The unexpected consequences of a pandemic: Crypto-finance as cultural commons

Introduction

During the pandemic, retail investors turned en masse to crypto. ¹ As the number of investors has continued its exponential growth, interest in crypto has become increasingly visible in everyday life. Crypto has become a topic of conversation at pubs and family gatherings. In my fieldwork, I have found that at any given table it is now common for at least one person either to be a crypto investor or to know someone who is. It was no surprise that on 18 October 2021, the Financial Times started hosting a daily digest on digital assets, explaining that crypto ‘are edging into the financial mainstream’ (Financial Times, 2021). As further measures of societal relevance, the number of active investors has exceeded the 500-million mark (Triple, 2021), and crypto as a global industry is currently valued at $1 trillion, as the gross domestic product (GDP) of countries like Mexico or Indonesia.

In what follows I provide some coordinates that help explain why crypto has become mainstream, indicating its connection to precarisation and new class formations. I will also look at how this change has been achieved by examining the impact of information and communications technologies (ICTs) on the process of socialisation and re-signification of finance. Finally, I will explore how these shifts might be related to the emergence of a peculiar form of digital and cultural commons. I grant that this last idea might appear odd, far-fetched or downright inappropriate, since investment by individuals for individual profit is a defining characteristic of the realm of crypto-finance. I hope to show, however, that what lies behind these individualised actions is an ambivalence in which exploitation coexists with a redefinition of the genetic code of finance, giving rise to a shared culture and a commoning of resources. This ambivalence is due to the different ethical standpoints that coexist in the realm of cryptocurrencies: the ethics of individual profit and the ethics of political subjectivity. These are articulated in a social space where social values become sources of economic value. ² This same ambivalence is reflected in the literature that examines the politics of Bitcoin and blockchain. Scholars have traced a fundamental right-wing ideological core in the origins of Bitcoin, particularly when embedded in blockchain-issued currencies and assets. Links have been established to the thought of such economists as Von Mises and Hayek, given their insistence on the need to move beyond central banks (Golumbia, 2016). On the contrary, Rozas et al. (2021) identify a split between techno-determinist views driven by free-market principles, as in the case of crypto, and central authorities that claim the right to regulate this industry to ensure fair governance. Their opinion is that emancipation is possible in the linkage between these technologies and the commons. What if the commons, however, are to be found within the social fabric that supports a market-oriented view? My aim is to present the hypothesis of a common located within a mainstream cultural and economic phenomenon. ³

Examining the social political implications of blockchain and their crypto applications one cannot ignore the pollution and extensive depletion of resources. Most Bitcoin mining occurs in the United States, China and Kazakhstan, and their energy consumption (often deriving from fossil fuels) is comparable to a nation of 45 million people, as Argentina (Hinsdale, 2022). This is largely due to the extensive computing required (so-called proof-of-wark) to solve the mathematical puzzles that bitcoin miners have to solve in order to release new bitcoins in the network, while profiting from it. New, greener blockchains adopting different protocols have emerged in recent years, but the environmental concerns remain high.

The crypto-finance scene is composed of a plurality of voices: anarchist and right-wing ideals merge with both populist and avant-garde visions of finance; meanwhile crypto-evangelists have made their way in the digital world by amassing hundreds of thousands of followers. Crypto-finance has emerged as a flourishing industry that has created its own infrastructure, with digital and decentralised exchanges and extensive practices of data-gathering (Cossu, 2022). In this article, I focus on the cultures of crypto, pointing at the ways they are re-mediated, shared and lived out by a wide public of retail investors.

Method

This article is based on extensive research I have conducted on both the ordinary world of crypto-investors. I have conducted digital ethnography for the past 4 years, following the main conversations on Twitter, Telegram and Discord. I have also worked on YouTube gathering networks of channels that provide crypto-related financial literacy, also working with visual methodologies and content analysis to identify their main narratives. In addition, I have conducted 20+ interviews with ordinary crypto-investors, crypto-influencers and crypto-founders. All of this is complemented by document analysis of a corpus consisting of trade press (including both ‘underground’ blogs and mainstream financial press, as the Economist and Financial Times), cryptocurrency white papers, policy papers in the European Union, Bank of America in the United States and Financial Conduct Authority in the United Kingdom.

