Technological Populism and Its Archetypes:
Blockchain and Cryptocurrencies
Asress Adimi Gikay & Cătălin Gabriel Stănescu
Lecturer in Artificial Intelligence, Disruptive Innovation and Law at Brunel University,
United Kingdom, PhD Researcher, Sant’Anna School of Advanced Studies, Department
of Law, Politics and Development, Pisa, Italy, asress.gikay@brunel.ac.uk.
Assistant Professor and Marie Curie Fellow at Centre for Market and Economic Law,
Faculty of Law, University of Copenhagen, Denmark, catalin-
gabriel.stanescu@jur.ku.dk.
ABSTRACT ......................................................................................................... 66
1. INTRODUCTION .................................................................................... 66
2. POPULISM AND BLOCKCHAIN - AN OVERVIEW ............................... 70
2.1.1. WHAT IS POLITICAL POPULISM? ................................... 70
2.2. WHAT IS BLOCKCHAIN? ............................................................ 75
2.3. BLOCKCHAIN AND POPULISM—CONCEPTUAL AND
RHETORICAL ASSOCIATIONS ................................................... 77
3. THE POPULIST PROMISES OF BLOCKCHAIN TECHNOLOGY .......... 80
3.1. DISRUPTION - CHALLENGING THE ESTABLISHMENT .......... 80
3.2. EMPOWERING THE DISENFRANCHISED AGAINST THE ELITES
83
3.2.1. THE ILLUSION OF DECENTRALIZATION ..................... 84
3.2.1.1 Decentralization is not real ..................................... 84
3.2.1.2 Decentralization is not feasible .............................. 86
3.2.1.3 Decentralization is not desirable ............................ 87
3.2.2. TRUST IN COMPUTATION — GETTING UNMERITED
TRUST ............................................................................... 90
3.2.3. ANONYMITY— ANARCHY WITH A DROP OF PRIVACY
........................................................................................... 95
3.3. SUMMING UP: THE FALSE PROMISES OF TECHNOLOGICAL
POPULISM .................................................................................... 96
4. EXPLAINING THE RISE OF TECHNOLOGICAL POPULISM ............... 97
4.1. THE ROLE OF MEDIA AND INTELLECTUAL SYCOPHANTS .. 98
4.1.1. THE MEDIA ...................................................................... 98
4.1.2. THE INTELLIGENTSIA .................................................... 99
4.1.2.1. Hype by All Means? ................................................ 99
4.1.2.2. A 21st Century Dilemma: To Regulate or Not to
Regulate? ............................................................................................ 102
4.1.3. REGULATORY OVERSIGHT .......................................... 104
5. CONCLUSION: A CALL FOR TECHNOLOGICAL POPULISM
CONSCIOUSNESS ................................................................................. 108
NJCL 2019/2 66
ABSTRACT
Blockchain technology claims to disrupt the existing financial system,
the way of doing business, and to empower ordinary citizens against an
elitist economy through decentralization of the decision-making process.
In the political arena, the disruptive ideology branded as ‘populism’
challenges the neo-liberal establishment. By appealing to peoples’ fears,
frustrations, and dissatisfaction with the political elites, exploiting distrust
in the so-called establishment, populism claims to deliver more power to
the people.
In this article, we draw a parallel between core foundations of
political populism and those of blockchain and propose a theory of
technological populism. Technological populism as reflected by
blockchain platforms exploits the rhetoric of empowering the
disenfranchised through decentralized decision-making process, enabling
anonymity of transactions, dehumanizing trust (promoting trust in
computation rather than trust in humans and institutions) as well as
breaking the monopoly in the financial system and money supply. The
rhetoric of empowering the disenfranchised against financial elites is not
only propaganda but also a method of accumulating wealth for
technocratic elites.
Ultimately, the blockchain and cryptocurrency world has perfected
what political populists have pioneered — unrealistic promises, turning
the citizen against “the elites” only so long as they are not the elites in
charge.
Key Words: Technological Populism, Populism, Distributed
Digital Ledger (DLT), Bitcoin, Democracy, Blockchain, Cryptocurrencies,
Anarchy, Political Promises
1. INTRODUCTION
When Bitcoin was launched in 2009, there was great enthusiasm for
its potential. Today, cryptocurrencies and blockchain transcended the
sphere of peer-to-peer online payment and have become a multi-billion
dollar industry.1 Bitcoin could replace fiat money,2 could bank the
1 As of April 25, 2019, the total market capitalization for cryptocurrencies is over $ 170
Billion. Cryptolization, retrieved from accessed 25 April
2019.
2 Frank Holmes, ‘Bitcoin could replace cash in 10 years’ Business Insider (1 May 2018),
retrieved from accessed 23 February 2019.
67 TECHNOLOGICAL POPULISM AND ITS ARCHETYPES
unbanked,3 while blockchain could revolutionize finance, could help in
fighting against poverty,4 could be used to safeguard the environment and
combat climate change.5 These are just some of the claims made by
entrepreneurs, industry experts, advocates, intellectuals, and the media in
regard to cryptocurrencies and blockchain. With cryptocurrencies failing
to deliver on their promises of replacing fiat currencies and tripartite
payments systems,6 the enthusiasts shifted their focus from the
currency/payment aspect to blockchain as a malleable Distributed Ledger
Technology (DLT) with various applications across industries.7
The past ten years have also revealed many direct or indirect
challenges facing the technology, ranging from fraudulent practices in
crowd financing of various projects linked to the technology to its use for
criminal activities. A report published in 2018 shows that 80% of the
3 Paul Vigna and Michael J. Casey, ‘Bitcoin for the Unbanked: Cryptocurrencies That Go
Where Big Banks Won’t, Foreign Affairs’ (Foreign Affairs, 25 October 2017), retrieved
from accessed 6 July
2018; Steve Forbes, ‘How Bitcoin Will End World Poverty’ Forbes (02 April 2015,
retrieved from accessed 6 July 2018 & George
Basiladze, ‘How Cryptocurrencies Can Help Bank the Unbanked’ (FIN. MAGNETS, 16
August 2015), retrieved from
accessed 6 July 2018.
4 Gillian Tett, ‘Bitcoin, blockchain and the fight against poverty’ The Financial Times (22
December 2017), retrieved from accessed 29 June 2018.
5 Anteneh Tesfaye ‘Blockchain is Here and it’s Changing The World’ Data Driven
Investor (Oct 15, 2018), retrieved from
23 February 2019.
6 Yuwa Hedrick-Wong ‘Cryptocurrencies Have Failed, And Blockchain Still Has Yet To
Be Proven Useful’ Forbes (Nov. 11 2018), retrieved from
accessed 25
April 2019.
7 I. Kiviat Trevor, ‘BEYOND BITCOIN: ISSUES IN REGULATING BLOCKCHAIN
TRANSACTIONS’ 65 Duke Law Journal 569, p. 570. ‘…—the true innovation behind
the Bitcoin protocol. Simply, blockchain technology solves an elusive networking
problem by enabling “trustless” transactions: value exchanges over computer networks
that can be verified, monitored, and enforced without central institutions (for example,
banks). This has broad implications for how we transact over electronic networks.’
NJCL 2019/2 68
Initial Coin Offerings (ICOs) (a method of crowdfunding for blockchain-
based projects)8 were fraudulent.9
Blockchain’s ability to revolutionize finance, data sharing and even
combating poverty or preserving the environment has been discussed
often by employing optimistic rhetoric. However, potential is not a
substitute for facts. Similarly, the claim of empowering ordinary citizens
against elitist economy and institutions through decentralization across
sectors lies at the heart of the campaign for blockchain. Nevertheless, the
technology’s promise of easy solutions to multifaceted societal challenges
is nothing more than demagoguery and a business opportunity. The
technology that should have significantly disrupted the old economic and
financial establishment has made many people rich (or richer), but failed
to deliver on its original promises.
In the political sphere, there is a similar phenomenon. The neo-
liberal establishment is being challenged by a disruptive political
movement or ideology labeled as “populism”. Appealing to peoples’ fears,
frustrations, and dissatisfaction with the political elites, populism claims
to deliver more power to the people and to reconnect political
representatives with their constituencies. However, the leaders of the
populist camp either promise the impossible or fail to deliver on them.
In this article, we postulate that there is a close association between
blockchain technology and populism at a conceptual level and investigate
the common traits between blockchain and cryptocurrencies, on the one
hand, and political populism, on the other.
In order to do so, we propose a new concept - “technological
populism,” — to refer to the phenomenon by which technological
innovations that promise and promote disruptive effects as societal
benefits and claim to solve pressing socio-economic problems by
8 Initial Coin Offering (ICO) is a scheme whereby an entity promoting a new
cryptocurrency or crypto-asset raises money from the public where investors are usually
issued a token that entitles them to different kinds of rights such as the right to profit
sharing and voting in the entity issuing the token. See A. Sehra, P. Smoth & P. Gomes,
‘Economics of Initial Coin Offerings’ (Allen & Overy, 01 August 2017) 2
accessed 6 July 2018 & A. Majumda,
‘A Regulatory Outlook on Initial Coin Offerings’ (Oxford Business Law Blog, 03 August
2017), retrieved from accessed 6 July 2018.
9 Shobhit Seth, ‘$9 Million Lost Each Day in Cryptocurrency Scams’ (Investopedia, 2
April 2 2018), retrieved from accessed 17 October 2018.
69 TECHNOLOGICAL POPULISM AND ITS ARCHETYPES
empowering the ‘disenfranchised’ and replacing the ‘elites’ are ‘hyped’10
for the economic and commercial benefits of a select few.
Blockchain’s promise of a simple solution to complex problems, just
like what “populists” promise in politics, is used to create a temporary
alliance with ordinary citizens in order to convince them to invest money
in a system run by invisible entities distributed across a network of nodes.
Institutions that oversee the market and are generally adamant about
populism, embraced this ‘populist’ innovation. Intellectuals and
businessmen, who are otherwise critical about simple solutions to complex
societal problems, paradoxically ignore or minimize the risks to
consumers, for the rule of law and even for the environment. By the time
the true nature of the technology was revealed, some of the advocates of
the technology have made fortunes.11 We name this category of blockchain
advocates and profiteers ‘technological populists.’
By taking an interdisciplinary and cross-jurisdictional approach, we
methodically extract the core elements of political populism and populist
rhetoric and juxtapose them with ideals of cryptocurrencies and
blockchain to argue that both employ demagoguery to grab power and
control. We do not discuss the legitimate and limited use cases of
blockchain12 as that goes beyond the scope and purpose of our analysis.
We focus instead on the problematic aspects of blockchain to shed a light
on how society should see new technologies that over-promise without
reasonable demonstration of their value to society. The notion of
technological populism is therefore used pejoratively to describe digital
10 The verb ‘hype’ is defined by Cambridge English Dictionary as “a situation in which
something is advertised and discussed in newspapers, on television, etc. a lot in order to
attract everyone’s interest”, while as a noun, it means “information that makes something
seem very important or exciting (many times more than it is). For a full list of meanings:
accessed 28 April 2019.
11 Satoshi Nakamoto, who to this date remains anonymous and who wrote the white
paper for bitcoin, has earned an estimated $19 Billion from cryptocurrencies making
him/her the number profiteer of the technology. Cherry Reynard, ‘Who are the richest
cryptocurrency investors?’ The Telegraph (25 May 2018), retrieved from
accessed 25 April 2019.
12 Blockchain could be used for tracking goods in a supply chain. It can also be used to
manage data in a decentralized manner. Nevertheless, even these use cases are not proven
to be efficient and effective as researchers are still exploring the potential of the
technology. See Yoav Vilner ‘5 Blockchain Product Use Cases To Follow This Year’
Forbes (June 27, 2018), retrieved from
accessed 28 April 2019.
NJCL 2019/2 70
innovations that do not solve genuine social problems, but rather serve
the interest of specific stakeholders.
The article is divided into three sections. Section one briefly explains
political populism and extrapolates its core principles that can be used to
explain blockchain demagoguery. It also introduces the definition of
blockchain and cryptocurrencies to provide background information to
the reader. Section two explains the core features of blockchain and
cryptocurrencies that embody populist principles and undertones. Section
three provides an explanation for the rise of technological populism. The
paper concludes with a call for technological populism consciousness.
2. POPULISM AND BLOCKCHAIN - AN OVERVIEW
Populism and blockchain (or any other digital technology) seem to
have remote connections. A closer inspection reveals otherwise. In this
section, we provide a necessary overview of the two concepts.
2.1.1. WHAT IS POLITICAL POPULISM?
Populism is undoubtedly one of the most widely used terms by
political commentators, both at national and international level. The term
is associated with both conservative and right-wing politicians, such as
Donald Trump (USA), Nigel Farage (the UK), Matteo Salvini (Italy) or
Viktor Orban (Hungary) and left-wing movements such as Syriza
(Greece), Podemos (Spain) or leaders Hugo Chavez (Venezuela), Jeremy
Corbyn (the UK) or even the US Senator Elizabeth Warren. Given that
one cannot define or attribute populism to a certain side of the political
spectrum,13 it becomes important to determine its characteristics, rather
than confine it within the political manifestations associated with it.
