A sceptic’s guide to crypto: the church of bitcoin

This is an audio transcript of the Tech Tonic podcast: A sceptic’s guide to crypto: the church of bitcoin

Jemima Kelly
Hi. I’m Jemima Kelly, your guide on this journey through the fantastical kingdom of crypto land. And I have a question for you. What’s the difference between believing in crypto and joining a cult?

Amanda Montell
Crypto seems to me like the monetary equivalent of the Heaven’s Gate spacecraft that was supposed to transport all those followers to the Kingdom of Heaven.

Aviv Milner
When people engage in crypto, it is not the way that they engage in any other hobby. The beliefs in crypto are quite extreme and very absurd.

Nic Carter
At this point it’s like bordering on denying reality.

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Jemima Kelly
This is Tech Tonic from the Financial Times. And in this series I’ve been asking why people believe in a future for cryptocurrencies and the blockchain. For many people, crypto is simply all about making money. Getting rich quick by betting on the crypto markets or shilling the tokens they say will power their latest blockchain-flavoured invention. But it didn’t start quite that way. And for many people, crypto and in particular bitcoin, is about much more than that. You see, bitcoin is an ideology, a quasi-religion that cast the development of this cryptocurrency as a history-changing event. You might remember bitcoin super gambler Michael Saylor in episode one, telling us that bitcoin is an instrument of economic empowerment for the world, a tool for freedom and truth and justice. That’s the thing about bitcoin. It’s a belief system with its own commandments and taboos. So what do bitcoin evangelists believe in? And why do they believe it? This is episode four: The church of bitcoin.

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Jemima Kelly
To understand just how big a part mythology and an almost religious fervour play in bitcoin, let me start by telling you its origin story. It starts on the 31st of October 2008, Halloween. The world is in the grips of a crippling financial crisis. People are rethinking the whole financial and economic system, and the greedy bankers are the lowest of the low. And then someone calling themselves Satoshi Nakamoto sends out an email.

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Satoshi Nakamoto
I’ve been working on a new electronic cash system that’s fully peer-to-peer with no trusted third party.

Jemima Kelly
The email lands with subscribers of the cryptography mailing list, an email group made up of a few dozen researchers and enthusiasts who are interested in some of the geekier aspects of the world of cryptography. The message was brief and matter-of-fact, a short description and a link to a PDF file. The file outlined an electronic cash system that Satoshi Nakamoto called bitcoin.

Satoshi Nakamoto
A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without the burdens of going through a financial institution.

Jemima Kelly
This wasn’t the first attempt at creating a decentralised digital currency and initially the idea didn’t get much traction. But over the next two years, Satoshi Nakamoto kept developing bitcoin, releasing updates to the protocol, replying to emails on the mailing list and posting on message boards. Usually there were questions about bugs or potential problems with how the system worked, fixes to the coding, that kind of thing. And occasionally there would be discussions over the value of creating bitcoin in the first place.

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You will not find a solution to political problems in cryptography.

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Yes, but we can win a major battle in the arms race and gain a new territory of freedom for several years.

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The real trick will be to get people to actually value the bitcoins so that they become currency.

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I would be surprised if ten years from now we’re not using electronic currency in some way.

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If enough people think the same way, that becomes a self-fulfilling prophecy.

Jemima Kelly
But later, as bitcoin began to catch on, Satoshi had to worry about how to present the concept of bitcoin to the wider world.

Satoshi Nakamoto
Sorry to be a wet blanket. Writing a description for this thing for general audiences is bloody hard. There is nothing to relate it to.

Jemima Kelly
Satoshi even had to worry about marketing issues like how to make Bitcoin look like a legitimate currency.

Satoshi Nakamoto
How does everyone feel about the B symbol with the two lines through the outside? Can we live with that as our logo?

Jemima Kelly
Now, throughout all of this, the real identity of Satoshi Nakamoto remained a total mystery. No one knew who it was. Was it a pseudonym? Was Satoshi even a man, as the name suggested? Or could it be a woman? Maybe a group of people? And then in December 2010, barely two years after that first email, Satoshi Nakamoto stopped posting. The inventor of bitcoin vanished into thin air. What makes the story even more intriguing is that by the time Satoshi disappeared, this mysterious inventor had amassed a fortune in bitcoin. And to this day, not a single one of those bitcoins has ever been spent.

