8 Jan 2022 – The best indication of the changes affecting our financial system is the rise of two new interrelated phenomena: Cryptocurrency and NFTs. Both emerged from a libertarian idea to bypass state apparatuses and establish direct communication between concerned parties.However, in both cases, we see how the idea turned into its opposite, with bitcoin and NFTs now having their own 1% which dominate and manipulate the field. Here we should avoid both extremes: neither praising Bitcoin or NFT as offering us new freedom, nor dismissing them as the latest speculative capitalist madness.

In our usual experience of money, its payment value is guaranteed by some state authority, such as a central bank, and the state can also misuse its authority, by printing money and causing inflation, etc.

The value of bitcoin, a digital currency or cryptocurrency, is not guaranteed by any public institution of authority. It is determined by what people are willing to pay for it right now. And they are ready to pay for it and accept it as money if they believe in it, if they trust it.

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Here, in the domain of cold and ruthless financial speculation, confidence and trust enter the stage: bitcoin is like an ideological Causer that exists as a real force only if enough people believe in it – without individuals who believe in the Communist cause, for instance, there would’ve been no Communism.

There’s a similarity between this and how stocks are priced: if more people want to buy than sell, prices will likely go up, whereas when there are more sellers, the price usually falls. However, one difference is that – at least, in principle – the value of stocks is not purely self-referential, it refers to investments that are expected to generate profit from ‘real’ production.

The maximum number of bitcoins that can be issued, or mined, is limited; cryptocurrency inventor Satoshi Nakamoto capped it at 21 million (about 19 million has already been mined). This makes Bitcoin similar to gold and other precious metals, but it has no intrinsic “real value.”

How can this be? Bitcoins have to be registered in blockchains which are

“essentially decentralized ledgers. They’re a ‘place’ to store information and, crucially, because they are decentralized, cannot be edited without the knowledge of other users on the blockchain. The idea is that blockchains are able to store records of information without the need for third parties (e.g., banks and financial institutions), so that the system is essentially self-sufficient and self-regulating. As a digital infrastructure, an added benefit is that huge legal fees added by third parties are avoided,” according to an article published by Aesthetics for Birds website.

Here we stumble upon the tension that defines blockchains: precisely because there is no third party and the system is essentially self-sufficient and self-regulating, every registration/inscription of a new bitcoin involves a tremendous amount of work through which the new bitcoin will be brought to “the knowledge of other users on the blockchain.” Since there is no third party to which every bitcoin owner could refer, each new owner has to elaborate a complex texture of algorithms and codes which guarantee that the specific identity of the new bitcoin will be clearly perceived by all others without turning it into something that can be appropriated by others.

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Blockchain – as a non-alienated ‘Big Other’ – needs a lot more work than inscription into an alienated third party, creating the new ‘proletarians’ of this new domain out of the bitcoin ‘miners’ who do this work. We move from old miners who do their difficult work deep beneath the earth as the genuine 19th-century kat’ exochen proletarians, to the bitcoin miners who toil to construct and secure the space for a bitcoin in the digital ‘Big Other.’

The paradox here is that they do not work to produce new use-values, but to create new space for exchange-value. To guarantee that bitcoins do not need a legal external authority and the accompanying legal fees, an effort is required which takes a lot of time and uses so much energy (electricity) that it is a heavy ecological burden.

The potentially progressive idea of Bitcoin as global, independent of particular state apparatuses, thus actualizes itself in a form which undermines its premises. This makes it similar to NFTs.

NFT (non-fungible token) – proclaimed by Collins Dictionary its word of the year for 2021 – was also invented as a decentralized, anti-State, libertarian attempt to save the autonomy of artists from institutional clutches. The price we pay for this idea is that “the creation of an NFT is an attempt to create artificial scarcity where there is none. Anyone can create an NFT for a digital asset, even if there’s no actual asset behind it!”

The paradox of NFTs is that they introduce scarcity into a domain where items are accessible to everyone for free. For this reason, NFTs compel us to rethink the notion of property, of owning something in a digital space:

“Through subscription services, we have temporary access, but never own a thing. In some quite important sense we might ask, were we to own something, what would it be? An original master of a film or music? Perhaps. But in reality what we can say is ours is either the temporary access, or a download. The download is likely to be absolutely identical to every other download that exists. In other words, our owning it doesn’t preclude others from owning it. This is why even the thought of owning a piece of art online has a tinge of absurdity about it. If the song exists as a file, it can exist identically in an infinite number of digital spaces. But NFTs provide a kind of ‘solution’: artificial scarcity. They give us digital collectibles in a world where duplication has zero costs.”

What is intriguing in NFTs is the idea of taking a digital asset that anyone can copy and claiming ownership of it. An NFT has almost no use-value (maybe it brings some social prestige to owners), and what sustains it is its potential future exchange-value. It is a copy with a price, an item of purely symbolic ownership that can bring profit.

