David Golumbia
Virginia Commonwealth University
February 2020
Blockchain: The White Man’s Burden
Transcript of talk delivered at The White West: Automating Apartheid III, Kunsthalle Wien,
February 14, 2020.
It is conventional to begin any work on blockchain by explaining “what blockchain
is,” in which one repeats the same advertising slogans that have been stated
endlessly by digital evangelists. There is every reason to wonder about the
functions of this rhetorical form, so I’m going to try to keep this as brief as
possible, and to focus in particular on facts that the sloganeers rarely include in
their catechisms.
A “blockchain” is a software model used to track the storage of data not itself
directly located on the blockchain—the simplest description usually given is that of
a “ledger,” meaning an accounting record of transitions. Blockchains require each
machine that is truly participating in them to run and host essentially the entirety of
the ledger. Each machine running the blockchain participates in verification
operations to ensure that new transactions are authentic before they can be
recorded in the ledger. Periodically, machines running these operations are
rewarded with tokens, which are essentially just incremented numbers, also
recorded in the ledger of transactions.
Blockchains were invented because of those tokens, which are conventionally
given the misleading name “cryptocurrencies.” That name was given to them as a
result of a decades-long effort by encryption enthusiasts known as “crypto-
anarchists” and “cypherpunks,” overwhelmingly associated with the political far
right, who were desperate to develop a payment system that would be outside of
legal oversight by what they crudely refer to as “the state,” in no small part to fund
organized crime activities that they insist should be outside of governmental
control altogether. Crypto-anarchists rely on theories developed by self-identified
economists who take the Chicago School as the left edge and move farther right
from there. At the limits of this discourse, favored by many of the most persistent
blockchain promoters, economic theory itself starts to blur into a verbal
phantasmagoria that bears many of the hallmarks of fascist rhetoric in its
characteristic rejection of reality testing.
What the blockchain promoters don’t want to tell you is that they now have
voluminous and incontestable evidence that their “theories,” in so far as they are
really deserving that name, are wrong. They don’t want you to know that Bitcoin is
by far not the only cryptocurrency, but that reliable trackers indicate that there
have been somewhere between 1 and 2 thousand such tokens created over the past
decade, most of them with far fewer tokens in circulation than Bitcoin has, and that
nearly all of them, no matter how limited the number, have the same value: 0.
Scarcity has nothing to do with the persistence of value.
What they don’t want to tell you is that all the trading markets in cryptocurrency
are so dominated by scams and frauds that it is hard to locate any significant
volume of organic trading in them at all. In fact, “scams and frauds” is a good
word to substitute when people mention blockchain. This shouldn’t be a surprise,
because in democracies, the “state control” Bitcoin inventors hate so much really
exists, or existed until very recently, especially in highly regulated trading markets,
to push back against fraud and gaming the system. Bitcoin helps to prove that
when you eliminate democratic oversight, fraud rushes in, especially when most
economic transactions are still conducted by actors who have reason to value the
adherence to rules that regulated systems supply. Here we start to see one of the
contradictions at the heart of all these practices; blockchain claims to be structured
around “trust” and “verification,” because of the distributed mechanisms built in to
verify transactions, but these are confined entirely to technological considerations.
Once blockchain systems interact with the world outside of the blockchain itself,
which is coyly known in the blockchain universe as “the oracle problem” and is in
most cases unsolvable, they become riddled with fraud—fraud that promoters
insist is somehow incidental to the software.
Blockchain promoters also don’t want to explain that there are essentially only two
blockchains that actually function today: the Bitcoin blockchain and the Ethereum
blockchain. The reason is simple: blockchains are incredibly energy-intensive:
indeed, it’s reasonable to argue, as blockchain critics like David Gerard do, that the
whole point of the blockchain architecture is to waste as much energy as possible
to authenticate transactions, thus making it extremely costly for another actor to try
to fool the system. For this reason the system needs to incentivize people to run it,
and most of the independent blockchains produce tokens that nobody wants or
cares about, or that can very easily be traded for Bitcoin or Ethereum tokens.