Nic Carter
It’s like a Jesus-style myth where Satoshi sacrificed himself or herself by leaving the project and spurning the immense wealth that Satoshi had accumulated, right about a million coins. So what is that, $20bn?

Jemima Kelly
Nic Carter there. He’s a prominent crypto investor. He says the story of Satoshi disappearing and not cashing in his wealth has taken on an almost religious aura that makes bitcoin not just another cryptocurrency but special, a sort of chosen one.

Nic Carter
There’s a notion of like, and very explicit within the Bitcoin community, of Satoshi literally sacrificing themselves for our sins, basically, creating this new independent system that’s free of the sin of fiat and creating a new pure system that you’re welcome to join. There’s also, if you wannna go further back in mythology, you could say it’s a Promethean story, right, where Satoshi did this daring act, stole fire from the gods, stole monetary policy from the Fed, and then was punished for it for all eternity. In this case, Satoshi’s punishment was not being able to benefit from all the bitcoins that they created for whatever reason. So the mythology there is very significant.

Jemima Kelly
We’ll come back to Nic a little later. But first, let me introduce you to another person who at one point truly bought into that whole bitcoin ideology.

Aviv Milner
When I was at school studying math, I had an, already an interest in economics. I had an interest in philosophy and political science. At the time, bitcoin was kind of having its, you know, second or third big public explosion.

Jemima Kelly
Several years after Satoshi’s original email, Aviv Milner was a student living in Vancouver in Canada.

Aviv Milner
I was very prime for that pitch because it was a pitch that essentially said we can use computer science and math to solve economic and political philosophy problems and we can solve almost all the problems. And that was really exciting for me.

Jemima Kelly
Aviv discovered an online community of bitcoin enthusiasts who believed that bitcoin had the power to change the world. As well as getting stuck into the tech behind bitcoin, Aviv starts delving into its ideology too. He came across a document written in 1993 by a computer programmer called Eric Hughes. The document was called the Cypherpunk Manifesto.

Aviv Milner
Cypherpunk is this kind of rebellious, anti-government philosophy. It starts by saying that privacy is necessary for an open society in the electronic age. And then it goes on about why privacy is so important and why we must resist government oppression and tyranny, and why money must also be private. That’s the root of, even folks like Satoshi Nakamoto who created bitcoin was this tool to regain personal liberty and freedom to transact as one sees fit, to transact privately and anonymously, to send money anywhere in the world. And the idea that decentralisation is key, such that the system itself could not be corrupted and could not censor any one person.

Jemima Kelly
Aviv started chatting to other bitcoiners on the online forum Reddit. He went to bitcoin conferences and he started buying bitcoin because he genuinely believed that it could be the future of currency.

Aviv Milner
I was pushing people to spend their bitcoin, pushing people to learn about bitcoin. It’s super reliable. It’s awesome. The value only goes up. You know, this is gonna be great for commerce.

Jemima Kelly
For Aviv, mass adoption seemed, well, entirely sensible. So much so that he tried to get local businesses in Vancouver to start accepting payments in bitcoin.

Aviv Milner
At the time it seemed obvious, right? Because small businesses pay credit card fees and point of sale fees. So you can build an app for them that will accept bitcoin and surely users will love it and the store will love it. And so we found a few stores that were willing to do this to have this bitcoin point of sale app.

Jemima Kelly
But bitcoin started to become a victim of its own success. In 2017, after a huge run-up in prices, bitcoin’s network started getting congested. The cost of making payments was exploding, and transactions that were supposed to take 10 minutes were sometimes taking several days to complete.

Aviv Milner
And the result was that nobody used it. Nobody wanted to actually go in the store like an average, you know, grocery store and pay with bitcoin. And I just remember laughing really hard thinking like, none of this was as we talked, like it was a faulty product that both the user didn’t want and the merchant didn’t want. The concept failed on all levels.

Jemima Kelly
Which is why today, Aviv is no longer a bitcoin believer. These days he’s gone full bitcoin sceptic and that total 180 in the world of bitcoin just doesn’t happen. Aviv is the only person I’ve ever come…