Precarious investors in neoliberal societies

The logical response to the current societal and financial picture is a simple question, yet one that is difficult to answer with scientific precision: why has crypto-finance gone mainstream?

The appeal of crypto might be explained, first, by the heightened sense of financial insecurity that many people face as a result of the current health, economic and climate crises. As exemplified by the case of South Korea (Lee, 2020), investors have looked to lucrative and volatile assets to compensate for a diminution in the power granted by traditional career paths. Getting a postsecondary degree and working hard are no longer enough to secure home ownership or a decent income. Incidentally, this theme is central to the plot of Squid Game, the most-watched show ever streamed by Netflix, a dark tale about Korean society where those who have fallen into disgrace because of debt gamble their lives (literally) to repay their debt and get rich quickly. The increasing prevalence of precarity and insecurity is also familiar in Western societies, as evidenced by the abundance of the social science literature (Banks, 2017; Gill and Pratt, 2013; McRobbie, 2016) and social critique (Berardi, 2017; Lazzarato, 2012) documenting this existential threat and the resulting growth in class inequality that has occurred throughout the past two decades, both before and after the 2007 global financial crisis (Friedman and Laurison, 2019; Savage, 2015). From the perspective of growing insecurity and inequality, one explanation for the mainstreaming of crypto looks at the trend towards neoliberal governmentality, in which systemic problems are addressed on an individual basis. Is investment in crypto, then, an individualised response to the systemic issue of precariousness? This reasoning seems plausible, but it does not address the full complexity of the situation. On closer inspection of the crypto-financial ecosystem, one finds elements of a commons-oriented ethos.

Second, and consequently, cryptocurrencies, thanks to the unique circumstances of their creation, have given rise to a new class of subjects. Bitcoin, the ‘mother’ of all cryptos, was capable of transcending its material essence – that of a revolutionary, but still slow, inefficient and polluting system for the transfer of intangible assets – to become a mythology (Dodd, 2018) or empty signifier (Mouffe, 2000). Bitcoin is most properly understood as a symbol, meaning very little in itself, that has the power to transform a multitude into a community. Bitcoin as a signifier has proved capable of accommodating the hopes, desires and fears of a generation that has grown up with a permanent crisis as its only social scenery. That generation is suspicious of the institutions – primarily governments and central banks – that are deemed responsible for this crisis.

The foundational cohort of crypto-investors, originally a generation of enthusiastic technophiles, is widening demographically. People from diverse backgrounds are now investing in crypto – not only the ‘usual suspects’, young males in their twenties or thirties with postsecondary degrees and specialised knowledge in computer science, living in urban centres and with high levels of income. A recent survey conducted on a sample of 2000 individuals in the United Kingdom (Gemini, 2021) showed that 13.5 percent of them currently invest in crypto or have done so in the past. The composition of this group has become more diverse across all variables, from gender to income and education. The typical investor here is aged between 18 and 44, is almost as likely to be female as male (41% are female, 56% male), is in a relationship, less likely to own their own home and more likely to have children or dependents at home. To compound the change, investing activity now starts with a yearly household income as low as £20,000, which is below the UK’s national average. These data tell us that those who are investing are not simply diversifying their portfolios. To conclude this demographic snapshot, the same reports reveal that these investors do not typically fit the narrative we find on social media, which portrays crypto-investors as aggressive and speculative intraday traders. Instead, these investors tend to have a rather cautious orientation, investing and holding a position for weeks or months. A revealing insight is that crypto, for those at low-income levels, might be the prime or sole form of financial investment, something that also worries regulators considering the high risks involved in this kind of trading.

