them a good guy in their own mind, they are still not the good guy.

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2 years ago