Donald Trump has threatened to designate Antifa—a decentralised group of far-left activists—a terrorist organization after country-wide protests over the killing of George Floyd turned violent.
Florida Republican Representative Matt Gaetz called for the government to “freeze their money” to stop protestors thought to be aligned with Antifa from “committing attacks”—prompting fears digital payment channels could be hijacked and suggestions bitcoin could be used to resist government “overreach.”
Protestors and demonstrators have taken to the streets across the U.S. in response to the killing … [+]
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“Now that we clearly see Antifa as terrorists, can we hunt them down like we do those in the Middle East,” Gaetz asked via Twitter this week, racking up 12,000 retweets before Twitter moved to limit its visibility.
While the U.S. government cannot label a domestic group a terrorist organization under current law, Trump’s language could indicate the resources the Department of Justice and FBI are willing to put into their investigations, Faiza Patel, director of the liberty and national security program at the Brennan Center for Justice told FactCheck.org.
The U.S. has used its influence over financial infrastructure for political ends before.
Back in 2010, political pressure on Visa, Mastercard and PayPal led to them blocking payments to whistle-blower site WikiLeaks after it leaked a cache of U.S. State Department diplomatic cables.
Bitcoin, a decentralized digital currency, was used to sidestep the block on payments to WikiLeaks in 2010.
“WikiLeaks has kicked the hornet’s nest, and the swarm is headed towards us,” bitcoin’s mysterious inventor Satoshi Nakamoto wrote at the time, shortly before he disappeared.
Since then, digital payments have significantly replaced cash, especially among young people, leaving giant corporations largely in control of payment channels.
Card companies Visa and Mastercard, along with PayPal-owned Venmo and Square’s Cash App, have seen explosive growth in recent years—speeding up and easing the flow of payments but also handing companies swarths of financial data and control.
Alongside the rise of these centralized payment systems, bitcoin has emerged as an alternative.
“Bitcoin is apolitical financial infrastructure that is indifferent to the identity of its users,” said Nic Carter, partner at blockchain-focused venture capital fund Castle Island Ventures.
“Historically, bitcoin has been perceived as solely the purview of libertarians and ideologues. However, as financial rails have become increasingly politicized, a more heterogeneous set of groups are finding value in truly neutral payments systems. Bitcoin caters to all without restriction.”
Others in the bitcoin and cryptocurrency community have warned the freezing of funds is a common authoritarian tactic.
“One of the most important tools in the authoritarian toolkit is the ability to freeze the funding of legitimate political dissent,” said Nathaniel Whittemore, a bitcoin and cryptocurrency consultant and strategist.
“By separating the infrastructure of money from the infrastructure of state power, bitcoin makes it that much harder for this type of politically motivated confiscation.”
“In the wake of unprecedented central bank action around the Covid-19 crisis, it seemed like the most relevant narrative of bitcoin in 2020 was as a hedge against inflation,” Whittemore said.
“It appears, however, that its capacity for censorship resistance might be just as relevant.”
U.S. President Donald Trump has adopted a combative attitude toward protestors across America, … [+]
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Meanwhile, countries around the world, led by China and kicked into action by Facebook’s libra plans, are looking to digitalize their currencies—something that could give the governments even greater control over what people spend money on.
“A digital dollar would probably be designed to make it remarkably easy to freeze or seize the funds of any person or group. This system could allow the U.S. government to fine-tune the uses of each programmable dollar,” said financial author and trading veteran Glen Goodman, who has been closely following the development of central bank digital currencies.
Some U.S. lawmakers have proposed the creation of digital dollars and so-called FedAccounts as part of stimulus bills designed to offset the economic damage wrought by coronavirus-induced lockdowns.
Goodman fears central bank digital currencies and a digital dollar could open up highly specific avenues of control.
“If intelligence agencies suspected some Americans of helping to fund an anti-government group, they could freeze some of their digital dollars, but leave them with enough workable dollars to pay their bills and living expenses,” Goodman said.
“This could potentially allow a government to suppress opposition without infringing the Eighth Amendment which bans ‘cruel and unusual punishments’.”
Meanwhile, the coronavirus pandemic is likely to push payments online at a far faster rate than before.
Some have suggested Covid-19 could herald the long-expected “death of cash.”
“As payments move online, virtually every transaction produces metadata and surveillance collateral,” said Carter.
“It’s not hard to see how this can be abused by the state, which has a long track record of lazily conducting enforcement through the domain of finance. Non-state tools are crucial in this time of state overreach.”
The phase “bitcoin fixes this” has become a cliche in tech circles since bitcoin exploded onto the world stage in 2017, mocking diehard cryptocurrency supporters’ belief that bitcoin is a panacea for the world’s ills.
In this instance, however, bitcoin really does offer a solution to what could become a serious problem.