Populism is “a complex phenomenon deeply connected with
democracy [...] a modality of social expression of ‘popular sovereignty’,
which acquires different forms, but has specific traits that are determined
by the social conditions of the context where it manifests itself.”14
Nowadays, the process of globalization, the increased interconnectivity,
the creation of new social spaces and forms for politics and social
consensus have given birth to new forms of populism,15 such as media
populism, web-populism, or tele-populism.16 To these, we add
technological populism.
13 J.W. Müller, What Is Populism? (Penguin Books Limited 2017), p viii.
14 M. Anselmi and L.F. Morrisey, Populism: An Introduction (Routledge 2017), p 2.
15 C. Mudde and C.R. Kaltwasser, Populism: A Very Short Introduction (Oxford University
Press 2017), p 6.
16 Anselmi and Morrisey, p 3.
71 TECHNOLOGICAL POPULISM AND ITS ARCHETYPES
Before delving into the intricacies of technological populism, one
should first determine the building-blocks of political populism.17 And, in
order to understand how political populism came to be the buzz-word it
is nowadays, 18 one must look at the social and institutional crisis that
precedes it. Populism is mainly the reaction to an established (and
potentially declining) elite,19 an attempt to mobilize excluded sectors of
society for one main purpose: disrupting the status quo20 and replacing the
elite with a new one (the populists).21
From this perspective, three major building blocks can be
distinguished. The first building block is an interclass homogenous group
of people22 that perceives itself as the absolute holder of ‘popular
sovereignty’ expressing an anti-establishment23 attitude and portraying
itself as an alternative to the pre-existing elite (anti-pluralist24). This group
may or may not have a leader voicing the group’s message. The second is
the challenged elite, be it another group of people, another party, an
institution, or even a class. The third, and maybe most important, a
discursive, argumentative, Manichean style of communication where the
group is referring to itself as ‘us’ and to those challenged as ‘them’25. This
17 Cristobal Rovira Kaltwasser, How to define populism? Reflections on a contested
concept and its (mis)use in the social sciences, in G. Fitzi, J. Mackert and B.S. Turner,
Populism and the Crisis of Democracy: Volume 1: Concepts and Theory (Taylor & Francis 2018),
pp 64-65.
18 Mudde and Kaltwasser, p 1.
19 Anselmi and Morrisey, p 4.
20 Mudde and Kaltwasser, pp. 3, 18.
21 Müller, p 29. Muller notices here one of the inherent paradoxes of populism. Populists
do not have a problem with representation as long as they are the representatives and
they are fine with elites leading people, as long as they are those elites. Same observation
is made by Cristobal Rovira Kaltwasser, How to define populism? Reflections on a
contested concept and its (mis)use in the social sciences, in Fitzi, Mackert and Turner, p
74.
22 For more considerations regarding the concept of ‘the people’ Mudde and
Kaltwasser9-11. Also: Müller, pp 22-23.
23 For more considerations regarding the concept of ’the elite’ Mudde and Kaltwasser,
pp 11-16.
24 Müller, p 101
25 According to another view, the three core elements of populism are ’the people’, ’the
elite’ and ’the general will’, the latter being defined as the capacity of people to join
together into a community and legislate to enforce their common interests. The concept
of general will, however, is centered around the populist leader capable of identifying,
triggering and channeling the general will, Mudde and Kaltwasser, p 16. Thus, while
named different, we perceive these core elements as being fundamentally the same as
those employed in the main text. A detailed discussion on various theories proposed is
provided by Cristobal Rovira Kaltwasser, How to define populism? Reflections on a
NJCL 2019/2 72
discourse is aimed at creating political polarization,26 which can then be
further used for political support. All the above will feed in a constant
social attitude against the elite or any form of intermediation27 (generally,
but necessarily, institutional).28
The idea of defining populism by using common traits is not new.29
Since it would be beyond the paper’s purpose to propose a new political
theory of populism, we will refer to previous research instead. Among the
long list of potential traits that have been advanced some capture our
attention: populism is more moralistic than programmatic,30 it is always
anti-establishment and against the ruling elite, it is subjected to corruption
and burgeoisification processes, it often demonizes financiers, it can be
urban, or it opposes social and economic inequalities produced by
institutions, but it accepts those related to tradition and lifestyle (its ‘own’
meritocracy). As the concrete examples in subsection 1.3 reveal, all these
traits are easily identifiable in the blockchain manifestos and, thus, can be
said to define technological populism as well.
We started this section by noting that populism has manifested itself
on both ends of the political spectrum31. This constant oscillation between
Left and Right is confusing in regard to the nature of populist ideology,
which led certain scholars to argue that populism is not a self-standing
ideology, but a discursive form that can complement and accommodate
various political views32.
Laclau, for instance, argued that populism is a discursive logic
centred on the rhetorical appeals to “the people” against common
enemies, regularly identified with unresponsive institutions,33 financial
institutions, or concentrated groups of economic and political power
(referred to as ‘elite’, ‘oligarchy’ or ‘establishment’).34 His point, however,
contested concept and its (mis)use in the social sciences, in Fitzi, Mackert and Turner,
pp 64-66.
26 Anselmi and Morrisey, p 8, Mudde and Kaltwasser, p 6, Müller, p 3.
27 Anselmi and Morrisey, p 29.
28 For instance, in political populism the idea is that ‘the people’ should take the most
important decisions instead of delegating them to the parliament, while in the aftermath
of the financial crisis and the wake of Bitcoin, the idea is to disrupt financial institutions.
29 Anselmi and Morrisey, pp 21-22.
30 Müller, pp 3, 19. On the meaning of morality in populism, Cristobal Rovira Kaltwasser,
How to define populism? Reflections on a contested concept and its (mis)use in the social
sciences, in Fitzi, Mackert and Turner, p. 66.
31 P. Gerbaudo, The Mask and the Flag: Populism, Citizenism, and Global Protest (Oxford
University Press 2017), p. 73.
32 Ibid 73.
33 E. Laclau, On Populist Reason (Verso Books 2018), p. unavailable (online source).
34 Gerbaudo, p. 77, Mudde and Kaltwasser, p. 5.
73 TECHNOLOGICAL POPULISM AND ITS ARCHETYPES
was that populism could serve as a positive force in organizing excluded
sections of society to pursue political and socioeconomic integration,35 a
view which, as we will show, is very common in the discourse surrounding
blockchain technology and technological populism.
Recent theories place even more emphasis on the communicative
nature of populism. According to these views, populism is a “rhetorical
macro-device that asserts itself” and “operates in an attempt to overturn
the people’s subalternity to the dominant social class”. These views still
revolve the dichotomy between ‘the people’ and the ‘elite’, nevertheless,
in this narrative, the people’s attitude and (re)action is the result of a
specific communicative strategy,36 which can easily transform into
manipulation. In our opinion, extrapolating these views and applying them
to the so-called ‘blockchain revolution’, would explain the ‘hype’ around
the ‘buzz word’. As shown in subsection 1.3, blockchain manifestos are
not technological or programmatic documents, but mainly
communication strategies meant to attract supporters and create a
polarization that keeps the ‘hype’ real. Nothing seems to be more effective
to this end, than resorting to populist rhetoric.
This is not to say that populism is merely an issue of style or form,
without its own substantive content, or that it constitutes a completely
negative phenomenon. On the contrary. Revolving around ‘the people’ –
whoever they may be – the principle of popular sovereignty is central to
populist discourse37 in both politics and technology, as both claim to
return power to its original owners by removing it from the hands of
illegitimate profiteers, be it an elite or an intermediary institution. It is a
reaction to social issues and has a corrective potential for any type of
politics that is disconnected from ‘the people’.38 This allows certain
politicians to proudly claim they are populist, as long as populism infers
working for the people and reveals a particular issue of distinguishing
between ‘good’ and ‘bad’ populism.39
For instance, Satoshi Nakamoto’s Bitcoin manifesto starts with what
could be labelled and interpreted as ‘populist’ statement, given that later it
was used as basis for most blockchain manifestos: “A purely peer-to-peer
35 Cristobal Rovira Kaltwasser, How to define populism? Reflections on a contested
concept and its (mis)use in the social sciences, in Fitzi, Mackert and Turner, p. 63.
36 Anselmi and Morrisey, p. 43.
37 Gerbaudo, p. 74.
38 Cas Mudde and Cristobal Rovira Kaltwasser (eds) cited by Müller, p 8.
39 Ibid 9-11. Such division is more easily identifiable on the two shores of the Atlantic.
While populism is perceived as somewhat progressive and egalitarian in the Americas, in
Europe it entails solely demagoguery and irresponsible politics.
NJCL 2019/2 74
version of electronic cash would allow online payments to be sent directly
from one party to another without going through a financial institution.”40
The statement’s content, although disruptive in effect, does not target
directly the financial industry. Yet, other blockchain manifestos do.
Two problems arise, which constitute the main paradoxes of
populism. On the one hand, such social support in favour of either
political or technological populism based on communication strategies
lacks substance. Although populists portray themselves as anti-
establishment and anti-elite, that ends when they become the
establishment or the elite.41 On the other hand, its message can be easily
(mis)appropriated and marketed as being for the people, while, in reality,
it creates more wealth for the very ‘elite’ it allegedly tries to fight. The best
example is the election of Trump. Although himself a poster image of
capitalism, and thus a member of the ‘elite’, he managed to present himself
as an anti-systemic candidate and made it to the Oval Office. Nevertheless,
his election simply meant replacing the political elite with the economic
one, thus perfectly illustrating how the capitalist class can control the
political narrative and maintain its direct rule and domination over
politics42 by merely employing the recipe of disruptive discourse of
populism.43
As indicated, we believe the traits of populism can be extrapolated
from the purely political sphere and applied to technology as well. The
postulate that discursive elements and paradoxes associated with populism
are easily identifiable in the discourse of technological disruption as well
will be proved by resorting to examples of technological speech regarding
blockchain technology. But before delving into the rhetorical similarities
of political and technological populism, we must first explain what
blockchain is.
40 Satoshi Nakamoto, Bitcoin: A Peer-to-Peer Electronic Cash System, p. 1, retrieved
from , accessed 5 April 2019.
41 See supra fn 9.
42 Panayota Gounari, Authoritarianism, Discourse and Social Media: Trump as the
‘American Agitator’ in J. Morelock, Critical Theory and Authoritarian Populism (University of
Westminster Press 2018), pp. 208, 221. Also Müller, pp 29-30 and Cristobal Rovira
Kaltwasser, How to define populism? Reflections on a contested concept and its (mis)use
in the social sciences, in Fitzi, Mackert and Turner, p 67.
43 Morelock, p 209.
75 TECHNOLOGICAL POPULISM AND ITS ARCHETYPES
2.2. WHAT IS BLOCKCHAIN?
Blockchain is a distributed digital ledger (database),44 which records
transactions on a chain of blocks, in the order in which the transactions
occurred.45 The technology emerged from the first cryptocurrency—
Bitcoin. Cryptocurrency is “a system of currency that uses cryptography
to allow secure transfer and exchange of digital tokens in a distributed and
decentralized manner.”46 Thus, while cryptocurrencies are digital
currencies or assets47, blockchain is a distributed database where those
assets are generated, stored, and transacted on.
Once a transaction is initiated on a blockchain, it must be approved
by the majority of nodes (computers) in the network through a 'consensus
mechanism'. Regarding the work model adopted by Bitcoin, consensus is
established by the node being able to solve an automatically generated
mathematical puzzle.48 Solving the puzzle entitles the miner (‘transaction
validator’) to reward crypto-asset(s). Regarding the stake model, generally,
the node with higher stake (‘ownership’) has a higher chance to validate
transactions and claim the reward.49
44 Robby HOUBEN & Alexander SNYERS, ‘Cryptocurrencies and blockchain: Legal
context and implications for financial crime, money laundering and tax evasion’ (2018)
PE 619.024, 15, retrieved from
accessed 20 October 2018.
45 Chuen David Lee Kuo, Handbook of digital currency : Bitcoin, innovation, financial instruments,
and big data (9780128023518
9780128021170, 2015), p. 49. See also Pierluigi Cuccuru, ‘Beyond bitcoin: an early
overview on smart contracts’ 25 International Journal of Law and Information
Technology 179, pp. 1, 4.
46 Eli Dourado and Jerry Brito, ‘Cryptocurrency: From the New Palgrave Dictionary of
Economics’ (2014, Online Edition) 1, retrieved from accessed 28 October 2018.
There are over 2000 cryptocurrencies (or digital tokens created by cryptography) in the
market today. Cryptocurrency Market Capitalization, retrieved from
accessed 22 September 2017.
47 Also called ‘crypto-assets’. Crypto-asset is a term that refers to all cryptographic assets
including cryptocurrencies and cryptographic tokens that are ill-suited to bear the name
cryptocurrency as they are neither designed to be currencies, nor function as one in
practice. Kevin Kim, ‘What is Cryptocurrency & Why the Term Doesn’t Apply to Most
Coins & Tokens Today’ (The Blockchain Review, 02 July 2018), retrieved from
accessed 19 November 2018.
48 The process is known as mining. Robby HOUBEN & Alexander SNYERS (n 22).
49 Ibid. Also Mike Orcutt, ‘Bitcoin uses a massive amount of energy — but there's a plan
to fix that’ Business Insider (19 Nov. 2017), retrieved from
accessed 19 November 2018.