Blockchain promoters want to tell you that Ethereum is different from Bitcoin,
because the Ethereum software comes with a pseudo-programming language that
enables a kind of transaction promoters call a “smart contract.” They call it that,
but they don’t want you to know that a “smart contract” has very little in common
with a regular contract, and is in fact so useless that very few of them have ever
been used for anything relevant to any ordinary person. In fact, one of the only
reasons Ethereum still exists is that the system spits out tokens that have at times
been the objects of intense financial speculation, but that are no less conditioned by
fraud than the rest of the cryptocurrency universe.
Ethereum enables people to use the so-called smart contract feature to set up what
look something like corporations, or what they call in their overblown rhetoric
“Decentralized Autonomous Organizations,” which come with spinoff
cryptocurrencies that “investors” are encouraged to buy. For a while these were
called “Initial Coin Offerings” or “ICOs,” modeled after “Initial Public Offerings”
of stock. Unlike IPOs, however, the purchaser of an ICO was granted no
ownership stake whatsoever in the underlying “company”—instead they were
offered a pure speculative bet on the value of the token, which might or might not
be correlated with the company’s success the way the price of the shares of stock
of an IPO is. If a company had a “real” business plan with some hope of paying a
return on its investment, then it might as well work through the more cumbersome
processes of venture capital and taking its stock public. If a company wanted to
grant ownership stakes via tokens, it would be offering an IPO, and thus would be
subject in the US and Europe to laws that the whole point of blockchain is to
bypass. So “companies” that chose the ICO route were, unsurprisingly, nearly all
frauds. Nearly all ICOs collapsed almost instantly, and nearly all are today under
investigation or have been assessed criminal penalties.
The Bitcoin blockchain, the Ethereum blockchain, and the cryptocurrencies
produced by them still exist, but in every way the whole cryptocurrency project
seems to be waning. That is partly due to the retrenchment of Bitcoin’s trading
price, and the subsequent exposure by the financial press that cryptocurrency
trading recreates all of the phenomena that modern financial markets were
designed to prohibit: coordinated fraudulent trading, massive hoarding by single
actors who pretend to be multiple entities, actual fraudulent tokens, a financial
press that is dominated by market participants who fail to disclose their direct
interest in the commodities they trade, and more. The energy wasted by
blockchains is significant enough that countries are starting to limit the amount of
power used by the systems. The whole thing appears to be a house of cards, and
regulators the world over are starting to catch on and to put enough pressure on the
scam-filled trading markets that, among many other factors, most ordinary people
know that Bitcoin is too inherently volatile, and too unanchored to anything but its
own power consumption, for rational people to use as an investment.
This has led blockchain promoters to somewhat desperate measures. In part, they
build on existing themes I haven’t talked about yet. One of the most prominent and
also most troubling features of blockchain discourse is the remarkable emphasis its
promoters place on the technology being “good for us”: “blockchain for social
good” is a remarkably widespread formation. This advertisement subtly puts the
cart before the horse: even as it seems to be finding “good” uses for blockchain, it
tacitly assumes that blockchain is an inherent good, or has inherently good
properties, and then projects these properties out into a situation that blockchain
promoters depict as “bad.” As with so many projects involving what Evgeny
Morozov rightly calls “technological solutionism,” these initiatives almost never
entail actual knowledge of, let alone expertise in, the conditions that promoters
think are “bad.” Rather, they take up old, hackneyed, and typically disproven
stereotypes of the way the world is, especially the parts of the world that the
typically well-off if not wealthy technological solutionists think the world is, or
should be.
Because blockchain is essentially garbage, its functions in neocolonial discourse
are both especially interesting and not immediately amenable to easy analysis.
Blockchain has virtually no success to point to; any empirical testing would
quickly show that ordinary folks are even more likely to lose money than to make
it by investing in cryptocurrency. They are even likely to lose money in purchasing
the equipment and power necessary to generate tokens on their own, so that very
few individuals even engage in this activity any more, despite its being at the heart
of the blockchain story. So rather than any number of lucrative “development”
efforts undertaken by both international corporations and humanitarian NGOs,
blockchain’s promises are evidently empty signifiers. This is not to say that
promises of riches due to natural resource exploitation are fully saturated
signifiers, but it is notable that Shell Oil and the exploiters of coltan and other
materials for the tech industry can make far more concrete offers of ongoing
capital production than can a blockchain startup. Blockchain startups essentially
offer relatively modest sums of venture capital, and aggressive, bullying promises
which lack practical examples for support.
