Becoming the “Crypto Bro” and the Dystopian Future

1. my journey to this point

Working at a Finnish crypto startup made me realise a ton of things regarding the state of crypto since the publication of my thesis Bitcoin as a Nonviolent Tool Against State Financial Censorship. If you are worried that you might have less personal autonomy over your money, then let’s look 1) my journey to this point and 2) my perspective on where things are going.

I heard about bitcoin for the first time from my friend in 2012. They bought a bitcoin miner and actually made some profit in their home. I paid no attention and shrugged it off, enjoying video games with my friend.

I didn’t pay attention to it until early 2017 when bitcoin was a hot potato. I was, like most people, greedy. Not too long and it reached the peak and crashed and became boring, “dead”. From daily euphoria to nightly panic attacks.

Despite these difficult emotions, I plunged into the rabbit hole. I was astonished that the spotlight wasn’t bitcoin and its technological inner workings per se but the context: The economy in shambles after the financial crisis of 2008, origins and function of money, different schools of thought regarding economical models for capitalism, monetary colonialism, the taken-for-granted financial privileges of the Global North, cashless societies, and state censorship.

I have laser eyes. You could say I am one of the people who “came for the money, but stayed for the technology”. In fact I contributed to the bitcoin community by writing a thesis on censorship, telling my friends and family about bitcoin (with poor success), and now working at a crypto startup.

I have witnessed two halving events and couple market crashes. Halving is an event where the supply of bitcoin halves and there is less and less bitcoin available, making it one of the scarcest things there is. I bet some day when bitcoin is ubiquitous in our society, people will have halving parties every four years until the end of 2140.

Every year since 2017, I have become more and more confident and easy about the price and vision. It is a linear relationship: the more you know about bitcoin, the more certain you become of its potential and its eventual ubiquity. The inevitable crash will be a mere meh.

I am no longer interested in the price. However, it is important to note that increases in price drives awareness and then adoption. (That is how I dropped into the rabbit hole!) Some even say that when “price goes up, freedom goes up”. Though that is assuming that the person still hodls their bitcoin despite market crashes and in their own self-custodial wallet. Freedom here refers to freedom from harmful state monetary practices, and freedom to spend your bitcoin the way you want.

After I finished my thesis, I shared it with a human rights activist Alex Gladstein in a cold email.[1] After he posted my thesis on Twitter/X, it quickly spread, capturing the interest of a vast audience.

That was a pivotal point in my life.

Since its publication, the thesis has been downloaded hundreds of times. This does not take into account how many times the thesis was shared, accessed, seen and read without downloading. Even my university checked my social media profile. An opinion piece on Forbes (albeit with a skewed narrative) was also written.

the making of the thesis ft. Lorna Shore

Subsequently I was interviewed by two people. One gave me an opportunity to build a career at Alrecon starting as a business and operations manager. The other motivated me to keep on researching and writing articles and eventually a doctoral thesis on bitcoin and human rights. I was definitely keen to write a doctorate after my graduation but I wasn’t sure about the available data as well as the specific topics and overarching theme. After the interview I was more confident and determined that I could write a doctorate. For now I am still taking notes, reading books and theory, and thinking of simpler articles to write.

Friends often ask me what am I doing at the startup exactly?

I always give a different answer, trying to understand how my friends would understand me the best. Partly because I am curious what kind of responses they make. Bitcoin and crypto are difficult to understand by themselves, and when I say that I work at a crypto startup, that is, well, cryptic.

Sometimes I say I work in ‘finance’ just to avoid the topic. Honestly, I hate to say that because that undermines the ethos of bitcoin, mistaking me as some sleazy Wall Street investor. I’m not sure “crypto bro” is any better either. Then again, working at a crypto startup that builds a custodial wallet and an exchange does not exactly support the bitcoin ethos either.

my friend told me i look like a “an alcoholic coming from his 9-5 job trying to get the courage to go back to his family”

Every time I say I work with ‘cryptocurrencies’, I giggle inside, expecting that the person is going to shout the whole field as a scam only because they don’t or don’t want to understand the specific nuances, philosophy and origins behind crypto.