NJCL 2019/2 76
Based on access, blockchain can be classified into two, i.e.,
permissionless and permission blockchain. A permissionless blockchain
lacks oversight, planning, and control by a central authority.50 In
‘permissionless' blockchain, transaction validators can join the network
without a need for approval by a central authority,51 whereas in
‘permission’ blockchain, joining the network requires approval by the
entity running the network.52
Originally, Bitcoin, being based on permissionless blockchain, was
meant to be ‘peer-to-peer decentralized electronic cash’ with no
intermediary involved in facilitating transactions.53 Cryptocurrency
exchange platforms, as intermediaries, emerged to accommodate the
needs of users who were not able to transact directly on the blockchain or
wished to trade on organized platforms. Exchange platforms buy and sell
cryptocurrencies and, in most cases, provide custodial digital wallet
services.54 Some platforms exchange cryptocurrencies only for other
cryptocurrencies, while others convert cryptocurrencies also to fiat
currencies and vice-versa.55
During earlier times, while blockchain-based assets were created
mainly to facilitate payment, even claiming to be alternative currencies,
improvements to the technology gave rise to different types of blockchain-
based assets, mainly classified as ‘pure currency tokens’, ‘utility tokens’,
‘investment tokens’, and ‘hybrid tokens’, each serving different purposes
and triggering the application of different legal rules.
Each of the blockchain-based assets is created with a certain degree
of rebellion against the existing system that it aspires to replace. Section 2
explains in detail how this aspect of blockchain technology and its failure
to achieve its self-proclaimed goals make the technology akin to political
populism.
50 John Blocke, ‘Decentralization Fetishism is Hindering Bitcoin’s Progress', (Medium 6
July 2017), retrieved from accessed 09 September 2017.
51 Robby HOUBEN & Alexander SNYERS, supra fn. 44.
52 Ibid.
53 Satoshi Nakamoto, ‘Bitcoin: A Peer-to-Peer Electronic Cash System’ (2008), retrieved
from accessed 23 February 2019.
54 Robby HOUBEN & Alexander SNYERS, supra fn. 44.
55 Ibid.
77 TECHNOLOGICAL POPULISM AND ITS ARCHETYPES
2.3. BLOCKCHAIN AND POPULISM—CONCEPTUAL AND RHETORICAL
ASSOCIATIONS
Having defined political populism and blockchain, we will now
return to the conceptual and rhetorical associations between them, in
order to determine the existence of technological populism. In subsection
1.1, we have established that the concept of populism is determined by the
existence of three building blocks: ‘the people’, ‘the elite’, and ‘a disruptive
discourse’ by which ‘the people’ challenge and try to replace ‘the elite’. We
also showed that the disruptive discourse employs Manichean, anti-
pluralist rhetoric. This subsection proves that all the above characterize
the ‘blockchain revolution’ discourse, by highlighting them in the
blockchain manifestos advanced by technological pundits.
According to Nakamoto’s Bitcoin manifesto, the main purpose of
Bitcoin was to provide “a solution to the double-spending problem” and
that of “a trusted third party”, meaning a solution by which the
intermediary would be removed from the transaction.56 While not a direct
attack on banks and financial institutions, one cannot ignore the
conspicuous disruptive effects Bitcoin was intended to have on the
banking system, especially in the light of the blockchain manifestos that
followed. Once removed from handling transactions, banks would lose a
significant amount of revenues, while states would lose the capacity to
supervise financial transactions if parties were to choose to remain
anonymous.
A stronger populist message can be identified in the Blockchain
manifesto of Naval Ravikant.57 The manifesto is conceived in 37 points,
following a logical sequence. The starting point is that “Blockchain will
replace networks with markets”58, thus creating the premises of
polarization: ‘blockchain’ versus ‘networks.’ It goes on to argue that
“Networks must be organized according to rules: and require “Rulers to
enforce these rules”.59 As networks “create a winner-take-all dynamic”60,
the “Rulers of these networks become the most powerful people in
society”.61 In other words, networks generate the same type of phenomena
witnessed in society and politics, leading to the creation of oligarchs and
56 Id. at 1.
57 Naval Ravinkant, Blockchain Manifesto, retrieved from:
https://medium.com/koinok/blockchain-manifesto-by-naval-ravikant-insightful-read-
4cc793606a0c, accessed 5 April 2019.
58 Id at point 1.
59 Id at point 7.
60 Id at point 8.
61 Id at point 9.
NJCL 2019/2 78
unaccountable elites. Who are they? The answer depends on the type of
network: “kings and priests”,62 “corporations”,63 “elites (doctors,
academics, bankers)”,64 “dictators”,65 “mobs”,66 “markets (credit, stock,
commodities, money markets)”.67 The Blockchain manifesto argues that
its own rise will replace all these inefficient, abusive, dangerous, powerful
and unmeritorious networks with a new one “that allows meritorious
participants in an open network to govern without a ruler and without
money.”68 Put simply, the rhetoric advertises replacing the network elite,
with the blockchain one.
The Blockchain manifesto resorts to populistic discourse to advance
its own agenda and advertise a profound technological revolution:
“Blockchains’ open and merit-based markets can replace networks
previously run by kings, corporations, aristocracies, and mobs”.69 In this
sentence, one can identify all traits of the populist rhetoric: blockchain
generated open and merit markets (‘the people’), and kings, corporations,
aristocracies and mobs (‘the established elite’). The manifesto concludes
with a typical disruptive message associated with the populist movement:
“Blockchains give us new ways to govern networks. For banking. For
voting. For search. For social media. For phone and energy grids.
Networks governed without kings, priests, elites, corporations, and mobs.
Networks governed by anyone with merit to the network.”70 These restate
Laclau’s point of view71 according to which populism could serve as a
positive force in organizing excluded sections of society to pursue political
and socioeconomic integration. Only that in the cited manifesto, populism
was replaced with blockchains.
This message is reiterated in the Ten Principles advanced by the
“Blockchain for Good” movement.72 The populist antagonism with the
oligarchy, referred to as “the privileged” or “the select few” is
omnipresent. To take some examples: 1) “for far too long, power has been
62 Id at point 10.
63 Id at point 11.
64 Id at point 12.
65 Id at point 14.
66 Id at point 13.
67 Id at point 17.
68 Id at point 20.
69 Id at point 30
70 Id at points 33-34.
71 Supra fn. 35.
72 Retrieved from < https://www.blockchainforgood.com/manifesto-1> accessed 5
April 2019.
79 TECHNOLOGICAL POPULISM AND ITS ARCHETYPES
mediated by the select few […] it is time to take back control”;73 2) “old
value is controlled […] by the privileged, the select few” […] Blockchain
passes value through to the people, […] the incentive is upon us all, not
for the select few”;74 3) “old prosperity is wealth […] enjoyed by the select
few and out of reach to the masses, new prosperity is open to everyone”75;
or “new power is power to the people”.76 Whilst these principles refer to
the potential of software, taken out of context it would be hard to
distinguish between the arguments of political and technological
populism. It is also apparent that blockchain manifestos are not as much
technological or programmatic documents, but empty promises and
communication strategies meant to attract supporters and create
polarization. Populist rhetoric is employed to keep up the ‘hype’.
The populist discourse is found in all manifestos of blockchain
aficionados, but citing them all would go beyond the purposes of our
paper. What we would still wish to address in regard to connections
between blockchain and populism, is the potential for (mis)appropriation
by the members of the challenged elite, just like Trump managed to do in
the US elections. This potential did not go unnoticed by populists
themselves. Steve Bannon, the man who many credit for the success of
Trump’s 2016 presidential campaign and now seems to be coordinating
European populist movements, asserted that ‘Bitcoin and other
cryptocurrencies can disrupt banking the way Trump disrupted American
politics.’77 He wanted to create a blockchain-based token for the
worldwide populist movement, known as ‘the Deplorables,’ driving its
name from the famous ‘Basket of Deplorables’ category in which Hillary
Clinton put half of Trump supporters.78 Its aim was to take control of
money and finance as a tool to control political constituency.
So far, our narrative demonstrated that the very foundation of the
blockchain is framed and communicated using populist discourse and
73 Principle 3: Blockchain is distributed power.
74 Principle 4: Blockchain is New Value.
75 Principle 8: Blockchain is Prosperity – But Not as We Know It.
76 Principle 10: Blockchain is New Power.
77 Jeremy W. Peters and Nathaniel Popper ‘Stephen Bannon Buys into Bitcoin’ New York
Times (June 14, 2018), retrieved from <
https://www.nytimes.com/2018/06/14/technology/steve-bannon-bitcoin.html>
accessed 7 April 2019.
78 Anthony Cuthbertson ‘Steve Bannon is Betting on Bitcoin and May Release his own
‘Deplorables” Cryptocurrency’ Independent (June 15, 2018), retrieved from <
https://www.independent.co.uk/life-style/gadgets-and-tech/news/steve-bannon-
bitcoin-deplorables-coin-cryptocurrency-a8400051.html> accessed 7 April 2019.
NJCL 2019/2 80
strategy. The following section elaborates on the populist concepts as
reflected by blockchain technology.
3. THE POPULIST PROMISES OF BLOCKCHAIN TECHNOLOGY
We have briefly explained political populism and highlighted its
close conceptual association with blockchain. In this section, we focus on
two facets of blockchain technology manifestos that capture the populist
rhetoric in the political sphere, namely disruption and the people vs. the
elite rhetoric.
3.1. DISRUPTION - CHALLENGING THE ESTABLISHMENT
One of the founding aims of the Bitcoin, the first cryptocurrency,
was to disrupt the existing financial system, including the creation and
control of money. Nakamoto’s Manifesto employed a neutral language
and perhaps conveyed an economic efficiency rationale in advocating for
‘purely peer-to-peer (P2P) version of electronic cash that allows online
payments to be sent directly from one party to another without going
through a financial institution.’79
While cutting out middlemen in conducting transactions cuts costs
and increases speed, the P2P cash system has an implication that goes
beyond efficiency. It has effect not only on simple payments but on the
creation and control of money supply. It takes away the exclusive power
of creating money from Central Banks and states. According to Charles
David George “[…] BitCoin looks like it was designed as a weapon
intended to damage central banking and money issuing banks, with a
Libertarian political agenda in mind—to damage states’ ability to collect
tax and monitor their citizens’ financial transactions."80
The disruptive effect of Bitcoin removes not only intermediaries in
economic transactions but also aims to reject legitimate government
79 Satoshi Nakamoto, Bitcoin: A Peer-to-Peer Electronic Cash System (November 1,
2008). The original paper is retrieved from accessed
23 February 2019.
80 Charles Davide George ‘Charlie Stross,” Why I want Bitcoin to Die in a Fire’
(December 18, 2014), retrieved from accessed 7 April 2019.
81 TECHNOLOGICAL POPULISM AND ITS ARCHETYPES
regulation.81 Bitcoin is a tool for criminal enterprises such as laundering
money, tax evasion, or other shady transactions.82
The blockchain technology is the most important innovation
emerging from bitcoin, supposedly having unlimited application across
sectors. The promise of recapturing power from financial elites and
handing it back to the disenfranchised individual provides a universal
legitimacy for blockchain, just as it legitimizes support for populist leaders.
It aspires to disrupt the existing system of finance, data governance,
corporate governance and other important aspects of modern economy.
Nevertheless, the disruptive goal of blockchain has failed in many regards,
as illustrated by the following two examples.
The first example pertains to blockchain and finance, where the
technology was set to fundamentally disrupt banking and reduce the
profitability of banks.83From the very outset, it was clear that a P2P system
of payment with no central clearing system would not function. That is
because payment processing84—approval and clearing—is expected to be
conducted by individuals in the network, incentivized by rewards they
obtain for their computational skill and resource, with no central office in
charge of rectifying delays or irregularities in payment.85 The Bank of
International Settlement (BIS) pointed out this unsuitability of
cryptocurrencies in its 2018 annual report. BIS stated that
“Cryptocurrencies cannot scale with transaction demand, are prone to
congestion and greatly fluctuate in value. Overall, the decentralised
technology of cryptocurrencies, however sophisticated, is a poor
81 Andreas M. Antonopoulos, Mastering Bitcoin, programming the open blockchain (1491954388,
Second edition edn, O'Reilly 2017), p. 3.
82 Sean Foley, Jonathan R Karlsen and Tālis J Putniņš, ‘Sex, Drugs, and Bitcoin: How
Much Illegal Activity Is Financed through Cryptocurrencies?’ 32 The Review of Financial
Studies 1798, p. 1798.
83 Antonopoulos stated ‘As with the many industries disintermediated by the Internet,
banks will survive. But they will be fundamentally changed and their power and
profitability will be significantly reduced. They can’t adapt and they can’t stop this
disruption.’ Daniel Araya, ‘The Promise of Bitcoin: An Interview with Andreas M.
Antonopoulos’ Futurism (February 29, 2016), retrieved from
accessed
25 April 2019.
84 Joan Antonio Donet, Cristina Perez-Sola, and Jordi Herrera-Joancomart, The Bitcoin
P2P Network (March 7, 2014).
