Why I’m So Persistently Intrigued by Blockchain

After I changed jobs last September, I stopped doing a lot of digital activism. The break has been great, honestly. It’s hard to fight on NSA surveillance abuses, crackdowns on whistleblowers, and free speech violations for literally years at a time. It was in many ways easier to focus on strategy and the day-to-day challenges of keeping smart people happy in their jobs, coordinated in their work, and highly productive.

The one program area I kept in my docket was blockchain. I’ve published a bunch of different blog posts in the last few months exploring the collision of free expression and blockchain regulations:

Could Regulatory Backlash Entrench Facebook’s New Cryptocurrency Libra?

EFF and Open Rights Group Defend the Right to Publish Open Source Software to the UK Government

Why Outlawing Cryptocurrency Purchases by Americans is a Terrible Idea

Coin Center’s Report Explores Privacy Coins, Decentralized Exchanges, and the First Amendment

SEC’s Action Against Decentralized Exchange Raises Constitutional Questions

I also want to share a bit about why I’m interested in this issue, since my parents find it baffling.

My first job in consumer advocacy was at a scrappy but principled nonprofit called the Privacy Rights Clearinghouse. In addition to writing consumer guides about protecting  privacy and cataloguing data breaches by companies, we’d get questions from consumers who were struggling with privacy issues. People could literally call us up on the phone and say, “I’m having this horrible privacy problem, do you have any suggestions?” We’d point them to our guides, or to other nonprofits working in the space, or sometimes we’d explain how to file a complaint with the appropriate regulatory agency. A lot of the time, we’d just tell them how to find an attorney, or ask them if they’d be interested in talking to the press.

I remember one individual I spoke to called me after his Paypal account had been frozen, and he hadn’t been able to access the funds he had in there. I did some research at the time, and found scores of other consumers complaining about the same thing. That was the first in a long line of consumer complaints I heard about banks and Paypal, and most often accounts were frozen due to some sort of identity or privacy issues. The message from Paypal was, give us more of your personal data and we’ll let you have your money back. It had this vague feeling of privacy blackmail, not the least because Paypal was happy to let people set up accounts and use the service for a while before demanding more identification.

And then one of my projects, the Chelsea Manning Support Network, had our PayPal account frozen. I had channels to Paypal so I felt fairly confident we’d get it resolved, but multiple conference calls with representatives of Paypal didn’t get us anywhere. Paypal was pretty vague about its reasoning for freezing our accounts, but at least one person I spoke with mentioned Know Your Customer requirements. The Network had been using PayPal to process donations from the beginning, so why freeze the account then? And while most of our donations weren’t processed through PayPal, almost all of our international donors used PayPal. We’d be cutting off basically all our international supporters.

Plus, I worried that PayPal was just the beginning. If it’s PayPal this week, what’s to stop Visa and MasterCard from shutting us down next week?

I think a lot lately about the costs of opposing the government. Chelsea Manning is the obvious example but there are many others. Covering the costs of her initial trial was an enormous, multi-year fundraising endeavor. Adding in the cost of her appeal? It was impossible to raise that much money, especially when she wasn’t in the news as much. And now she’s facing contempt of court charges with hundreds of thousands of dollars in fines unless she’s willing to testify against Wikileaks.  I have no idea how the community will be able to raise that much money,

And she’s far from the only one. There are several handfuls of whistleblowers I know now who not only suffered in their careers and had their names dragged through the mud for trying to oppose government abuses of power, but who also had to shoulder years of costly court battles.

The Chelsea Manning Support Network was good at getting in the news, and so that’s what we did. We put out a press release, several reporters snagged the story, and PayPal started getting called for quotes. Within a day, Paypal had unfrozen (thawed?) our account and full functionality was restored. We never did give them any additional access to our accounts or more data on us. It was just public pressure.

But most people who have an account frozen with Paypal can’t put out a press release and get a bunch of news coverage.

After that, I paid attention to stories of people who had bank accounts closed or frozen, or who weren’t allowed to open accounts at all. I documented some of those for EFF, and others I just took notes on with a vague sense that one day I might have time to write a longer research paper on the issue. I also got more interested in blockchain.

There are a lot of things blockchain is not good for. Critics are constantly pointing out all the ways blockchain sucks at doing various things—which is true, it’s remarkably inefficient for a lot of stuff. But it’s permissionless and it’s hard to censor, which means the base technology (if not the many applications on top of it) doesn’t have the Paypal problem.

And the more I got interested in blockchain issues, the more I started recognizing a lot of other digital rights issues. Just like the Clinton Administration tried to ban encryption, there are regulators today toying with whether to ban publications of open source software in an attempt to stop blockchain innovation. Some regulators are scared of privacy coins (digital tokens that have a lot of the privacy-preserving attributes we already have with cash), while other are trying to impose Know Your Customer standards on blockchain projects.

All of which has made me think more about our financial institutions, about the policies companies like Visa and PayPal get to set and the long term implications for the rest of us.

I have increasingly thought that we need a fundamental shift in the power imbalances of our financial institutions. I’ve wondered about a regulatory response, and in some ways I think that’s the purest and simplest solution: everyone should have a legal right to a bank account; transactions shouldn’t be censored by a payment provider any more than the water company should deny water to people it doesn’t like; we need reform of the credit reporting system so people can bounce back from histories of bad credit more quickly; and we’d need real privacy around our financial transactions, because they’re incredibly sensitive and revealing. That includes high standards for when the government wants to snoop through our bank transactions.

But the relationship between the government and the financial institutions that are benefiting from the current system is so cozy, and the literal cost of effectively lobbying in DC is so absurd, that my pragmatic side is skeptical that real legal safeguards will be put into place in my lifetime.

Which is why I always end up mulling on blockchain. Not because it’ll fix everything, but because there’s a sliver of a chance that some version of this technology might be a lever to start righting fundamental injustices in our current financial system.

Image by Pete Linforth from Pixabay