These demographic shifts show how Bitcoin might constitute a haven (Conlon et al., 2020) from the uncertainty of a crumbling world. Bitcoin, in the crypto-evangelists’ account, is a parallel world that was decoupled from the influence of the traditional economy during the pandemic crisis. In fact, after a precipitous fall from $8000 to $4500 per bitcoin at the start of the pandemic (13/03/2020), the currency is now faring well at over $60,000. The typical tweet about this topic would read: ‘See, folks? As the old economy collapses, Bitcoin thrives!!’ However, other accounts (Financial Times, 2021) state that Bitcoin is indeed linked to the economic conjuncture and has soared in parallel with the public subsidies and government-backed loans ⁴ that have been deployed to mitigate the pandemic’s impact on employment rates and wages. Crypto is a safe haven that provides anchorage – a loose sense of community – in cultural terms, but that seems to provide financial returns as well. This description was confirmed in research conducted for OECD (2019) which showed that, overall, retail investors are profiting from the industry. This reality has led many to examine the attraction of crypto by exploring the cultural underpinnings of crypto-financial behaviour. As it turns out, the current explosion of financial speculation is not unprecedented; Lafargue (in Lee, 2020) once stated that it is modernity itself that has turned ‘capitalist society into a giant international gambling house where the bourgeois wins and loses capital in consequence of events which remain unknown to him’ (p. 1). One line of inquiry follows the anthropological route, understanding this new class of investors as gamblers strangely attracted to the irrational and the magic suggested by the wild fluctuations of cryptocurrency prices. Using this approach, researchers may wish to explore the affective side of investing apps, which might prioritise sensation over rational evaluation. However, research already shows how lay investors (Lee, 2020) distrust the traditional techniques of finance – for example, technical and foundational analysis – and how they ultimately embrace the unintelligible financial market on its own terms. One might think that they are gambling because it is the only way to go ⁵ , but I am also convinced of the validity of another line of interpretation, one that sees retail investors as subjects who are betting on the ‘collapse of the current social order’ (Hayes, 2019: 12). It is on this bet that the speculative value of bitcoin and other cryptocurrencies depends.

The cultural production of crypto

So far, we have concentrated on the causes of crypto’s going mainstream. The next question is: How was this shift achieved, and more specifically, how might the commons have been involved with this process? At first glance, a movement composed of individualised, lay investors might seem antithetical to the commons. They are, after all, self-interested individuals seeking to maximise profit; nothing could be further from the ideal of the commons. Yet there is a component within the realm of crypto that is based on and akin to the notion of the commons. The digital creation and diffusion of information about crypto, the common awareness of the potential of this economic wave, and the shared mythology about the value of cryptocurrency might configure it as a cultural common (Kay and Wood, 2020) or a knowledge common (Hess and Ostrom, 2007). Fundamentally based on an extensive material layer that includes a plethora of devices – ranging from large server farms to the smartphones used by retail investors for trading – as well as countless hours of work, the cultural common of crypto-finance can be defined as a new body of knowledge about finance. This cultural common is being relentlessly enriched by a vast array of users, from crypto-influencers to the masses of unknown individuals who write hundreds of comments on social platforms (e.g. Reddit, Telegram, Twitter). The cultural common of crypto-finance can be viewed as a shared pool of resources that current and prospective investors can use for orienting their actions. The information included in this common varies significantly in its degree of authenticity, as the presence of fraudulent content, scams and Ponzi-esque schemes can attest. In addition, the cultural common of crypto-finance presents differential access to information, ranging from universally accessible forums and YouTube videos to paid content.

We can think of this cultural common as a ‘Wikipedia of Finance’, a broad assemblage of digital media products forming the cultural foundation for a new financial literacy and providing a socialisation process for a new financial ethos. This content is largely created in peer-to-peer mode, without reliance on traditional expertise, and includes such formats as videos, written posts and podcasts. Historically based on memetic and participatory Internet cultures (Jenkins, 2006), a part of the cultural common of crypto-finance is visible in the fabric of everyday life, as my ongoing ethnographic research suggests – for instance, in informal conversations that take place undetected by digital data-gathering processes. Furthermore, it is possible that beneath the production of this cultural common, an even more fundamental change is taking place: a digitally enabled transition to a post-literary canon (Maxwell et al., 2017). This transition would imply that the deluge of digital traces in the crypto scene can be accounted for only by framing them as part of natively oral, not written, culture. Thus the mythology of crypto would become a collection of oral tales about the virtues of digital currencies. This development might seem pre-modern, but perhaps it reveals the enduring nature of human behaviour; following Bruno Latour, we might say that, after all, we have never been modern. However, we evaluate the crypto-phenomenon – as regressive, alienating or emancipating – I believe that crypto-finance holds great importance precisely because of its social relevance.