85 Asress Gikay, Regulating Decentralized Cryptocurrencies Under Payment Services
Law: Lessons from European Union Law, Case Western Reserve Journal of Law,
Technology & the Internet,Vol. 9, 2018, vol 9 (2018), pp. 25-26.
NJCL 2019/2 82
substitute for the solid institutional backing of money.”86 BIS’s position
is a severe blow to those who advanced the narrative that Bitcoin would
disrupt the financial system.
Second, blockchain has not delivered a concrete result in its other
industry applications. In 2018, a group of researchers studied forty-three
highly praised blockchain use cases and concluded that they found no
evidence of an actual result.87 One area in which blockchain is supposed
to thrive is replacing traditional contract negotiation through a smart
contract— “programmable computer protocols that are able to self-
enforce the terms therein encoded upon certain triggering conditions.”88
Yet, blockchain-based smart contracts have been proven to be
impracticable.
On the one hand, creating a computer program that self-executes
complex contractual relationships involving various legal terms,
conditions, and limitations and other human elements, such as good faith
and trust, is decidedly impossible.89 On the other hand, many of the
blockchain based smart contracts utilized for corporate governance
showed deviations in the publicly stated promises and the actual terms
coded in the smart contract.90 Based on the study of the top fifty Initial
Coin Offerings in 2017, Sklaroff et al found a significant discrepancy
between publicly available white papers or other contract types and the
actual smart contracts, where founders maintained undisclosed codes and
sometimes unilaterally modified entity governance structure.91 These
86 BIS, Annual Economic Report (June 2018), 91, retrieved from
accessed 8 April 2019.
87 Aaron Hankin, ‘Blockchain companies go silent when their tech promises fall short,
research group finds’ Market Watch (Dec 4, 2018), retrieved from
accessed April 25, 2019.
88 Cuccuru, p 1.
89 Sklaroff argues that smart contracts, in attempting to replace flexibility in human
negotiation increases transactions costs. He states ‘’ these tradeoffs suggest that
technology cannot replace what is fundamentally a human activity. Smart contracting
certainly proposes exciting new changes to the way transactions might take place and
presents a meaningful step forward from the days of EDI. But a full-scale smart
contracting revolution would introduce costs far more extreme and intractable than the
ones it seeks to solve. Proponents who argue for a complete replacement of semantic
contracts underestimate the power of fluid human behavior and judgment in the
contracting process. The flexibility of semantic contracts is a feature, not a bug. Jeremy
Sklaroff, ‘Smart Contracts and the Cost of Inflexibility’ (Philadelphia) 166 University of
Pennsylvania Law Review 263, p. 303.
90 Shaanan Cohney and others, ‘Coin-Operated Capitalism’
, pp. 20-27.
91 Ibid 86.
83 TECHNOLOGICAL POPULISM AND ITS ARCHETYPES
stories suggest that the smart contracts, although inflexible and computer
programmable, far from distributing decision making power and
empowering the individual, give leeway to technocrats to maintain
asymmetrical power relationship visa-a-vis the crowd.
The technology’s inability to deliver on promises of disruption in
finance, corporate governance, and contract execution did not stop the
advocates from pushing the hype. Thus, the promises of blockchain
technology can easily be compared with Trump’s promise to build a wall
and make Mexico pay for it. Although patently unrealistic, such promise
was taken seriously by his base. The rhetoric of the wall is still being
pushed by the US president, with a changed narrative, suggesting that
Mexico will pay in a form of tariff, rather than directly.
3.2. EMPOWERING THE DISENFRANCHISED AGAINST THE ELITES
As shown, populism creates a divide between ‘the people’ and ‘the
elites’ accused of having hijacked power from the people and running the
system to their own benefit.92 After his presidential election, Trump
declared that: “the forgotten men and women of our country will be
forgotten no longer.”93 The message could not be clearer. The political
elites no longer represent everyday citizens. Rather, they collude with
corporations and financial institutions fighting for their common interest.
Blockchain technology was built on similar rhetoric and now struggles to
distance itself from its own history by changing the narrative as the
technology evolves.
In the proceeding sub-sections, we examine how the three
features of cryptocurrencies and potentially other blockchain-based
currencies or assets claim to empower the disenfranchised. These features
are decentralization, trust in computation, and anonymity. Ultimately,
none of these empowers the people. On the contrary, they are used to
accumulate wealth for a small group of people through hyperbolic
marketing, manipulation and deception tactics.
92 William Galston, ‘The Populist Challenge to Liberal Democracy’ (Baltimore) 29
Journal of Democracy 5, p. 11. ‘These observers argue that elites, by taking important
issues such as economic, monetary, and regulatory policies off the public agenda and
assigning them to institutions insulated from public scrutiny and influence, have invited
precisely the popular revolt that now threatens to overwhelm them.’
93 David Jackson, and Doug Stanglin, ‘‘Trump is now president: 'The forgotten ... will be
forgotten no longer'’, USA Today (Jan 20, 2017), retrieved from
accessed 9 April, 2019.
NJCL 2019/2 84
3.2.1. THE ILLUSION OF DECENTRALIZATION
As shown, one of the philosophies of cryptocurrencies
(permissionless blockchain) is the lack of central authority that controls
them, meaning an authority that issues them and controls the
technological infrastructure in which they function. Permissionless
Blockchain is available to anyone who is willing and able to engage in a
transaction verification process.94 The imagined virtue of decentralization
is cutting out middlemen in transaction processing, primarily payment
systems; but the principle is equally applicable to blockchain based systems
including data transfer, corporate governance, and other transactions.
Antonopoulos stated “Bitcoin’s decentralized security model puts a
lot of power in the hands of the users. With that power comes
responsibility for maintaining the secrecy of the keys.”95 Although
Antonopoulos is referring to the security of Bitcoin network, he does
imply that the decentralization of Bitcoin puts the user in charge as
opposed to traditional banking or payment system where a central
authority is in charge. Echoing this sentiment, Bitcoin’s early investor and
entrepreneur Charlie Shrem wrote “for me, this is the most important
aspect of Bitcoin and cryptocurrency: its role in propagating power to the
greatest number of people possible. What Satoshi did when he
democratized money was hand every individual alive – and generations to
come – vast personal liberty.”96 Whether the above is true or not is not for
this paper to determine. What is clear is that Nakamoto sold something
for an estimated value of $19 Billion.97 And what he sold was neither
personal liberty nor money. But let us return to the fundamental questions.
Is decentralization real, feasible, and desirable?
3.2.1.1 Decentralization is not real
Early critique quickly pointed out that, although decentralized in
principle, a closer look at the governance structure shows that Bitcoin is
not truly decentralized. De Filippi and Loveluck argue:
94 Antonopoulos, p. 177.
95 Ibid 232.
96 Charlie Shrem, ‘Bitcoin’s White Paper Gave Us Liberty – Let’s Not Give It Back’
(Coindesk, October 20, 2018), retrieved from accessed 9 April 2019.
97 Satoshi Nakamoto’s estimated earnings from cryptocurrencies as of 2018 is $19 Billion
making him/her the number one profiteer of the technology. Cherry Reynard, ‘Who are
the richest cryptocurrency investors?’ The Telegraph (25 May 2018), retrieved from
accessed 25 April 2019.
85 TECHNOLOGICAL POPULISM AND ITS ARCHETYPES
‘[…] Hence, just like many other open source projects, there is a
discrepancy between those who can provide input to the project (the
community at large) and those who have the ultimate call as to where the
project is going. Indeed, while anyone is entitled to submit changes to the
software (such as bug fixes, incremental improvements, etc.), only a small
number of individuals (the core developers) have the power to decide which
changes shall be incorporated into the main branch of the software.’98
In the governance structure of Bitcoin, decentralization shrinks at
the top level with implication not only on the democratic decision-making
process but also on the technical functioning of the system. One example
illustrates the problem. In the design of the Bitcoin blockchain, every
block had a capacity of 1 megabyte.99 The block size limit was placed
allegedly to ensure that the blockchain remains decentralized, since high
block size means that there would be delays in transaction propagation as
large miners could benefit at the expense of small miners, hence creating
centralization.100
Some of the core developers of Bitcoin wanted to increase the block
size on the ground that it has been arbitrarily fixed and it is causing a delay
in transaction confirmation.101 It was claimed that transactions remained
unexecuted between 60 seconds to 14 hours as a direct consequence of
the limit in block size.102 We note here that lately transaction delays are in
terms of days and weeks. Due to disagreement among the core developers
on whether to increase the block size, Mike Hearn, one of the core
developers resigned as a full-time Bitcoin developer in January 2016.103
Due to the sustained disagreement among the developers and
miners, as of August 1, 2017, a split or what is referred to in a technical
term as “a hard fork” has occurred, leading to two different chains in the
98 Filippi Primavera De and Loveluck Benjamin, ‘The invisible politics of Bitcoin:
governance crisis of a decentralised infrastructure’ 5 Internet Policy Review, p.13.
99 Blockchain, Average Block Size (2017), retrieved from
accessed 24 July 2017. See also ibid 7.
100 Retrieved from
accessed 24 July 2017.
101 Mike Hearn, The resolution of the Bitcoin experiment (2016), retrieved from
, accessed 24 July 2017.
102 Retrieved from ,
accessed 4 April 2017.
103 Retrieved from , accessed 4 April 2017.
NJCL 2019/2 86
blockchain.104 With the hard fork, two separate systems have been created.
In one chain, due to a software upgrade, the block size increased from 1
megabyte to 2. In the other, the block size to 8 megabytes.105 The latter
option led to the creation of a new cryptocurrency – Bitcoin Cash
(BCC).106 Both bitcoin and bitcoin cash co-exist ever since then, each
having its backers and different market values.107
The story highlights how millions of citizens who believed in the
promise of decentralization are forced to accept a decision made by a
technical elite who claimed that it will take power back from the state,
central banks, and traditional financial institutions and give to the people.
Weather in part or in full, decentralization is not real.
3.2.1.2 Decentralization is not feasible
Further, in 2018, a group of companies that engage in Bitcoin mining
combined their hashing power and colluded to compel a software upgrade
which resulted in the creation of new cryptocurrency based on bitcoin
blockchain against the rule that decision has to be made by the majority
of the network’s members.108 They were the majority. Only that they
rigged the system to create the majority and diluted the power of the
individual.
The scandal led to a lawsuit in the District Court of Southern District
of Florida, where the plaintiff claimed, among others, compensation for
various damages caused by a global meltdown of the value of bitcoin.109
104 Bitcoin Cash: 5 Fast Facts you need to Know, retrieved from
, accessed 2 August
2017.
105 Ibid.
106 Ibid.
107 Ibid. “On the 1st of August 2017, several hours after the fork had been completed,
Coin Market Cap reported that Bitcoin Cash (BCH) which is the newly created by using
the 8 megabytes block is priced around $379.40, a fraction of the original Bitcoin’s value,
which is priced at $2720.”
108 United American Corp. vs Bitmain, Inc., US District Court of Southern District of
Florida, Complaint, para 70-80, retrieved from
accessed 9 April 2019.
109 United American Corp. vs Bitmain, Inc., US District Court of Southern District of
Florida, Complaint, retrieved from
accessed 9 April 2019.
87 TECHNOLOGICAL POPULISM AND ITS ARCHETYPES
The problem known as the ‘51 % attack’ occurs when a decision has to be
made based on consensus, but an entity or a group of entities controlling
51% of the hashing/computing power override the decision, prevent it or
even reverse transactions that were already confirmed.110 The case
demonstrates that the Bitcoin protocol is not decentralized and is
susceptible to be controlled by a single entity.
Whatever core changes take place within the bitcoin protocol
depends on whether the core developers—a select few— agree on it.111
The core developers are not a group of people elected democratically.
They were chosen based on their expertise, their involvement in the
project and their shared ideology with the founder.112 In other words, they
are the elite of both the technically and financially empowered elites. The
small miners down the ladder are insignificant as far as significant changes
are concerned. Thus, it is impossible to make a claim that a system that is
built by the elite, for the elite empowers citizens around the world.
3.2.1.3 Decentralization is not desirable
Antonopoulos argues that Bitcoin’s complete decentralization
ensures robustness, prevents criminals from breaching the system, and
makes the network government intervention-proof.113 Even if this
assertion was true, the question from both consumers’ and regulators’
perspective becomes whether total decentralization is desirable and to
what end. We will use the European Union’s payment services law as an
example. Although there are slight variations in national laws, the
regulation of payment services has the same fundamentals in many
countries.
110 Antonopoulos, p. 211. ‘One attack scenario against the consensus mechanism is called
the “51% attack.” In this scenario a group of miners, controlling a majority (51%) of the
total network’s hashing power, collude to attack bitcoin. With the ability to mine the
majority of the blocks, the attacking miners can cause deliberate “forks” in the blockchain
and double-spend transactions or execute denial-of-service attacks against specific
transactions or addresses. A fork/double-spend attack is one where the attacker causes
previously confirmed blocks to be invalidated by forking below them and re-converging
on an alternate chain. With sufficient power, an attacker can invalidate six or more blocks
in a row, causing transactions that were considered immutable (six confirmations) to be
invalidated.’