For my thesis, I researched through the humanitarian lens, taking into account the benefits for the individual and society at large. I wrote about bitcoin’s use for funding nonviolent campaigns, but also mentioned other organisations—Anti-Corruption Foundation and Wikileaks—who had their finances cut off by the state.

In contrast, in my everyday work I am researching and developing from a money laundering and terrorist financing standpoint, considering risks and costs associated with the business. Essentially, everyone is considered a threat with a risk score. (Similar to the Realist theory in international relations, states maintain a cautious approach towards each other, constantly aware of potential shifts in power and alliances.) I have had days where I have been genuinely frustrated and even angry about the current developments and where the industry is heading. More on that later.

“crypto bro” in his natural habitat

Right now I am making beautiful flowcharts and documentation on how the business ought to work within applicable national law and EU regulation.

For example, the new Markets in Crypto-Assets Regulation (MiCAR) in the EU will regulate all crypto-asset service providers (CASPs) to provide detailed information on their operations in a more structured manner. Then there is the Transfer of Funds Regulation (TFR) that will require CASPs to collect and share information about individuals who send and receive crypto funds through their services.

The Finnish government is now starting to implement these changes. They inquired information and interviewed me—or rather Alrecon—about MiCAR and TFR. Actually they asked all Finnish CASPs, twelve of them, for their opinions.[2]

Table 1. List of 12 CASPs in Finland in 2023

Index CASP Website Business Type Licence
1 Alrecon Oy NA Custody Custody
2 Blocktech Oy NA NA Both
3 Coinmotion Oy https://coinmotion.com/ Exchange, Custody Both
4 Cornerstone.land Oy https://cornerstone.land/ NFT Exchange
5 Kvarn Capital Oy https://www.kvarncapital.com/ Investment Both
6 Localbitcoins Oy https://localbitcoins.com/ P2P trading Both
7 Membrane Finance Oy https://www.membrane.fi/ Stablecoin; EUROe E-money institution
8 NordXE Oy https://nordxe.eu/ NFT Both
9 Northcrypto Oy https://www.northcrypto.com/fi Exchange, Custody Both
10 NV Exchange Ab NA NA Both
11 QB Finland Oy https://litepro.org/ Exchange Both
12 Tesseract Group Oy https://tesseractinvestment.com/ Borrowing/Lending Both

Note. Check licences here: https://www.finanssivalvonta.fi/en/registers/supervised-entities/

2. my perspective on where things are going

I like MiCAR in the general sense: CASPs can now advertise and provide their services across the EU; CASPs should become more transparent and better structured; and CASPs will have clear responsibilities and duties. In other words, it will be safer to buy and sell crypto and there should theoretically be safeguards against customer fund misuse.

However, I strongly disagree with their requirement for CASPs to provide information on the environmental impact of each crypto they want to list in their services. The whole environmental topic around bitcoin has gained so much negativity over the years in the media that anyone caring for the climate—at this point almost everyone—is dissuaded from even understanding bitcoin any further.

Myths often persist in society longer than the reality they are based on, which can change over time. Despite people strongly believing in these long-standing myths, reality continues to evolve. However, we don't always recognise or adapt to these changes in reality promptly or effectively.

I wrote to the European Securities and Market Authority about the requirements to disclose energy uses of crypto-assets, which may consequently stigmatise bitcoin. I don’t think they understand how bitcoin mining works. Nor do I but there are intelligent people who do.[3]

In short, prior models that calculated the environmental impact of bitcoin are now outdated. Myth still persists. However, I am glad that the bitcoin community is taking a stance. I remember from psychology studies that to persuade the majority, the minority (bitcoin community) has to patiently and regularly convey factual information to change the majority’s perception.

There are many misconceptions about bitcoin's energy use. Let me tell you one. The belief that bitcoin primarily uses fossil fuels was true until the post-May 2021 mining ban in China, but the migration of mining activities has led to a significant shift towards sustainable energy sources. Note that mining equipment do not in itself produce greenhouse emissions. Heat is not a greenhouse emission. As such, greenhouse emissions depend on where the electricity is produced: using renewable power sources or oil and coal. Focusing on electricity consumption is a distraction.