Some of those promises include: producing currency; replacing existing currency;
serving as a “safe haven” currency for countries experiencing financial trouble;
replacing central banking; providing “immutable” records of property ownership;
providing uniquely unforgeable identifiers of persons or anything else; securing
digital interactions so that they are more trustworthy; providing cheap remittance
services for international money transfers; “banking the unbanked,” one of
blockchain’s most absurd and offensive claims, one key to the political project
called Libra recently mooted by Facebook in an effort to bully democracies away
from regulating its assaults on our political systems; and supplanting systems that
are touched by widespread fraud with ones that are much less easy, to say nothing
of impossible, to defraud. To be sure, you can find tens of thousands of stories on
the web claiming that blockchain does all of these things: but once you read the
stories carefully, you’ll find that you are always reading descriptions of “pilot
projects,” or entirely speculative projections of what “could” be, or small running
pieces of technology that use only a part of what we call “blockchain technology”
but are crucially not running on a public blockchain network that anyone can join.
They also typically fail to closely examine existing methods for providing the
services in question, which typically are far more robust, reliable, and energy
efficient than the blockchain “solutions” promoters advertise.
These continual promises for things that cannot be delivered opens up avenues for
pure speculation of the theoretical, not financial sort. For we are all too familiar
with a “technology”—or what might be better described as a kind of poiesis or
creative making—that is empty, fraudulent, and yet advertised as incredibly
desirable, productive, unassailable. That is of course whiteness. Both blockchain
and whiteness tell the world that they are incredibly necessary; that no matter how
wasteful they may appear by any objective measurement, in fact it is we and not it
that are wasteful; that critical attention drawn to it must be directed back at the
critic; that it has a more direct an authentic connection to “real” property than the
ordinary property relations with which we are familiar; that it has an urgent and
direct connection to human right that trumps what the rest of us think rights are;
that any attempt to reasonably adjudicate between its claims for itself and the
claims of what are apparently similar qualities in other makings (that is, claims
about “human beings” made about whites vs nonwhites, and claims about data
storage technologies made about blockchain vs databases, spreadsheets, and other
far more useful, widespread, and effective digital storage techniques).
Consider the pattern: critics point out that blockchain is designed to waste energy
in order to “verify” transactions; blockchain advocates respond by claiming that
blockchain is necessary for “social good” and that therefore no matter how much
energy is wasted by it by design, society is obligated to pay that tax because of
blockchain’s beneficence. The cryptocurrency world is full of scams and ripoffs:
blockchain advocates respond by claiming that critics are actually hurting the
world’s poorest people, because blockchain is actually good for them and so
criticism will deny them this necessary and beneficent gift. Never mind that the
only people blockchain seems to help are the most vicious and dishonest capitalists
one can imagine: we are supposed to believe that their intention to scam the
poorest people in the world out of the meager amount of resources they do have is
for their own good.
One of the more disturbing parts of recent blockchain advocacy is the offshoring of
blockchain activity to countries that have been chosen precisely because of their
inability to conduct proper oversight of financial transactions. Probably the bestknown of these is one in Puerto Rico, about which Jillian Crandall writes:
Two months after Hurricane Marıa, Brock Pierce (widely acknowledged as
the spearhead of the Puertopians) said, “I’m working on building kind of a
city. […] I’m moving there with a bunch of my friends” (2017). He believes
their aims are altruistic. Pierce says, “when you experience great loss, it
creates an opportunity to upgrade […] because you’ve basically lost
everything, so you have to start over. And when you start over from scratch
you would do it very differently than if you have this big thing that has been
building on top of itself for ages and ages” (2017). Although Pierce and his
supporters see Puerto Rico as a blank-slate, Puerto Rico is not starting over
from scratch. The “big thing” that has been building on top of itself is serial
colonialism, which has dominated the archipelago for over 500 years – first
from the Spanish, then from United States, and perhaps now with cryptocolonialism. (Crandall 2019, 287)
While Pierce claims his motives are altruistic, when Puerto Ricans turned out to
protest these efforts—in no small part because Puerto Rico was and remains
desperate for energy and blockchain projects waste huge amounts of it—Pierce and
other promoters dismissed the protests as based on misunderstandings of the good
they were intending for the hapless residents. Crandall quotes another of the socalled Puertopians: “This isn’t about going down there to make money, although
that’s always a primary focus to establishing a foundation and keeping things
going for the long-term. It is more so about the spreading of a new religion […] the
religion of peace, of economy, of all things that are beauty and all things that we
want for this world” (Crandall 2019, 287).