111 Today, the top-level administrators of Bitcoin called, maintainers are three in number.
See Bitcore, retrieved from accessed 09 April
2019.
112 Primavera De and Benjamin.
113 Antonopoulos, p. 3.
NJCL 2019/2 88
First, the legal regime governing payment Services in the EU—the
Payment Services Directive (PSD II) 114— does not accommodate
permissionless blockchain-based payment system. Under the PSD II, to
get an authorization to engage in payment service provision, a payment
service institution must have prudent management, robust governance
arrangement, clear organizational structure, and well-defined, transparent,
and consistent lines of responsibility.115 Cryptocurrencies based on
permissionless blockchain inherently reject a centrally managed
organization because the transfer of funds can be performed directly
between the sender and the receiver, with no central processing
authority.116 In this system, individuals with no legal obligation to clear
transactions engage in transaction validation. Hence,117 those who are
unable to complete a transaction due to the inaction of transaction
validators have no central office to seek remedy from.
In payment services provided by traditional currencies, the payment
service provider is liable for any charges and interest resulting from the
non-execution, defective, or late execution of the payment transaction.118
For transactions ‘on the blockchain’, no similar rule could be designed
because there is no central office in charge of executing payments. Since
the transaction validator could be anyone in the world, there is no way for
a legislature or supervisory authority to design workable redress and
penalty systems.119
Although cryptocurrency exchange platforms have created
centralization, they are effective only in executing 'off-chain' transactions,
meaning the transactions conducted without updating the public ledger on
which the cryptocurrency is based.120 To benefit from central payment
processing, users must go through exchange platforms to conduct their
114 Directive 2015/2366 of the European Parliament and of the Council of 25 November
2015 on Payment Services in the Internal Market, Amending Directives 2002/65/EC,
2009/110/EC and 2013/36/EU and Regulation (EU) No 1093/2010, and Repealing
Directive 2007/64/EC, OJEU L 337/35 (PSD II).
115 Id at Art. 11(4).
116 Id at Art. 11(4).
117 Joan Antoni Donet Donet, Cristina Perez-Sola, and Jordi Herrera-Joancomart, The
Bitcoin P2P Network in Rainer Böhme and others, Financial cryptography and data security,
FC 2014 Workshops, BITCOIN and WAHC 2014, Christ Church, Barbados, March 7, 2014,
revised selected papers (3662447746, Springer 2014), p. 87.
118 PSD II (n 87) Art. 89(3).
119 For rules on complaint and penalty mechanisms under PSD II, see ibid Arts 90 and
103 respectively.
120 Hughes Sarah Jane and T. Middlebrook Stephen, ‘Advancing a Framework for
Regulating Cryptocurrency Payments Intermediaries’ 32 Yale Journal on Regulation 495,
p. 559
89 TECHNOLOGICAL POPULISM AND ITS ARCHETYPES
transactions.121 In any event, final settlement of any cryptocurrency
transaction must be registered on the relevant blockchain,122 which means
that exchange platforms themselves ultimately encounter the potential
delay or irregularity in settling their payment on the blockchain. It is for
this reason that the BIS finally gave its verdict that ”[c]ryptocurrencies
cannot scale with transaction demand […] Overall, the decentralised
technology of cryptocurrencies, however sophisticated, is a poor
substitute for the solid institutional backing of money.”123
Notwithstanding all the above, one could ask about decentralization
in other aspects of the economy. Ten years after blockchain started being
implemented, there is no evidence that its decentralisation has other
concretely proven industrial applications. The idea of distributed storage
of data or asset management with no central authority is simply a talking
point. Nouriel puts it as follows:
‘As for blockchain itself, there is no institution under the sun –
bank, corporation, non-governmental organisation or government agency
– that would put its balance sheet or register of transactions, trades and
interactions with clients and suppliers on public decentralised peer-to-peer
permissionless ledgers. There is no good reason why such proprietary and
highly valuable information should be recorded publicly. Moreover, in
cases where distributed-ledger technologies – so-called enterprise DLT –
are actually being used, they have nothing to do with blockchain. They
are private, centralised and recorded on just a few controlled ledgers. They
require permission for access, which is granted to qualified individuals.
And, perhaps most important, they are based on trusted authorities that
have established their credibility over time. All of which is to say, these
are “blockchains” in name only.’
If blockchain technology would have had a ground-breaking
industrial application, we would have heard about it and many would have
written about it. That is not the case. As we have shown, blockchain-based
currencies cannot be purely decentralized. There would be a central point
of control for the system to create responsibility, accountability, and
efficiency.
Decentralizing everything from payments to storing data, tracking
goods and services, and empowering everyone by excluding intermediaries
121 Edward V. Murphy et al, ‘Bitcoin: Questions, Answers, and Analysis of Legal Issues’
(2015) US Congressional Research Report 7-5700, 5.
122 David Lee Kuo, p. 49.
123 BIS, Annual Economic Report (June 2018), 91, retrieved from
accessed 8 April 2019.
NJCL 2019/2 90
is an appealing promise. However, our research reveals it to be largely a
utopia, with no or little basis in reality.
3.2.2. TRUST IN COMPUTATION — GETTING UNMERITED TRUST
Political science establishes a close relationship between populism
and lack of trust in mainstream political parties and government
institutions.124 Lack of trust was exacerbated during and after the financial
crisis, when citizens lost faith not only in financial institutions but also in
the political actors who chose to bail out these institutions, to the
detriment and at the expense of the citizens. Restoring public trust in
financial institutions became the beacon of all legislative acts that
followed. For instance, in the preamble of the Mortgage Directive,125 the
European Parliament, and the Council of the EU stated that the financial
crisis has led to ”a lack of confidence among all parties, in particular
consumers”.126 Restoring and strengthening their confidence was, thus, a
concern for all European institutions.127
While states were engaging in implementing measures aimed at
restoring trust in the market and financial institutions, technology geeks
were crafting a strategy to capitalize on the crisis. The emergence of
Bitcoin during the period of diminishing confidence in the existing
financial institutions in the aftermath of the 2008 global financial crisis128
is not a coincidence. The crisis has certainly helped marketing the
technology. Varoufakis alluded to this stating:
‘The Crash of 2008 has infused our societies with enormous
skepticism on the role of the authorities, both government and Central
Banks. It is quite natural that many dream of a currency that politicians,
bankers, and central bankers cannot manipulate; a currency of the people
by the people for the people. Bitcoin has emerged as the great white hope
of something of the sort.’129
124 Catherine Fieschi and Paul Heywood, ‘Trust, cynicism and populist anti‐politics’
[Taylor and Francis Ltd] 9 Journal of Political Ideologies 289, pp. 289-309.
125 Directive 2014/17/EU on credit agreements for consumers relating to residential
immovable property, retrieved from: , access on 22 April
2019.
126 Recital 3, Mortgage Directive.
127 Restoring, strengthening, or ensuring confidence is mentioned several times in the
preamble to the Mortgage Directive: Recital 3, Recital 31, and Recital 35.
128 M. Uslaner Eric, ‘Trust and the Economic Crisis of 2008’ 13 Corporate Reputation
Review 110, pp. 210-223.
129 Yanis Varoufakis, Bitcoin and the dangerous fantasy of ‘apolitical’ money, Yanis
Varoufakis Blog (Apr. 22, 2013), retrieved from
91 TECHNOLOGICAL POPULISM AND ITS ARCHETYPES
Thus, one of the alleged attributes of cryptocurrencies is that they
do not require trust in any central authority, private or public. In traditional
banking customers should trust third-party intermediaries, including
banks and other third-party payment service providers,130 while in
cryptocurrency systems, trust in third-party intermediaries is
unnecessary.131 This is one of the sales pitches for cryptocurrencies and
other blockchain-based transactions emulating the philosophy behind
Bitcoin.
Scholars acknowledge that “Bitcoin was born out of a distrust for
authority and driven by a desire for governance by community consensus
rather than central authority.”132 The question becomes, what is the
underlying trust-related problem that computation aims to solve? And,
furthermore, is trust in a third-party truly limited by blockchain?
Antonopoulos states:
“Here’s the most important effect of this new trust model of trust-
by-computation: no one actor is trusted, and no one needs to be trusted.
There is no central authority or trusted third party in a distributed
consensus network. That fact opens up a completely new network model,
as the network no longer needs to be closed, access-controlled, or encrypted.
Trust does not depend on excluding bad actors, as they cannot ‘fake’
trust. They cannot pretend to be the trusted party, as there is none.”133
The fundamental problem seems to be the inability of trusted
financial institutions to protect customers from bad actors that get
involved in double spending funds or outright theft through breaching
accessed 9 April 2019.
130 Nakamoto states “Commerce on the Internet has come to rely almost exclusively on
financial institutions serving as trusted third parties to process electronic payments. While
the system works well enough for most transactions, it still suffers from the inherent
weaknesses of the trust-based model.”
131 Brian Kelly, The Bitcoin big bang : how alternative currencies are about to change the world
(9781118963647
9781118963654
9781118963661, 2015), p. 69.
132 Usha Rodrigues, ‘Law and the Blockchain’ (Iowa City) 104 Iowa Law Review 679,
715. Kiviat describes it as ‘In short, the Blockchain is a “trustless” technology. “Trustless”
means—for the first time in history—exchanges for value over a Computer network can
be verified, monitored, and enforced without the presence of a trusted third party or
central institution.’(Citations omitted). Trevor, p. 574.
133Andrea Antonopoulos, Bitcoin security model: trust by computation A shift from
trusting people to trusting math (2014), retrieved from
, accessed 24 July 2017.
NJCL 2019/2 92
cybersecurity or fraudulent behaviors.134 The distributed digital ledger
makes it closer to impossible to engage in these kinds of behaviors. Is that
true? The answer to this question should be given based on the overall
infrastructure in which cryptocurrencies function and various tools that
bad actors might exploit.
The claim that trust is not needed at the heart of Bitcoin or other
cryptocurrencies makes more sense to the technical experts than to
average people. Evidence shows that even experts have lost their trust in
the system, which is why they take each other to courts of law over a
matter that should have been solved by computation.135 There are areas
where trust is required within the Bitcoin ecosystem. One of them is the
transaction verification, the very system where trust in a third-party is
deemed irrelevant. Given that the cost for verification of transactions is
covered by transaction fees and different users can offer different rates,
certain transactions could remain unconfirmed in the blockchain. That is
because miners could choose to dedicate their computational power to
higher fee transactions.136 Users who offer lower transaction fees are, thus,
uncertain that their transactions get confirmed in time. This requires trust
in the integrity of the miners, who, in this case, act as third-parties, not to
discriminate against low paying transactions.
Furthermore, the argument that blockchain removes trusted third-
parties assumes that the blockchain is the only infrastructure necessary for
the functioning of cryptocurrencies. In practice, cryptocurrencies cannot
function without other supporting infrastructures, such as exchange
platforms and digital wallets. Non-expert users of cryptocurrencies
purchase cryptocurrencies from exchange platforms using traditional
currencies and this renders the exchange platforms a necessary part of the
cryptocurrency ecosystem. Only technical experts can earn
134 Ibid. See also Nakamoto who states that ‘Commerce on the Internet has come to rely
almost exclusively on financial institutions serving as trusted third parties to process
electronic payments. While the system works well enough for most transactions, it still
suffers from the inherent weaknesses of the trust-based model. Completely non-
reversible transactions are not really possible, since financial institutions cannot avoid
mediating disputes.’
135 United American Corp. vs Bitmain, Inc., US District Court of Southern District of
Florida, Complaint, para 70-80, retrieved from
accessed 9 April 2019.
136 Olusegun Ogundeji, ‘Bitcoin Transactions Confirmation Delays’ Cointelegraph, Oct,
27, 2016
accessed 10 April 2019.
93 TECHNOLOGICAL POPULISM AND ITS ARCHETYPES
cryptocurrencies by mining.137 The non-expert users may need to store
their cryptocurrencies in third-party administered digital wallets who
should keep funds safely.
Cryptocurrency exchange platforms and digital wallet providers are
similar to traditional financial institutions. They are third-party
intermediaries that operate on the same principle of trust. They are
susceptible to the same challenges traditional financial institutions,
including theft and cyber security breaches.138 In 2018, Bitgrail, an
exchange platform, was declared bankrupt before an Italian court due to
a security breach that cost its customers $70 Million.139 Generally, loss of
funds due to a security breach affecting an exchange platform is covered
by the exchange platform, but Bitgrail blamed the hacking on a defect in
its software developed by a third-party developer, attributing the fault and
liability to the software developer140 and dragging the consumer through
lengthy litigation. Similarly, the Florida litigation on the manipulation of
decision making by dominant entities within the Bitcoin network141
illustrates that users have no reason to trust the system, even when it is in
its purest form with no adulteration by external ecosystems.
In ‘Trust, But Verify: Why the Blockchain Needs the Law’, Werbach
documents multiple trust-related problems in blockchain.142 He
underlines that the smart contract itself suffers from errors, for instance,
costing a Canadian Exchange Platform QuadrigaCX, over $ 14 Million.143
137 The process of creating bitcoin and other cryptocurrencies is known as mining-
solving automatically generated mathematical puzzles towards processing transactions of
users simultaneously. In more technical terms, “…mining is the competitive process of
collecting transactions and adding them to the blockchain in the form of blocks.” C.
