US whistleblower Edward Snowden has shared his thoughts on cryptocurrencies in an interview with the American Civil Liberties Union (ACLU). Unlike bitcoin maximalists and hyperbitcoinization proponents, Snowden believes that bitcoin is not going to become the one world currency, but that the current interest in BTC will transfer over to other cryptocurrencies.
Edward Snowden – BTC has short-term value
When asked as to whether or not BTC had any intrinsic value, Edward Snowden replied that it had short-term value due to its scarcity. The limited supply of 21 million BTC encourages miners to attain the last remaining BTC. He also asserted that BTC did have an intrinsic value as it provided the ability to transact outside of the banking system and that this capability is of vital importance. But because so many other coins can now provide this service, BTC could soon be on the way out –
“That belief is how cryptocurrencies move enormous amounts of money across the world electronically, without the involvement of banks, every single day. One day capital-B Bitcoin will be gone, but as long as there are people out there who want to be able to move money without banks, cryptocurrencies are likely to be valued.”
The concepts of intrinsic value, scarcity, and utility are constantly debated among scholars and laypeople alike. The simplest definition is that the value of something is determined by what people are willing to pay for it. A large part of the decentralized movement is the establishment of a free market where value can be more readily analyzed, and bitcoin was heralded as the answer to this issue.
However, there is considerable evidence of manipulation in the BTC market. A proliferation of institutional offerings has also led many to ponder who owns all the BTC and how ‘financial’ the market has become, with crypto-derivatives, stablecoins, and custody solutions. Cryptocurrencies are starting to broadly resemble the financial products they were designed to replace, and BTC is a prime example of this trend. With the current ongoing market collapse, the faith in BTC, even from diehard early adopters, may be waning.
But for Edward Snowden, wealthy elites and government agencies have much to fear from BTC and cryptocurrencies in general. They provide no benefit for the rich, as there are already many ways for the wealthy to avoid paying taxes. Yet they provide multiple benefits for the poor, including those who do not have access to a bank account, such as a teenager in hyperinflation ridden Venezuela.
Cryptocurrencies provide a means for people to avoid paying fees and taxes which invariably trickle upwards. Many civilians are already openly looking for methods to transact outside the existing banking system, and this need is going to grow. Collapses in Venezuela, Turkey, and Iran have pushed citizens towards the adoption of BTC.
The importance of trust in a world of lies
Snowden was also critical of both proof of work (POW) and proof of stake (POS) consensus mechanisms. He described POW as environmentally destructive and of benefit only to the rich (the bitcoin cash hashing war is a prime example of this point, where the networks are governed entirely by mining interests). Snowden said that POS is a system that benefits the rich in the hope that their greed will keep the system running.
While Edward Snowden still praises BTC as the first form of free money, it is to be replaced with other cryptos as time goes by. This lends weight to the idea that we will have a plethora of industry-specific coins as opposed to “one coin to rule them all.” Instead of having one token for the entire world, coins will be specific to certain industries, and second layer solutions will enable seamless interoperability between various cryptocurrencies.
People will have a choice in what coins they transact in, and the market will be fluid and dynamic. There is also a strong argument that using a single coin is a recipe for disaster, given that there is already serious manipulation in the BTC market. While critical of BTC, Snowden freely highlighted the multiple benefits of blockchains as a means of avoiding government censorship and battling corruption. Trust, for Snowden, is a scarce commodity in the modern era –
“We live in a world where everyone is lying about everything, with even ordinary teens on Instagram agonizing over how best to project a lifestyle they don’t actually have…This is the one interesting thing about blockchains: they might be that one tiny gear that lets us create systems you don’t have to trust. You’ve learned the only thing about blockchains that matters: they’re boring, inefficient, and wasteful, but, if well designed, they’re practically impossible to tamper with.”
Digital Nomad with an interest in Zen and Blockchain technology.
Law graduate with 3 years experience as a consultant in the capital markets industry and 4 years experience freelancing on UpWork as a Creative Writer.