It isn’t merely that these projects are misguided and ignorant reiterations of
colonial gestures; they are also larded with the libertarian lust for self-interest
disguised by vague altruism that characterizes the whole cryptocurrency discourse.
While the blockchain startups Pierce and others advocate for seem intended to
poach resources from Puerto Ricans in fairly straightforward fashion, they go
hand-in-hand with a possibly more nefarious form of scam, in which the promise
of economic progress is coupled to a demand that the already limited ability of the
developing country to regulate fraudulent economic activity be relaxed entirely.
Thus, Crandall goes on,
other crypto-proponents have found a way to form a right-libertarian enclave
via the Security Token Offering (STO). The STO combines typical venture
capital with cryptocurrency to create a “tokenized venture capital fund” tied
to real assets, such as ownership rights in a new company, or real-estate
(Ortiz 2018). … In true “crypto” style, their sought-after properties
(including key pieces of real estate – a headquarters, office buildings,
apartments) are distributed throughout Old San Juan to extract rent and do
business. …
Blockchains at times act as “gated platforms for payment, accounting, and
exchange” (Nelms et al 2018). Although there are no physical walls gating
the crypto-utopia in San Juan, there are digital walls and gates that keep
anyone out unless they are high net-worth “accredited investors” (according
to the VSJ Re-Fund Token Sale Agreement 2018), and on the inside in the
“blockchain space.” This is similar to the process of redlining and
gatekeeping loans and mortgages, yet different because the STO does not
require the intentional coordination of banks and governments – rather,
investors can do it via exclusive digital frameworks. (Crandall 2019, 288)
Yet these schemes exist because blockchain promoters have taken advantage of a
loophole in Puerto Rico’s economic development laws that are supposed to “offer
tax incentives for new residents and businesses coming in from outside of Puerto
Rico” (Crandall 2019, 283). In other words, Puertopians are being paid by the
Puerto Rican government to run businesses and conduct transactions that are best
understood as entirely fraudulent (in addition to Crandall, see also Watlington
2019, Yarovaya and Lucey 2018).
This scenario is being replicated elsewhere in the world. In New Zealand,
Papua New Guinea, and Fiji, to name some of the better-documented examples,
blockchain promoters have demanded governments create “special economic
zones” for their activities. Of course, Special Economic Zones already exist as a
part of the neoliberal world order, and they are often deeply exploitative; but a
blockchain Special Economic Zone is a special thing indeed, for it functions as a
kind of tax and regulatory haven to bypass scrutiny of transactions that are largely
being conducted elsewhere. Think of it as a bit like offshore gaming, with the
added benefit that it is not regulated as such, and is advertised not as a recognized
“entertainment” industry but as an ethical and economic boon to the very people
whose own assets are being stripped by the activity. One of the main proponents of
these Special Economic Zones is a man named Tim Draper, a major Silicon Valley
venture capitalist who owns huge amounts of Bitcoin, while predicting that its
price will explode in value very soon, in just the sort of speculation that he is
constrained from making in quite such naked form with regard to ordinary trading
instruments (see Jutel 2019 for more on blockchain in the Pacific). Draper is the
same man who advocates for California to secede from the US by splitting into six
(or more recently, three) separate states, and was an early investor in the fraudulent
medical device company Theranos, a company that almost everyone is now
convinced never had any hope of delivering the product it promised, because the
promises were physically impossible: Draper is one of the few people around who
still insists, despite SEC rulings and criminal indictments, that Theranos was not
fraudulent to the core.