Moreover, note that this doesn't take account the multitude of ways that bitcoin mining makes contributions to the climate. For example, bitcoin mining can support renewable energy development[5] and capture landfill methane to to power its operations.

Then there is the TFR. I am wholeheartedly disgusted by the organisation behind TFR—the Financial Action Task Force (FATF). Their proposal is an attempt to make barriers for the use of crypto. No more borderless transactions. The Global North wants crypto under control for the new-generation crypto corporates. Bitcoin and crypto was supposed to foster financial inclusion, and now the Global North wants to make it a controlled environment, similar to the contemporary financial institutions. This is called path dependence: the future development of an economic system is affected by the path it has traced out in the past.

Moreover, being your own bank, that is, having your crypto self-custodial wallet is deemed dangerous in the name of money laundering and terrorism. Just like cash—crypto being the digital equivalent—you might not be able to withdraw your crypto to your own wallet in large increments. Private crypto and privacy tools will be deplatformed, banned, and forgotten.

This outlook is summarised by the FATF's stance on self-hosted wallets and decentralised finance.[6,7]

In their view, the concept of people controlling their own money through “unhosted” wallets and peer-to-peer transactions represents a significant risk to the established order. The term 'unhosted' itself implies that only a hosted scenario is acceptable, subtly saying that self-hosting is a illegitimate. The FATF magnifies concerns about money laundering and terrorist financing to rationalise stringent control measures.

In this envisioned world, every individual financial transaction is subject to intense surveillance and control, as financial autonomy is synonymous with criminal intent. The idea of privacy in financial dealings is demonised, and the very notion of self-hosted wallets, which enable individuals to transact directly without intermediaries, is depicted as a gate to unlawful activities. The fact that these transactions elude the traditional scope of AML/CFT standards fuels a narrative of fear and suspicion.

The push to impose additional AML/CFT requirements on CASPs for transactions involving self-hosted wallets is seen as an essential measure to combat this perceived threat. This shift signifies a move from individual ownership to corporate control of finances, executed under the pretence of shielding society from the dangers of unregulated financial activities.

The ultimate goal of this dystopia is a society where every financial action is monitored, controlled, and regulated, leaving no room for personal freedom or privacy in financial matters.

Now, let's delve into a plausible, yet scary story:

Imagine using bitcoin or any crypto for regular transactions – with friends, local businesses, and for online purchases. For each transaction to a friend who uses a different crypto provider, you're required to disclose the identity of the recipient.

The story takes a darker turn when you learn about peaceful protests in a distant country, marred by violence and oppression. You feel a deep sense of solidarity and outrage against the injustice. The most influential groups in these protests have been labelled as high-risk for terrorism by powerful nations and sanctioned. These groups, desperate and trapped, are on the brink of genocide, facing aggression from a neighbouring state funded by the very powers that have sanctioned them.

The people in this besieged country, with limited access to global financial platforms and barely any internet connectivity, rely on mobile wallets for transactions. Moved by their plight, you decide to withdraw bitcoin to your self-hosted wallet, an act akin to an ATM cash withdrawal in the bygone world. This action, however, requires you to justify to the new-age banks why you're withdrawing your funds and their intended destination. The transaction is deemed risky by all platforms, with withdrawal limits imposed based on each platform's policy, ranging from a few hundred to a thousand euros.

To execute this withdrawal, you have to verify ownership of your bitcoin address with a digital signature, irrevocably linking your identity to the address. This allows authorities to trace your money flow. To maintain a semblance of privacy, you use mixers and other tools to obscure the transaction history of your bitcoin. Consequently, you're immediately suspected of money laundering or terrorism, and any attempt to send back those funds back to your custody provider is met with scrutiny and potential seizure.

Your intention was merely to help a friend's family facing genocide, starvation, and gross injustice.

However, the system effectively blocks your humanitarian efforts unless they go through centralised, corporate entities.

In a society where digital finances are constantly under surveillance and control, participating in a disapproved protest, supporting a controversial political cause, or transacting with certain individuals could lead to your digital funds being frozen, seized, or completely taken away. The control over money lies not with individuals but with corporations, banks, and governments, often indistinguishably intertwined in their interests and operations.