Crypto between power and commons

How did it happen that an idea born in anarchist groups, seeking to diminish the power of government and win back control for individuals over key aspects of social and economic life, turned into the current crypto mainstream? As we have seen, multiple social and economic circumstances might contribute to an explanation. Furthermore, there is a need for reflection on a paradox: that digital money, machinic and disembodied in its nature, has encoded within it political principles and social processes that appropriate it, redefine it and possibly make it something different. This social aspect has been central in research streams that view money as meaning and as process. As the economic anthropologist Bill Maurer noted, in every scientific cycle, scholars are regularly puzzled by the fact that ‘money is “just” meaning, or that finance is fiction’ (Maurer, 2005: xiv). Furthermore, there is evidence that the social activities of crypto users do have an impact on its value. This reality should not be surprising, given that the performative turn in market studies and cultural economy has established clear links among beliefs, irrationality and markets (Callon, 1998; MacKenzie, 2008; Muniesa, 2014). This linkage can be observed also in crypto markets, where social sentiment grounded in the crises of our time has found a new cultural and economic space to inhabit. The endless conversation taking place on digital media about this new space has configured what we have provisionally defined as a cultural common.

Certain groups have worked to connect blockchain technologies and crypto-finance directly to the idea of the commons. Vanguard artists and programmers have tried to steer back from the largely market-driven trajectory that prevailed after the Bitcoin explosion, to safeguard its emancipatory potential. One notable effort in this direction is the Bank of the Commons ⁶ , created by activists, programmers and left-wing economists in the wake of the financial crisis of 2008–2011. Its aim was to create an alternative financial system capable of ensuring fairness and a minimum income for its participants. Historically and politically, the Bank of the Commons is founded on antagonism towards the financial system: the cooperative behind it was originally funded by a loan that was tactically taken from a Spanish bank with the clear intention of never paying it back. Moreover, it is often stated that code itself is something that belongs to the commons approach. The Free/Libre Open-Source Software movement (FLOSS) has shown how cooperation could result in reliable and universally accessible software which, in the case of Linux, is used to run most servers on the planet. In a similar vein, Commons-Based-Peer-Production (CBPP) represents a model in which peer-to-peer communities work within a commons framework. Stemming from the research of Yochai Benkler (Benkler and Nissenbaum, 2006), CBPPs show how communities can collaborate effectively beyond the boundaries of hierarchical firms and corporate structures and still achieve good outcomes.

The cultural commons of crypto-finance is based on a multitudinary social formation rather than a bounded community. This multitude has found in such digital artefacts as cryptos and such enabling technologies as blockchain a shared interest, a belief and perhaps also an addictive game during a time of crisis aggravated by the pandemic. The multitude does not always intentionally collaborate towards the production of knowledge, nor is it always guided by virtue. However, it does create and maintain an efficient infrastructure of meaning, value and knowledge. In this context, I am convinced that scholarly and public debates are misguided in their tendency to magnify and praise the actions of politicised minorities, often privileged in various forms of capital. The present moment is probably a bad one in which to praise the virtues of the people, as they have been persuaded by demagogic leaders on recent important occasions (as in the UK referendum and the US elections) and have been led into violent division among themselves over many issues: vaccines, immigration, LGBTQ+ rights, and so on.

What I hope could be recognised in my contribution is the inspiration it draws from the tradition of cultural studies which, since the 1960s, allowed popular cultural production to be viewed in a serious rather than a condescending way. My attempt has been to demonstrate that there might be grounds for understanding these knowledge hubs as new cultural commons. It is also plausible that this crypto-based cultural wave will constitute a turning point in the relationship between society and finance. This turning point will surely not be the first one, nor will it be the last. Remarkably, the British Museum hosts a vast collection of coins, most of which were minted by central authorities such as banks, kings and emperors. However, history documents some exceptions. One such incident occurred in 17th-century England, when shopkeepers started stamping their own coins and circulating them for their economic needs. These coins were banned by Charles II in 1670, with a decree stating that the practice violated the royal prerogative of coin minting, and noting how wrong it was, ‘imposing [the self-minted currencies] upon the poor’. The coins, though, were not imposed, as the analysis of a curator at the British Museum reveals (Allsop, 2018), the people simply needed them. If a parallel could be drawn with the present situation, we might suspect that we are witnessing one of the most significant disruptions yet in the relationships among authority, money and society.