Most of us in the west probably know that the phrase “the white man’s burden”
comes to us from a poem by the British writer Rudyard Kipling. Kipling spent
much of his life living in and other parts writing about India, and this may lead
those of us less familiar with the literary background to presume that the poem is
about the duty of the British to colonize and educate Indians. While this probably
does form some of the background of the poem, its subtitle reveals a different
focus: “The White Man’s Burden: The United States and the Philippine Islands,”
and as Patrick Brantlinger puts it, “Kipling’s aim was to encourage the American
government to take over the Philippines, one of the territorial prizes of the
Spanish-American War, and rule it with the same energy, honor, and beneficence
that, he believed, characterized British rule over the nonwhite populations of India
and Africa” (Brantlinger 2007, 172). Yet our divergent national histories entail
certain differences in the imperial project seen from across the North Atlantic. The
British could claim, however hypocritically, to be gracing its imperial others with
the benefits of centuries of “civilization”; the US, on the other hand, saw itself
constantly rebuked as an uncivilized upstart, and for historical reasons had been
reluctant to engage in colonization projects beyond what it perceived as its
legitimate territorial boundaries. Kipling’s plea to Americans, then, has been taken
to emphasize an abstract whiteness as the justification for imperialism, but just as
much the advances in industrialization and technology that were coming more and
more to characterize the US in the minds of the West.
The historian of technology Michael Adas has focused specifically on US
adventurism in the Philippines as a site where technology supplants cultural history
and religion as prime justifications for imperialism. While “the Americans' wellpublicized intent was to prepare the Filipinos for self-rule” (Adas 2006, 407), “the
preparation of the Filipinos for independence was never seen in purely political
terms.” Instead, “perhaps more than in any other colony, the role of the engineer as
civilizer was touted by politicians in Washington and officials in the Philippines.”
Adas offers as an example the “impatient businessman turned colonial
administrator W. Cameron Forbes”: “As he saw it, the Filipinos could not get
enough of the new technology that colonization made available to the islands.”
Adas is largely talking about technologies related to transportation and
construction, although he notes that “modernization” of legal codes and “currency”
were also important to technological imperialism. The example of blockchain
suggests another dimension to technological imperialism that the evident utility of
railroads and irrigation systems may obscure. For blockchain, despite the amazing
hype associated with it, appears to benefit nobody but the colonizer, and whatever
subordinates the blockchain imperialist has to pay off to get his way. The real
“benefit” blockchain provides is something like whiteness, with all its attendant
fictions and contradictions: whiteness is a technology that cannot deliver, or can
only deliver a lack, a lack that too frequently erupts into fascism on the domestic
front, and colonialism elsewhere (Seshadri-Crooks 2000). In both cases, it has
nothing to offer but the disparagement of the non-white and the exaltation of the
white, on grounds that it knows only too well it cannot actually provide. In this
small way, then, blockchain may help to illuminate something that may be less
clear in other imperialist projects: that even when what imperialism delivers
include material benefits to its subjects, its most important deliverables may be
neither economic nor practical in nature, but rather cultural and political: the power
of the message that what is “possessed by” or even characteristic of colonized
peoples may in fact be owed as the wages of whiteness, that one of the core
properties of whiteness is its ability to convince everyone, whites and non-whites
alike, that non-whites owe themselves to whites (this may provide a way of joining
the psychoanalytic analyses of Seshadri-Crooks to the important critique of
whiteness as property in Harris 1993). Whether it is whites on the homefront, or
nonwhites in the periphery, who subscribe to this belief, the results are arguably no
less destructive.
Works Cited
•
Adas, Michael. 2006. Dominance by Design: Technological Imperatives and America’s
Civilizing Mission. Cambridge, MA: Harvard University Press.
•
Brantlinger, Patrick. 2007. “Kipling’s ‘The White Man’s Burden’ and Its Afterlives.”
English Literature in Transition, 1880-1920 50:2. 172-191.
•
Crandall, Jillian. 2019. “Blockchains and the ‘Chains of Empire’: Contextualizing
Blockchain, Cryptocurrency, and Neoliberalism in Puerto Rico.” Design and Culture
11:3. 279-300.
•
Harris, Cheryl L. 1993. “Whiteness as Property.” Harvard Law Review 106:8. 17071791.
•
Jutel, Olivier. 2019. “The Blockchain, Imperialism, and Techno-Solutionist Discourse.”
Draft paper.
•
Seshadri-Crooks, Kalpana. 2000. Desiring Whiteness: A Lacanian Analysis of Race. New
York: Routledge.
•
Watlington, Chloe. 2019. “Tales from the Cryptos: Blockchain Visionaries and Old
Colonial Scams in Puerto Rico.” The Baffler 43 (Jan).
•
Yarovaya, Larisa, and Brian Lucey. 2018. “Bitcoin Rich Kids in Puerto Rico: Crypto
Utopia or Crypto-Colonialism?” The Conversation (Feb 14).