The maddest and most poetic experiment of the 2017 bull run was seeding Venezuela with cryptocurrency, expecting it would topple the government.
At the time, the Venezuelan state was teetering, squeezed by embargoes, falling oil prices, hyperinflation and hunger. The hope was that a massive airdrop would cause an alternative economy based on bitcoin (or dash) to spring to life, similar to attempts during World War II to debase enemy money by flooding countries with counterfeit currency.
James McGirk is a writer and researcher for the Smart Contract Research Forum. For more of McGirk’s work, check out his Substack at OurCyperpunkNow.Substack.com.
Without the power to control its own currency, the Maduro regime would be edged out of power. If the scheme worked, the thinking went, other authoritarian regimes could be toppled until the entire world was living in an economically self-determined society: a libertarian rapture.
Alas, after three years, an abortive guerilla campaign led by a lone American Green Beret and a failed international effort to prop up an opposition leader, life on the ground in Venezuela hasn’t changed much.
This is not to say that bitcoin hasn’t made a difference in the lives of many Venezuelans. Rather, it has underscored what the limitations are of any currency.
In February 2019, economist Carlos Hernández wrote an op-ed for the New York Times describing “How bitcoin has saved my family’s life.” For Hernández, bitcoin was a vital hedge against runaway inflation. To use it, he looked for someone willing to trade Venezuelan bolivars for a sliver of bitcoin on peer-to-peer trading sites like Localbitcoins.com.
Bitcoin was like a bar of gold buried in the yard. It was a store of value, but value alone wasn’t enough to prise off the government’s absolute control over banks, the food supply or telecommunications. If it wanted to, Hernández notes, the Venezuelan government could begin monitoring crypto transactions and crack down hard.
Hernández describes how bitcoin helped his brother to escape from Venezuela. His brother earned crypto doing freelance graphic design work online, and used a memorized key to keep his funds safe as he made his way through the most desperate parts of Venezuela and over the border into Colombia. What bitcoin couldn’t do was find him a job once he arrived. He eventually returned to his family.
The most ambitious and sensible of the Save Venezuela projects was Jonathan Wheeler and Morgan Crena’s Pale Blue Foundation, which planned to airdrop billions worth of bitcoin on Venezuela in 2018. But rather than trying to spring the cryptocurrency on the country (or literally airdrop paper wallets like one dubious effort) they worked with organizations like LocalBitcoins to target their goodwill.
The project faltered, and seems to have pivoted to creating software to make it easier for people like Carlos Hernández to use cryptocurrency or communicate without being detected. (Pale Blue didn’t return my messages before publication.)
There are still exciting utopian blockchain projects in the works. The TAJI Project hopes to forge a Pan-African renaissance by building a series of private cities interconnected by an open blockchain network to foster liberal economics. Citizens would have the ability to issue tokens to fund any of their creative or entrepreneurial desires.
But TAJI is relying on more than just blockchain magic to sparkle to life. There’s real real estate. They’ve partnered with a Zambian chief who has provided a 200,000 acre land concession, and their outside advisors include Vitalik Buterin. Other charitable blockchain organizations have also moved beyond the idea of airdropping and donations.
See also: Jonathan Beller: How We Short Capitalism – And Finance the Revolution
GrassRootsEconomics.org, for example, is working on “community inclusion currencies.” These token systems could replace a local currency in an emergency by keeping local economies moving and creating a smartphone-based distribution hub for international organizations, allowing charities to keep track of funds.
It’s a much more sensible approach because, rather than uprooting and replacing existing aid agencies and charitable networks, they’re plugging in and facilitating their existing work.
Bitcoin is on the rise again, trampling all-time highs and altcoins seem to be coiling up for another leap, but this bull run seems more subdued. We aren’t toppling governments this time. Perhaps this is a sign that blockchain technology is starting to mature.