The key Hegelian insight here – just as in the case of bitcoin – is that, although Bitcoin and NFT appear as an anomaly, as a pathological deviation of the ‘normal’ functioning of money and commodities, the two effectively actualize a potentiality that is already contained in the very notion of commodity and money.

Exemplary here is the figure of Peter Thiel, a German-American billionaire and co-founder of PayPal, who declared that “[Artificial Intelligence] is communist and crypto is libertarian.” Why? Because with AI, “you’re sort-of going to have the big eye of Sauron watching you at all times, in all places.”

“The main AI applications that people seem to talk about are using large data to sort-of monitor people, … where you can know enough about people that you know more about them than they know about themselves, and you can sort-of enable communism to work, maybe not so much as an economic theory, but at least as a political theory. So it is definitely a Leninist thing. And then, it is literally communist, because China loves AI…” Thiel said.

That sounds evident and convincing. However, as Thom Dunn duly noted:

“Thiel’s big critique here does seem to be about the authoritarian use of data and surveillance. Which, okay, cool, I agree, that’s a valid concern. I don’t know what that has to do [with] a revolutionary vanguard party forming a transitional state in order to establish a classless and leaderless society, but, um, sure. China does technically call itself a government. So I think I get what he’s putting down here. But just so we’re clear: this is the guy who helped found Palantir. Like, the big data analytics company that literally [taught] ICE to organize its authoritarian tactics. Which is the same Peter Thiel who also founded the Anduril surveillance company, and used his billions to destroy a successful news organization for criticizing him. And he’s afraid of AI because of … communism?”

Impossible to miss the irony here: the libertarian anti-Leninist Thiel relies on the very ‘Leninist’ AI mechanisms he deplores. The same goes for former Trump adviser Steve Bannon, who (yet another irony) allegedly described himself as “Leninist”:

“Bannon’s White House adventure was only one stage of a long journey – the migration of revolutionary-populist language, tactics, and strategies from the left to the right. Bannon has reportedly said: ‘I’m a Leninist. Lenin … wanted to destroy the state, and that’s my goal too. I want to bring everything crashing down, and destroy all of today’s establishment,’” Thiel reminds us.

This same Bannon who’s rambling against big corporations that, together with apparatuses of state, control and exploit ordinary working Americans, had allegedly intended to use sophisticated AI during the 2016 election campaign. It was revealed that Cambridge Analytica (CA), a political consulting firm where Bannon was vice president between 2014 and 2016, had scraped masses of user data from Facebook to provide information on populations of interest to political campaigns around the world.

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The company was shut down in 2018, after Christopher Wylie, a former Cambridge Analytica employee, blew the whistle on how CA had engaged in data-mining operations. Wylie, a gay Canadian vegan who, at 24, came up with an idea that led to the foundation of CA, which he described to The Guardian as “Bannon’s psychological warfare.” At a certain point, Wylie was genuinely freaked out:

“It’s insane. The company has created psychological profiles of 230 million Americans. And now they want to work with the Pentagon? It’s like Nixon on steroids.”

What makes this story so fascinating is that it combines elements which we usually perceive as opposites. The right-wingers say that addresses the concerns of ordinary white, hard-working, deeply religious people who stand for simple traditional values and abhor corrupted eccentrics like homosexuals and vegans, but also digital nerds–and then we learn that their “psychological warfare” is created by precisely such a nerd who stands for all they oppose. There is more than an anecdotal value in this: it clearly signals the vacuity of far-right populism, which has to rely on the latest technological advances to maintain its popular redneck appeal.

There is no contradiction between Thiel’s anti-Leninism and Bannon’s Leninism: if we understand under ‘Leninism’ the practice of total digital control over populations, they both practice it while maintaining a libertarian face. The difference resides only in the fact that, for Bannon, Leninism means destruction of the state and its apparatuses (without, of course, really intending it).

To conclude, digital control and manipulation are not an anomaly, a deviation, of today’s libertarian project, they are its necessary framework, its formal condition of possibility. The system can afford the appearance of freedom only under the conditions of digital and other modes of control that regulate our freedom – for the system to function, we HAVE to remain formally free and perceive ourselves as free.

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Slavoj Žižek, a Slovenian cultural philosopher and psychoanalyst, is senior researcher at the Institute for Sociology and Philosophy at the University of Ljubljana, Global Distinguished Professor of German at New York University, and international director of the Birkbeck Institute for the Humanities of the University of London. He has also been a visiting professor at more than 10 universities around the world. Žižek is the author of many books, including Living in the End Times, First As Tragedy Then As Farce, The Fragile Absolute and Did Somebody Say Totalitarianism? He lives in London.

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