There may be no problem now, but the equilibrium from democratic governance can quickly shift to a totalitarian surveillance state. Prior to this, if we had given them the power to monitor and control our transactions, those consequences can now be detrimental under the new regime.

We are at a crossroads regarding the future of digital money. On one path, digital transactions become dominated by corporations like banks and payment platforms, where every payment, except minor ones, involves a corporate intermediary. This scenario leads to increased corporate control and surveillance over financial transactions, with corporations having the power to enforce their terms and conditions.

Alternatively, we could choose a future where individuals control their digital funds and conduct direct, private transactions without intermediaries. This decentralised approach allows for financial autonomy and privacy, free from corporate oversight.

The decision we make now is crucial. It will shape our financial future, determining whether we move towards a cashless society under corporate dominance or embrace a system where money functions as a global internet protocol, enabling free and private transactions. This choice has significant implications for our freedom, privacy, and financial independence.

All things considered, I still have a rather narrow, incomplete view of the development. I mean that in the sense that I haven’t taken part in bitcoin conferences, I am not a cypherpunk, I haven’t worked on a decentralised projects, I don't know how the lightning network works and how it is going to be adopted given its in-built privacy features, I don't understand decentralised finance, and I don’t know how the Global South is adopting and educating bitcoin and crypto. I am sure there are lots of progress being made toward self-custodial solutions and other advancements for financial sovereignty.

When we reach the most banal corporation-controlled “walled garden” then at least we have bitcoin as sound money—apologies—an asset. Because bitcoin is no longer cryptocurrency or virtual currency or money, but an asset.[8] This is yet another way by to plant the seed in the public consciousness of how bitcoin is not a medium of exchange, but an asset. Luckily, bitcoin ETFs are here but at what cost?[9]

3. further reading

[1]. I remember years ago when I learned about the concept of “cold email” from Sriram Krishnan, How to write a cold email https://sriramk.com/coldemail.

[2]. Finnish Government. Lausuntopyyntö luonnoksesta hallituksen esitykseksi EU:n kryptovara-asetuksen ja maksun tiedot -asetuksen täytäntöönpanosta. https://archive.org/details/lausuntopyynto-20231227092243

[3]. Daniel Batten. https://twitter.com/DSBatten, https://danielbatten.substack.com/, https://batcoinz.com/

[4]. https://batcoinz.com/submission-to-esma-on-bitcoin-mining/#_ftnref4

[5]. https://pubs.acs.org/doi/10.1021/acssuschemeng.3c05445

[6]. Financial Action Task Force (FATF). UPDATED GUIDANCE FOR A RISK-BASED APPROACH. https://www.fatf-gafi.org/content/dam/fatf-gafi/guidance/Updated-Guidance-VA-VASP.pdf.coredownload.inline.pdf

[7]. Financial Action Task Force (FATF). TARGETED UPDATE ON IMPLEMENTATION OF THE FATF STANDARDS ON VIRTUAL ASSETS AND VIRTUAL ASSET SERVICE PROVIDERS. https://www.fatf-gafi.org/content/dam/fatf-gafi/guidance/Targeted-Update-Implementation-FATF%20Standards-Virtual%20Assets-VASPs.pdf

[8]. Even Michael Saylor does not want to call bitcoin a currency but an asset. https://www.btctimes.com/insight/michael-saylor-on-bitcoins-next-billion-hodlers

[9]. https://www.bloomberg.com/opinion/articles/2024-01-04/put-the-bitcoins-in-the-box?srnd=undefined

If your interest in crypto is “number go up,” this is good. If your interest in crypto is “this is the financial system of the future and will increasingly be adopted by big institutions and ordinary people,” this is a mixed bag: On the one hand, there is a lot of optimism about ETF approval driving retail and institutional adoption; on the other hand, “everyone owns Bitcoin through a BlackRock ETF in their Fidelity brokerage account” is not quite proof that crypto is the financial system of the future. If your interest in crypto is “crypto keeps coming up with fun new ways to do finance,” though, this is pretty boring. Crypto’s fun new way to do finance is to put Bitcoin in a box and sell you shares of the box; the goal is to transmute Bitcoin — this decentralized disintermediated trustless novel form of money that was meant to replace the banks and brokerages — into regular stocks.