Barski and C. Wilmer, Bitcoin for the Befuddled (No Starch Press, Incorporated 2014), pp. 4,
26.
138 See generally Mt. Gox Collapse of 214 resulting in loss of 850000.000 BTC due to
hacking, BITCOIN TALK (Nov. 16, 2014), retrieved from
https://bitcointalk.org/index.php?topic=57633; See Wolfie Zhao, $30 Million: Ether
Reported Stolen Due to Parity Wallet Breach, COINDESK (July 19, 2017),
https://www.coindesk.com/30-million-ether-reported-stolen-parity-wallet-breach/.
139 C. Edward Kelso, ‘Bitgrail Bitcoin Assets Taken by Italian Government, Victims Still
Fuming’, Bitcoin.com (16 June 2018), retrieved from
accessed 3 July 2018.
140 See Bitgrail Lasts News, retrieved from accessed 3 July
2018.
141 United American Corp. vs Bitmain, Inc., (supra n 109).
142 Kevin Werbach, ‘TRUST, BUT VERIFY: WHY THE BLOCKCHAIN NEEDS
THE LAW’ (Berkeley) 33 Berkeley Technology Law Journal 487, pp. 490-552.
143 Ibid.
NJCL 2019/2 94
The cause of the loss was permanent inaccessibility of Ethereum
blockchain-based tokens due to error in the smart contract.144 In 2016
Distributed Autonomous Organization (DAO), a crowdfunded artificially
intelligent entity based on blockchain was able to receive millions of
dollars in crowdfunding.145 DAO was supposed to operate based on smart
contract and enable corporate governance with no directors and board
members. Because the blockchain and smart contract did not distinguish
between legitimate fund transfer and theft, in 2017, $70 Million worth
Ether was stolen by a hacker.146 These incidents debunk the myth that
distributed digital ledgers filter back actors with no need for a trusted
central authority as a custodian. According to 2018 report, ‘each day $2.7
million is stolen from exchanges.’147
This evidence shows that not only unsophisticated consumers are
prone to theft and cyber-attack. Even well-financed institutions dealing
with blockchain are incapable of protecting themselves and the public.
The defect is not only in the external infrastructures and support systems
but also in the most cherished byproducts of bitcoin: blockchain and smart
contracts. None can be trusted. None can replace trust-based institutions,
where legal rules sanction breach of such trust.
The postulate of trusting in computation is no different than a
populist slogan that manufactures distrust in the establishment or points
out the reasons for which the establishment should not be trusted, while
not offering a shred of evidence as to why the alternative is different. We
now know that when the people fall into the trap of misplacing the trust
into lies and deceptions, the result is the accumulation of wealth by
political, respectively, ‘technological’ populists.
144 Ibid.
145 Giulio Prisco ‘The DAO Raises More Than $117 Million in World's Largest
Crowdfunding to Date’ Bitcoin Magazine (May 16, 2016), retrieved from
accessed 27 April 2019.
146 Ibid. See also Samuel Falkon, ‘The Story of the DAO — Its History and
Consequences’ The Medium (24 December 2017), retrieved from
, accessed 26 April 2019. ‘[O]n June 17, 2016, a hacker found a loophole
in the coding that allowed him to drain funds from The DAO. In the first few hours of
the attack, 3.6 million ETH were stolen, the equivalent of $70 million at the time. Once
the hacker had done the damage he intended, he withdrew the attack.’
147 Eric Larcheveque , ‘2018: A Record-Breaking Year for Crypto Exchange Hacks’,
Coindesk (December 29, 2018), retrieved from accessed 25 April 2019.
95 TECHNOLOGICAL POPULISM AND ITS ARCHETYPES
3.2.3. ANONYMITY— ANARCHY WITH A DROP OF PRIVACY
Cryptocurrencies provide anonymity.148 This aspect of
cryptocurrencies is appealing to both privacy-wary individuals, who
legitimately want to protect themselves, and to criminals who want to
engage in shady transactions. In Bitcoin, although all transactions
conducted by the user are publicly visible, it is the public key (a unique set
of numbers and letters that represents them (Bitcoin address).149 More
precisely, the blockchain provides ‘pseudonymity’ because the user’s
identity is hidden behind a pseudonym.150
The anonymity provided by blockchain can be reversed by various
techniques that link the Bitcoin address to the identity of the person.151
For instance, if the user purchases a digital currency from an exchange
using a bank account, the exchange or wallet provider has the knowledge
of the identity of the person. Techniques that are more complex can also
be used to tackle anonymity.152
However, de-anonymizing requires time, technological expertise,
and money. Despite the possibility of de-anonymization, the cost involved
makes it practically difficult, which is one of the reasons that attract the
use of digital currencies. This is exemplified by the donation page of
WikiLeaks: “Bitcoins cannot be easily tracked back to you and are safer
and faster alternative to other donation methods. […] Similar to Bitcoin,
Litecoin offers very fast and secure transactions worldwide, and there are
many exchanges allowing you to trade for Litecoins.”153 The Wikileaks
donation page reflects the typical mind-set of cryptocurrency users, i.e.,
cryptocurrencies provide anonymity.
In the era of mass surveillance, collection, processing, and misuse
of personal data by governments and giant corporations, it might be
necessary to ensure anonymity/pseudonymity.154 Thus, blockchain
promoters have used the ability of the technology to provide a bit of
148 Hanna Halaburda and M. Miklos Sarvary, Beyond bitcoin, the economics of digital currencies
(1137506423, Palgrave Macmillan 2016), p. 100.
149 Pedro Franco Pedro Franco, Understanding Bitcoin, Cryptography, Engineering and
Economics (1119019133, Wiley 2015), p. 209.
150 Ibid.
151 Ibid 209.
152 Ibid Cp. 13.
153 WikiLeaks official website, Donation Section, retrieved from
accessed on 16 July 2017.
154 See Leon Hempel and Hans Lammerant, Impact Assessments as Negotiated
Knowledge, in Gutwirth Serge, Leenes Ronald and Hert Paul de, Reforming European Data
Protection Law, vol 20 (9789401793841
9401793840, 2015 edn, Dordrecht: Springer Netherlands 2015), p. 141.
NJCL 2019/2 96
privacy, while they encourage anarchy and potential lawlessness in the
digital space. In a paper published in 2019, Foley et al, documented that
“[…] approximately one-quarter of Bitcoin users are involved in illegal
activity…, around $76 billion of illegal activity per year involves Bitcoin
(46% of Bitcoin transactions), which is close to the scale of the US and
European markets for illegal drugs.”155
Anonymity is one of the promises of blockchain-based transactions
that stands out, as terrorist organizations seem to be actively taking
advantage of it.156 An intriguing question to ask is how regulators could
watch without taking measures while a system that aspires to revolutionize
finance openly preaches anonymity (anarchy). Moreover, why are ‘people’
supporting this technology that undermines their safety and disrupts the
institutions on which their society is built? While the answers to these
questions are certainly many, we suggest one of our own: ‘technological
populism’.
During the 2016 US presidential campaign, the then-candidate
Trump speaking to his supporters stated: “I could shoot somebody in the
middle of the 5th Avenue and I wouldn’t lose voters.”157 His statement
echoed the power of his populist promises in blinding his voters to his
obvious flaws. The blockchain support base is similarly blinded by false
promises of blockchain technology. This is why there has not been a major
backlash from society, proportionate to the level of anarchy that the
technology has helped advance by eroding rule of law.
3.3. SUMMING UP: THE FALSE PROMISES OF TECHNOLOGICAL
POPULISM
Cryptocurrencies and blockchain, be it in finance or other industries,
have not delivered the game-changing efficiency and empowerment they
advertised. The technology is deeply rooted in ideas that political
populists also communicate to their constituencies and it is marketed using
populist rhetoric. Thus, disrupting the existing financial system and
industry, giving back disenfranchised individuals control over money, data
155 Foley, Karlsen and Putniņš, 1798.
156 Nikita Malik, ‘How Criminals and Terrorists Use Cryptocurrency: And How to Stop
It’, Forbes, April 31, 2018, retrieved from
accessed 11 April
2019.
157 Steve Holland & Ginger Gibson, ‘Donald Trump: 'I could shoot somebody, and I
wouldn’t lose any voters'’, Reuters, Jan. 23, 2016, retrieved from
accessed 11 April 2019.
97 TECHNOLOGICAL POPULISM AND ITS ARCHETYPES
and other aspects of their lives are all used to rally support for the
technology.
The developers of blockchain promised to perform miracles through
decentralization or DLT, eliminating intermediaries and the long-standing
trust in them and replacing it by trust in computation and by protecting
identities in conducting transactions. In a desperate attempt to sell the
idea and secure its wider adoption, they framed the foundation of the
technology based on rhetorics of empowering the disenfranchised, ‘the
people’ vs ‘elitist institutions’ and ‘us’ vs ‘them.’ The evidence
demonstrates that the large part of the promise of the technology is
nothing more than demagoguery backed by technology.
The outcome is not just a faulty technology that is struggling to
justify its existence, but billions of dollars transfer of wealth from ‘the
people’ to the new ‘elites’. ‘Technological populists’ created the
technology, created high electricity-consuming algorithms and machines
to mine the assets based on it,158 manipulated prices,159 enabled criminals
to engage in illegal activities. They were motivated by lucrative payments,
collected money from the public through crowd-funding named ICOs,
and managed to manipulate regulators into abstaining from timely
regulation.
4. EXPLAINING THE RISE OF TECHNOLOGICAL POPULISM
In the last part of the article, we briefly examine why technological
populism have risen to the level where they go without being checked by
the society and regulators. By examining the role of various stakeholders
in a democratic society in the rise of populist leaders and the
corresponding role of stakeholders in regulation of blockchain, we argue
that a combination of different extraneous factors contributed to the rise
of this kind of populism. We identify as factors that contributed to the
phenomenon: the failure of media and the intelligentsia in advancing
honest policy debate, and regulatory oversight.
158 Alex Hern, ‘Bitcoin’s energy usage is huge – we can't afford to ignore it’ The Guardian
(Wed 17 Jan 2018), retrieved from
accessed 25 April 2019.
159 Jay Adkisson ‘Why Bitcoin is so Volatile’, Forbes (February 9, 2018), retrieved from
accessed April 26, 2019.
NJCL 2019/2 98
4.1. THE ROLE OF MEDIA AND INTELLECTUAL SYCOPHANTS
The media and the intelligentsia have their own role in constructing
the technology ‘hype’. In this regard, we observe a parallel between the
way the media built representations of blockchain and theways in which
they built candidate Trump or other populist leaders.
4.1.1. THE MEDIA
The media has been painting a pink picture of blockchain from the
very outset. For instance, it advertised technological populism by stating
that cryptocurrencies will bank the unbanked,160 i.e., those who have no
access to a credit card or debit card and hence are excluded from the
financial system.161
160 Paul Vigna and Michael J. Casey, ‘Bitcoin for the Unbanked: Cryptocurrencies That
Go Where Big Banks Won’t, Foreign Affairs’ (Foreign Affairs, 25 October 2017),
retrieved from
accessed 06 July 2018; Steve Forbes, ‘How Bitcoin Will End World Poverty’ (Forbes
Magazine, 02 April 2015, retrieved from
accessed 6 July 2018 and George Basiladze, ‘How
Cryptocurrencies Can Help Bank the Unbanked’ (FIN. MAGNETS, 16 August 2015),
retrieved from accessed 6 July 2018.
161 Eric Sammons, ‘How Cryptocurrencies like Dash Help the Poor’ Dash Force News
(August 23, 2017), retrieved from accessed 21 October 2018. The claim proved to be false because
(a) credit card or debit card is a perquisite for acquiring cryptocurrencies from exchange
platforms in many cases and (b), cryptocurrencies are expensive, and transactions in them
are risky that the unbanked is not inclined to engage in. 161 To acquire any cryptocurrency,
a user must have a bank account, unless the user is computer scientist or skilled in the
field who has a powerful computer or a specialized cryptocurrency mining device and the
ability to solve complex cryptographic puzzles. See Barski and Wilmer, p. 1. Another
common method of acquiring cryptocurrencies is through transfer to a receiver’s digital
wallet by a sender in exchange for physical cash or an asset of value. Acquiring
cryptocurrency for physical cash requires a series of communications mostly over the
dark web to engage in illegal and illicit activities or to hide the illegal nature of the
acquisition of the cryptocurrency. Even if no illegal motive is involved, average users
have no incentive to engage in a cash-based transaction to access an asset whose use is
limited vastly to the digital space. Certainly, the unbanked have neither the means, nor
the incentive to engage in these kinds of transactions. Therefore, today for the most part,
cryptocurrencies are acquired from, stored, and traded on exchange platforms that the
unbanked do not have access to. See Katie Benner and Sheera Frenkel, ‘Drug Dealers
Targeted in Sweep of Illicit Online Marketplaces’ The New York Times (Washington
Dc., 26 June 2018), retrieved from
accessed 17 October 2018.
99 TECHNOLOGICAL POPULISM AND ITS ARCHETYPES
In December 2017, the Financial Times published an opinion titled
‘Bitcoin, Blockchain and the Fight Against Poverty’ highlighting Hernardo De
Sotos' initiative to use blockchain to register property rights.162 Even if
blockchain enables property registration in a reliable manner, it is not clear
how that benefits the poor. Blockchain technology is exceedingly technical
and requires infrastructures such as reliable electricity,163 internet, and
computers, things that the poor struggle with in the first place. There is
no evidence so far that blockchain and cryptocurrencies would lift people
out of poverty. After a decade long campaign, the efficiency of new
technology should not be evaluated solely on potential, but on results.
Various forms of populism have always found an echo in the media.
The most telling example is the hundreds of hours of interview conducted
with candidate Trump until it became apparent that he constituted serious
a threat in the elections.164 Blockchain populism is no different.
4.1.2. THE INTELLIGENTSIA
Our research identified two categories of intellectual minionism..
The first consists of those who participate in the ‘hype’ of the technology
by all means possible, including intellectual dishonesty. The second
involves turning a blind eye to the adverse effect of the technology on rule
of law and consumer welfare while emphasizing the potential industrial
application of the technology.
4.1.2.1. Hype by All Means?
Bitcoin enthusiasts have compared it to gold in a manner aimed at
‘hyping’ users and investors.165 The comparison focused on the process of
creation of Bitcoin- mining - a term that also describes gold extraction
process166 and the competitive prices for the two.167 Often, the
cryptocurrency-gold comparison is based on the notion that gold is
162 Gillian Tett, ‘Bitcoin, blockchain and the fight against poverty’ The Financial Times
(22 December 2017), retrieved from accessed 29 June 2018.
163G.F. ‘Why bitcoin uses so much energy’ The Economist (July 9, 2018), retrieved from
accessed 18 October 2918.
164 David Sillito, ‘Donald Trump: How the media created the president’, BBC (14 Nov.
2016), retrieved from
accessed 11 April 2016.
165 Jocelyn Aspa, Is Bitcoin the New Gold?, INVESTING NEWS (Sep. 2017), retrieved from
accessed on 13 January 2018.
166 Id.
167 Id.
NJCL 2019/2 100
expensive just because people subjectively view it as more valuable relative
to other metallic commodities that are perhaps as durable and functional.
Hence, goes the argument, if the users view cryptocurrencies as valuable,
there is no reason not to treat them like gold. Reflecting this sentiment,
Prentis argues:
‘The price of traditional commodities, like gold, silver, and
agricultural products, vary in accordance with their demand and scarcity.
When more people want a commodity that has a fixed supply, the price
rises. Similarly, the price of Bitcoin fluctuates according to the same fixed
supply model…. Bitcoins are considered rare because there is a fixed
supply of them, leading users to be willing to pay increasing prices to
control them. The value of a Bitcoin is ultimately driven by supply and
demand—a coin is worth whatever someone is willing to pay for it.’168
According to Prentis, it is appropriate to treat Bitcoin as
commodity169, asserting that Bitcoin has inherent value in its ability to
reduce transaction cost by enabling less costly two-party transactions than
traditional three-party transactions.170 In hindsight, as indicated by BIS,
Bitcoin does not scale with high volume transactions and is a poor
substitute for money.
While it is undeniable that users/speculators are willing to pay for
Bitcoin as much as they are willing to pay for gold, it is farfetched to argue
that Bitcoin has intrinsic value. In examining whether that is true, Godlove
argues that “It has more characteristics in common with commodities than
with currency, except for the most essential: It has no inherent value.”171
If intrinsic value is a value of a commodity judged independently of its
monetary use or value of a thing for its own sake172 the question becomes
whether cryptocurrencies remain useful when stripped of their ability to
transfer funds.
Bitcoin has also been compared with subterranean property.173 In
2014, the US District Court of Western District of Washington handled a
168 Mitchell Prentis, ‘Digital metal: regulating Bitcoin as a commodity’ [Case Western
Reserve University School of Law] 66 Case Western Reserve Law Review 609, p. 628.
169 Ibid 626.
170 Ibid 629 (“This means that the inherent value of a bitcoin is found in the difference
of transaction costs between an online three-party exchange, and a two-party exchange.”)
171 Nicholas Godlove, ‘Regulatory overview of virtual currency’ [University of Oklahoma
College of Law] 10 Oklahoma Journal of Law and Technology 67, p. 26.
172 Michael J. Zimmerman, Intrinsic vs. Extrinsic Value, THE STANFORD
ENCYCLOPAEDIA OF PHILOSOPHY (2015), retrieved from
https://plato.stanford.edu/entries/value-intrinsic-extrinsic/.
173 Casey Doherty, ‘Bitcoin and Bankruptcy’ (Alexandria) [American Bankruptcy
Institute] 33 American Bankruptcy Institute Journal 38, pp. 28–33.
101 TECHNOLOGICAL POPULISM AND ITS ARCHETYPES
case in which it considered, inter alia, whether a contract to mine and
deliver a certain amount of Bitcoins constitutes an executory contract174.
Examining the case, Doherty wrote an article in which he stated that
‘Bitcoin also shares similarities to “subterranean” commodities through its
extraction process, as demonstrated by in re CLI Holdings.’175 Citing
Doherty’s article, Borroni, in addressing the legal framework for Bitcoin
in the EU, wrote ‘…the qualification of Bitcoins as a commodity stems
from the case in re CLI Holdings, whereby the court treated Bitcoins like
a “subterranean commodity” (for example oil), due to the similarities
arising from the “extraction process” shared by both of them.’176
Doherty’s article and, by extension, Borroni’s, make a factually incorrect
suggestion that the court drew a parallel between Bitcoin and subterranean
properties.
In re CLI Holdings177 on or about 14th of August 2013, Bitvestment
entered into a Bitcoin services agreement with CoinLab, CLI Holdings
Inc. and their respective affiliates (Amended Agreement).178 As per the
agreement, Bitvesment paid the debtor, 75, 000 USD in return for which
the debtor agreed to mine and deliver 7,984.006735 BTC to
Bitsvestment179. The debtor breached the contract failing to deliver the
Bitcoins mined after the amended agreement, after which Bitvestment
filed a lawsuit in the US District Court for the Southern District of NY
against the Debtor seeking, inter alia, specific performance180.
On November 5, 2013, the District Court stayed the action against
the debtor because the debtor filed Chapter 11 bankruptcy,181
subsequently to which it filed a motion to reject the contract.182 The
debtor’s motion for rejection of the contract was based on U.S.C. § 365,
which allows the judge to approve the rejection of the executory contract
by the trustee183. The court dismissed the motion.
174 In re CLI Holdings, Case No. 13–19,746 (W.D. Wash. 2013).
175 Doherty, pp. 28–33.
176 Andrea Borroni, A Fuzzy Set in the Legal Domain: Bitcoins According to US Legal
Formants, in Gabriella Gimigliano, Bitcoin and mobile payments : constructing a European Union
framework (Palgrave Macmillan 2016).
177 In Re CLI Holdings Inc., Washington Western Bankruptcy Court, Case No. 13-19746-
KAO (Feb. 7, 2014), Motion to Dismiss Chapter 11 Bankruptcy, p. 2.
178 Ibid.
179 Ibid.
180 Ibid.
181 Ibid.
182 In Re CLI Holdings Inc., Washington Western Bankruptcy Court, Case No. 13-19746-
KAO (15 November 2013).
183 11 U.S.C. §365(a).
NJCL 2019/2 102
In its reasoning, the court reaffirmed that the key feature of
executory contracts is that the “obligations of both parties are so far
unperformed that the failure of either party to complete performance
would constitute a material breach and thus excuse the performance of
the other.”184 It ruled that since Bitvestment has performed its obligation
(paying 75, 000 USD), the debtor is the only party to the agreement with
an ongoing obligation, namely to mine and deliver to Bitvestment the
Bitcoins for which reason the contract was not executory185.
Whether Bitcoin is a commodity or not was irrelevant in the case. In
spite of this, Doherty compared Bitcoin with subterranean property.186 He
stated that “the court, in keeping with the analogous majority view of oil
and gas precedent (although not citing it), found that the debtor could not
reject a contract where the only performance of the interest-holder was to
receive production.”187 The court did not cite oil and gas precedents (by
Doherty’s own admission), but he still used the case to draw a parallel
between Bitcoin and subterranean properties. We cannot ignore the fact
that commodities such as oil have physical existence and intrinsic value,
whereas cryptocurrencies do not.
To argue that cryptocurrencies are commodities and not money by
using a judicial decision makes the claim more convincing. Nevertheless,
it is neither intellectually insightful nor honest, to misuse judicial decisions
only to ‘hype’ the technology and advance the agenda of technological
populists.
4.1.2.2. A 21st Century Dilemma: To Regulate or Not to Regulate?
Some scholars held the view that despite the technological origin of
transactions based on blockchain, for the most part, the existing legal
regulations are capable of being enforced against them, if enforcement
184 In Re CLI Holdings Inc., Washington Western Bankruptcy Court, Case No. 13-19746-
KA (12 Dec. 2013) , Order Denying Debtor's Motion to Reject Executory Contract with
Bitvestment Partners LLC, p. 1. Since the court’s order cites the parties’ submissions, the
reasoning of the court is found in the Creditor (Bitvestments’s) objection to debtor’s
motion to reject executory contract. See In Re CLI Holdings Inc., Washington Western
Bankruptcy Court, Case No. 13-19746-KAO (29 Nov. 2013), Bitvestment Partners
LLC’s objection to debtor’s motion to reject executory contract, p. 4. The court relied on
the definition of executory contracts provided by the Ninth Circuit in Marcus & Millichap
Inc. v Munple, Ltd. (In re Munple), 868 F.2d 1129, 1130 (9th Cir.1989), cited by
Bitvestment in its objection to the debtor’s motion for the rejection of the contract.
185 Id.
186 Supra note 174.
187 Id.
103 TECHNOLOGICAL POPULISM AND ITS ARCHETYPES
authorities issued the appropriate guidelines.188 These categories of
scholars generally call for ‘technology neutral’ or ‘functional interpretation’
of the legal rules. But, the intelligentsia that stands behind the technology
is quick to suggest that because the technology is at its nascent stage,
regulators should cuddle it,189 even if ten years have passed since it was
introduced and a select few have made fortunes out of it.
For instance, Michèle Finck alluded to, inter alia, a regulatory sandbox
that should allow startup companies to experiment their innovation
without complying with existing regulatory regimes.190 In a paper
published in 2018, she claims to provide regulatory techniques. Instead
she provides a cursory overview of blockchain use cases and an outline of
possible regulatory approaches gathered from existing practices, described
positively with no insightful normative regulatory theory. In order to
advance her narrative, she praises the technology by mentioning how it
helped poor people in Africa: “In Africa, blockchain has brought banking
services to the unbanked, most famously through BitPesa, which provides
blockchain-based mobile banking. Companies such as BitPesa and
BitSpark moreover allow for the fast and cheap transfer of remittances.”191
In support of her assertion, she cites the website of Bitpesa, the
company that alleges to make money transfer in Africa cheaper. However,
the information provided by Bitpesa should not be taken at face value.
Bitpesa cannot transfer money to a customer that does not have access to
a bank account and a mobile payment infrastructure. The assertion that it
brought banking services to the unbanked is completely unsubstantiated
and misleading, to say the least. To make this clear, we list the steps
necessary to conduct payment using Bitcoin in Africa, according to
Bitpesa’s own terms and conditions. 192
▪Sender opens Bitpesa Account and purchases Bitcoin;
188 Marina Fyrigou-Koulouri, ‘BLOCKCHAIN TECHNOLOGY: AN
INTERCONNECTED LEGAL FRAMEWORK FOR AN INTERCONNECTED
SYSTEM’ [Case Western Reserve University School of Law] 9 Journal of Law,
Technology and the Internet 1, p. 7; Philipp Hacker and Chris Thomale, Crypto-Securities
Regulation: ICOs, Token Sales and Cryptocurrencies under EU Financial Law (2017), p. 23 and
Gikay Asress Adimi, ‘European Consumer Law and Blockchain based Financial Services:
A Functional Approach against the Rhetoric of Regulatory Uncertainty’ [Ubiquity Press]
24 Tilburg Law Review.
189 Michèle Finck, Blockchains: Regulating the Unknown (German Law Journal 2018), pp. 675,
677.
190 Ibid 675, 677.
191 Ibid 672.
192 Bitpesa Terms and Conditions, retrieved from
accessed 11 April 2019.
NJCL 2019/2 104
▪Sender authorizes transfer by Bitpesa of a given amount of Bitcoin
to the designated payee’s bank account;
▪Bitpesa debits the sender’s account and transfers the specified
amount fewer charges to the payee’s bank account in local currency;
▪Bitpesa transfers the money to the receiver’s bank account with
mobile payment services.
Obviously, the payment system does nothing special to provide
banking service to the unbanked. In fact, an unbanked person—someone
who has no access to a bank account, credit card or debit card, and hence
is excluded from the financial system193— cannot access Bitpesa payment
system because local currency account is a prerequisite for the payment
system to work. In 2015, Bitpesa filed a petition against Safaricom for the
latter’s refusal to allow the former to use a mobile payment infrastructure
because it engages in Bitcoin-based transactions, without having a license
from the Central Bank of Kenya. The Central Bank did not give
authorization for it did not recognize Bitcoin transfer as money transfer.194
The dispute clearly shows that Bitpesa needs not only an existing local
currency account but also mobile payment infrastructure to provide
financial services in Kenya.
The example of Bitpesa underlines that not only are the media and
industry experts spreading technological propaganda but also scholars.
Without engaging in objective scientific analysis of the technology, the
intelligentsia risks becoming the mouthpiece for technological populists,
by merely echo-chambering what the latter propagate.
4.1.3. REGULATORY OVERSIGHT
Another important reason for the surge of blockchain as an
omnipresent and versatile innovation is the thoughtless regulatory
restraint in certain jurisdictions, especially in the European Union. A
reasonable restraint from putting in place a drastic regulation that stifles
innovation is understandable to a large degree. As Twigg-Flesner suggests,
a regulatory uncertainty caused by disruptive technologies195 should not
193 Eric Sammons, ‘How Cryptocurrencies like Dash Help the Poor’ Dash Force News
(August 23, 2017), retrieved from accessed 21 October 2018.
194 Lipisha Consortium ltd and Bitpesa Lted vs Safaricom, High Court of Kenya,
Constitutional and Human Rights Division, Petition No. 512, 2015, retrieved from:
accessed 11 April 2019.
195 Katyal defines disruptive innovation as follows: ‘Disruptive innovation goes beyond
improving existing products; it seeks to tap unforeseen markets, create products to solve
105 TECHNOLOGICAL POPULISM AND ITS ARCHETYPES
trigger the implementation of new legal rules until the disruptive
technology has also disruptive effect on the law.196 Premature regulatory
reform may deliver legal rules that are unsuitable or unworkable or
detrimental to innovation.197
Nonetheless, unduly prolonged restraint could also have a
detrimental effect on consumer rights198 and on the smooth functioning
of the market. Therefore, regulatory authorities, faced with a disruptive
technology that challenges the existing legal rules should not merely point
out the potential or actual regulatory uncertainty and sit idly. At least the
existing legal rules should be enforced with respect to the technology-
based challenges. This well-established conventional wisdom has been
ignored by governments in dealing with blockchain-based transactions.
The degree of regulatory self-restraint differs from jurisdiction to
jurisdiction, which permitted blockchain-based businesses to engage in
regulatory arbitrage.199
On the one extreme, there is China, which has declared ICOs
categorically illegal in 2017.200China considered blockchain-based
crowdfunding as mostly fraudulent with no sustainable business model
and concrete product to offer, a sentiment shared by Wikipedia’s founder,
Wales: “There are a lot of these initial coin offerings which in my opinion
problems consumers don't know that they have, and ultimately to change the face of
industry. We are all the beneficiaries of disruption.’ Katyal Neal, ‘Disruptive
Technologies and the Law’ 102 Georgetown Law Journal 1685, p. 1685.
196 Christian Twigg-Flesner, “Disruptive Technology - Disrupted Law? How the digital
revolution affects (Contract) Law” in Alberto De Franceschi, European contract law and the
digital single market : the implications of the digital revolution (Intersentia 2016) pp. 21, 25, 26.
‘The disruptive effect of a particular development can be gauged by considering whether
specific issues can be dealt with by applying the existing legal rules to the particular issues
that have been identified in respect of the issues. Thus, if it is possible to maintain the
existing rules but to clarify how these should be applied to the to the context of the new
development, then the disruptive effect to the law is minimal- indeed, such an approach
may reflect the robust design of existing legal rules and their potential for extending
these to new circumstance.’
197 Ibid 25.
198 Ibid 24.
199 Asress Adimi Gikay, ‘How the New Generation Cryptocurrencies Decoded the
Investment Contract Code: Analysis of US and EU Laws’ (2018) 10 Bocconi Legal Papers
311, 344. See also Gregory Klumov ‘How Various Countries Benefit and Suffer from
Regulation Arbitrage Today’, Bitcoinist(April 21, 2018), retrieved from
accessed 29
April 2019.
200 David Meyer, ‘China's Central Bank Is Banning Initial Coin Offerings’ Fortune
(September 4, 2017), retrieved from accessed 29 April 2019.
NJCL 2019/2 106
are absolute scams and people should be very wary of things that are going
on in that area”.201 A report published in 2018 confirmed that 80% of the
ICOs were indeed fraud.202 China has also been considering banning
bitcoin mining due to its wasteful electricity consumption.203
On the other extreme, the EU showed reluctance to apply existing
regulatory rules to blockchain based transactions until recently. The EU
market is peculiarly vulnerable to potential market failure due to lack of
reasonably robust regulation or regulatory decision pertaining to
blockchain. Due to the lack of commitment to enforcing existing legal
rules to ICOs, some ICOs raised funds largely from the EU market.204
A middle ground is taken by the United States, that adopted a more
balanced approach by applying the existing legal rules to various
blockchain based transactions and business entities. The US Financial
Crimes Enforcement Network (FinCen) issued a guideline that extends
the application of the Bank Secrecy Act to cryptocurrencies back in 2013
to cryptocurrency payments.205 The SEC has applied securities regulation
201 Joumanna Bercetche, ‘ICOs — the hottest craze in cryptocurrencies — is an
“absolute scam”, Wikipedia Founder Jimmy Wales says’, CNBC, 5 October 2017,
retrieved from: < https://www.cnbc.com/2017/10/05/ico-or-initial-coin-offerings-are-
an-absolute-scam-wikipedias-jimmy-wales.html l> accessed 29 April 2019.
202 Shobhit Seth, ‘$9 Million Lost Each Day in Cryptocurrency Scams’ (Investopedia, 2
April 2 2018), retrieved from accessed 17 October 2018.
203 Edwin Chan, ‘China Plans to Ban Cryptocurrency Mining in Renewed Clampdown’
Bloomberg (April 19, 2019), retrieved from
accessed 27 April 2019.
204 Angel Token ICO white paper states the following: ‘Government agencies in some
jurisdictions have made statements that we interpret such that they consider some Initial
Coin Offerings and token sales as Investments/offers that are to be regulated in some
way. Therefore citizens, residents, (tax or otherwise) and green card holders from the
following countries are strictly prohibited from participating in this ICO: – United States
of America (including all outlying territories) – The People's Republic of China ("PRC")
– Singapore – New Zealand – United Kingdom (including the Isle of Man, Northern
Ireland, and the Channel Islands.’ Angel Token ICO White Paper, Disclaimer, p.
2, retrieved from , accessed 29 April 2019. Hence, about half of funds
raised in ICOS in 2017 is raised from the European Market. Reuters, ‘Europe Is Pouring
a Staggering Amount of Cash Into New Cryptocurrencies’, Fortune (30 November
2017), retrieved from accessed 29 April 2019.
205 Financial Crimes Enforcement Network, ‘Application of FinCEN’s Regulations to
Persons Administering, Exchanging, or Using Virtual Currencies’ (18 March 2013), FIN-
2013-G001.
https://www.cnbc.com/joumanna-bercetche/
107 TECHNOLOGICAL POPULISM AND ITS ARCHETYPES
to blockchain-based financial instruments (securities).206 On December
11 2017, the SEC issued a cease and desist order compelling Munchee Inc.
to return funds raised from investors in return for tokens sold in violation
of securities law.207
The EU, while regarded as the model for regulating the market and
protecting consumers, has tactically been ignoring implementing balanced
regulatory measure by allowing the technology to serve as a tool for
anarchy. For a long time, the European Securities and Market Authority
(ESMA) has been ambivalent about whether the existing legal rules
governing offer of securities are applicable to blockchain-based assets. It
provided a positive answer only in January 2019.208 Perhaps more tellingly,
the European Commission and the Parliament concluded by early 2016
that the existing Anti-Terrorism and Countering Terrorism Finance
(AML/CTF) does not apply to cryptocurrency exchanges and digital
wallet providers. When the Parliament finally decided to implement a
directive to fill the regulatory gap, which it approved in 2018,209 it extended
the effective date of the Directive to 2020.210 Until 2020, the Parliament
and the Commission are willing to let exchange platforms conduct their
business without complying with obligations as know-your-customer
(KYC) or report suspicious transactions.
Why should a payment service provider transferring 50 dollars on
behalf of its customer be subjected to the KYC requirement that imposes
burdensome obligations on the financial institution as well as the
206 SEC, Report of Investigation Pursuant to Section 21(a) of the Securities Exchange
Act of 1934(2017), SEC Release 34-81207, p. 12, retrieved from
accessed 6 July 2018 &
In the Matter of MUNCHEE INC, SEC Administrative Proceeding File No. 3-18304,
retrieved from < https://www.sec.gov/litigation/admin/2017/33-10445.pdf> accessed
6 July 2018.
207 SEC Administrative Proceeding File No. 3-18304(n 166)
208 See ESMA, ESMA Advice: Initial Coin Offering (9 January 2019) & EBA, Report
with advice for the European Commission on Crypto-Assets (January 9, 2019).
209 Directive (EU) 2018/843 of the European Parliament and the Council of 30 May 2018
Amending Directive (EU) 2015/849 on the Prevention of the Use of the Financial
System for the Purposes of Money Laundering or Terrorist Financing, and, Amending
Directives 2009/138/EC, OJEU, L 156/43.
210 Id at Art. 42. Recital 8 of the Directive recognizes that ‘Providers engaged in exchange
services between virtual currencies and fiat currencies (that is to say coins and banknotes
that are designated as legal tender and electronic money, of a country, accepted as a
medium of exchange in the issuing country) as well as custodian wallet providers are
under no Union obligation to identify suspicious activity.’
NJCL 2019/2 108
customer,211 while intermediaries and users using cryptocurrencies could
transfer thousands of dollars without being bound by similar
requirements?
Compared to China and the US, the regulatory abstinence of the EU
is the result of either ineffectiveness or regulatory capture. Neither is
better or worse than the other. What we underline is that the rhetoric of
blockchain advocates has turned most stakeholders into active defenders
or passive observers, both categories being enablers.
5. CONCLUSION: A CALL FOR TECHNOLOGICAL POPULISM
CONSCIOUSNESS
The article showed that there are conspicuous similarities between
populistic discourse and the rhetoric supporting the ‘hype’ of blockchain
technology, which led us to propose the introduction of a new concept,
which we called ‘technological populism’.
Our research revealed that blockchain manifestos are neither
technological, nor programmatic documents, but mere communication
strategies resembling populist speeches, meant to attract supporters and
create polarization. In addition, we delved into the promises of blockchain
technology and showed that key elements of populist rhetoric, such as
disruption of the old order, empowerment of ‘the people’ against the
‘elites’, replacement of compromised institutions are also central to
blockchain manifestos. However, we also pointed out that the promises
of blockchain technology find little support in reality and we found that
the paradoxes of political populism – the potential for misappropriation
for own profit and lack of substance – are easily identifiable in regard to
blockchain technology as well. Thus, we debunked the promises of
decentralization, trustlessness (trust in computation) or
anonymity/pseudonimity.
Lastly, we advanced an explanation for the emergence of
technological populism and the reasons for its success. While accepting
that multitudes of answers are possible, our article identified and argued
that two extraneous factors are the most plausible explanation: the wide
support from the media and the intelligentsia and regulatory oversight.
The former provided technological populism with the necessary forum
211 D. Hopton, Money Laundering: A Concise Guide for All Business (Gower 2009), p. 78, ‘It
is often said that there are three parts to the KYC process: first, to satisfy yourself that
the prospective customer is who they claim to be; second, to ascertain the nature of the
proposed relationship; and third, to obtain enough information about the proposed
customer’s business so as to ascertain the legitimacy of the relationship.’
109 TECHNOLOGICAL POPULISM AND ITS ARCHETYPES
and legitimacy. The latter permitted the businesses centred on the
technology to operate without complying with regulatory standards and
rule of law, which made it economically efficient to create different
ventures with no sustainable business model. Ultimately, regulatory
oversight and indecision created the conducive environment, as populism
thrives on inefficient institutions.
All the above prove our initial postulate that similar discursive
elements and paradoxes connect political and technological discourse,
which justifies the introduction of the new concept of technological
populism. As in the case of political populism, a definition of technological
populism can only be based on its main traits because its confinements
remain fluid. We, thus, defined it as the phenomenon by which
technological innovations that promise and promote the disruptive effects
as societal benefits and claim to solve pressing socio-economic problems
by empowering the ‘disenfranchised’ and replacing the ‘elites’ are ‘hyped’
for the economic and commercial benefits of a select few.
This begs a final question: quo vadis? What should we do about
technological populism and how to control or curb its negative effects? In
our view, the answer to these questions starts with acknowledging the
existence of the problem. Such first step should enable regulators and
policymakers to quit their self-induced denial and regulatory stupor and
act, not just react. We understand that technology will always be one step
ahead in terms of innovation. Nevertheless, being conscious of
technological innovations with little real-world relevance, i.e., being able
to identify and distinguish between genuine benefits and populistic
promises of technology, should enable regulators to provide adequate and
timely responses to threats faced by citizens and businesses alike. It would
also save consumers from investing their hard-earned money into
technocratic projects that serve only the interests of a select few.