I think it’s very easy to get caught up in the hysteria that surrounds Bitcoin. With massive volatility, complex computer jargon, scammers and visionaries to the left and to the right, Bitcoin is either a revolution or rat poison depending who you talk to. But we must remember that before “crypto” was slang for cryptocurrencies, it referred to cryptography. And cryptography is one of the cornerstones of the information age.
Without cryptography, every message that was sent digitally would be readable by anyone who cared to listen in. Credit card numbers, the content of direct messages, purchase history, passwords, you name it. Without strong encryption, e-commerce would be completely impractical. This is kind of a big deal since e-commerce sales topped nearly $450 billion in 2017 and seems to do nothing but grow year over year.
But beyond that, encryption does more than just protect our sensitive information and enable online transactions, it can be a lifeline to people in distress. Recently, I had to chance to speak with Alex Gladstein of the Human Rights Foundation. You may have seen his recent article in Time, “Why Bitcoin Matters for Freedom.” If you haven’t read this article, go check it out – it’s powerful stuff.
Alex and I talked about the role that investors can play in helping to preserve human rights and basic freedoms that many take for granted. You may have heard of “Impact Investing,” or even the UN’s Sustainable Development Goals. But, so far, there’s been little to no attention paid by institutional investors to the billions of people living under authoritarian regimes. It has been estimated that more than half of the global population lives under authoritarian rule. Let’s briefly touch on a few of these areas and the kinds of abuses that are being suffered right now.
A world in peril
In Venezuela, refugees are fleeing from an authoritarian regime that has hyperinflated the Bolivar and caused extreme shortages in food and medicine. Currency controls have put people in a position where they face long delays and extraordinary fees to receive money from abroad. The refugee crisis is now being compared to Syria as millions flee under dire circumstances.
In Zimbabwe, the monetary crisis continues amid rising poverty. After seeing a new wave of hyperinflation, banks are now turning people away saying that they have no money. Elections are rigged, and voters are repeatedly threatened or intimidated.
In China, presidential term limits are being abolished, the Internet is heavily censored, journalists are being jailed over what they choose to retweet, and a technological police state has become the norm.
In Russia, the parliament has been devoid of opposition for more than ten years. Political opponents are jailed, television is censored, and journalists and activists have been poisoned and assassinated.
In Syria, open source software developers like Bassel Khartabil were imprisoned and ultimately executed. Meanwhile, the internet was cut off and the people were attacked with poisonous gas with no way to communicate with the outside world.
In Nicaragua, the state owned television was turned off while students were gunned down in the streets. Elections are riddled with fraud, the ruling parties control the media, and journalism is strangulated.
The Challenge “The Challenge”:
“We believe that being involved in Bitcoin, blockchain technology, or cryptoassets in general is one of the few ways that we can drive innovation, check the power of authoritarian leaders, and bring about a complete economic revolution as we move into a more digital society. It’s for these reasons that we believe in Bitcoin, and the transformative potential of cryptocurrencies and blockchain technology as a force for good.”
I believe that Alex and I agree on this point. However, many challenges still need to be faced, from further developing censorship resistant networks, making systems of strong encryption more accessible to the average person, and raising awareness. With that, let’s dive into my interview with Alex Gladstein.
A conversation with Alex Gladstein
Hans Hauge: How do you define democracy tech?
Alex Gladstein: Democracy tech or “DemTech” would be impact investing in companies whose products or services directly or indirectly support democratic values like civil liberties, privacy, press freedom, free and fair elections, and free expression.
HH: What’s the problem with SOCAP? What is SOCAP?
AG: I think the organizers of SOCAP have a tremendous opportunity. Basically, right now, in the impact investing community, there’s lots of wonderful, thoughtful work done on topics like education (EdTech), protecting the environment (CleanTech or GreenTech), healthcare (HealthTech), food and farming (AgriTech), and others. But there’s close to zero impact investing being done with regard to the promotion of civil liberties and individual freedoms. So when you search SOCAP’s most recent program from 2018, the words “human rights” are mentioned only once, and words like “democracy,” “journalism,” “privacy,” and “civil liberties” aren’t mentioned at all. There is no “DemTech,” and this is largely because events like SOCAP and the impact investing community in general are inspired by the U.N. Sustainable Development Goals. The U.N. SDGs were created and are now overseen by several dictatorships including China, Iran and Saudi Arabia who don’t want to focus on things like human rights and democracy. So you have 17 goals which all sound wonderful, but on closer inspection don’t focus at all on issues like civil liberties, elections, journalism, etc. But clearly, these issues and values are so critical to everything else in our world. If you don’t have the right to protest or speak your mind, you can’t effectively protect the environment or expose corruption or fight poverty or push for corporate regulations. Regardless of where you are politically, you shouldn’t want governments and companies to own all of our data, for example – I think there’s an opportunity here for investors and corporate leaders and platforms like SOCAP to come together and focus on privacy and freedom and help grow DemTech.
HH: What is Impact Investing?
AG: Impact investing is a strategy of investing where you are willing to take a lower return on your investment as long as you are making the world a better place. You can think of it as halfway between traditional investing (with no moral compass) and pure donations or charitable gifts.
HH: What are some companies or projects that you think are making a difference now in the areas of privacy, civil liberties, property rights, censorship resistance, mesh networks, voting etc.?
AG: I’m interested in a few key areas of technology that I think will be very important to prevent mass surveillance. Some are being advanced by companies, others by open-source communities. Things that might fall under the category of DemTech include:
HH: Do you have examples of how investing in technology for positive change has worked out in the past?
AG: The above list of technologies can be described as anti authoritarian. They are more suited for individuals vs. governments or corporations – as opposed to things like AI and big data, which have the opposite, centralizing effect. The interesting thing about these authoritarian or “DemTech” projects is that they are, generally speaking, open source. But that doesn’t mean that there aren’t huge amounts of money at stake. Bitcoin’s market cap is tens of billions of dollars. The Signal project recently attracted $50 million after Google, Facebook , and Skype adopted some of its encryption technology. Andreessen Horowitz launched a $300 million crypto fund last year, and other world-class investors like Union Square Ventures and Sequoia have launched crypto funds. It’s not just a morally good thing to do to protect our information, data, money, and communications, but also, it’s going to make smart folks a lot of money in the next decade and beyond.
HH: How do you see blockchain playing a role here?
AG: I think Bitcoin is going to play a central role in this. It’s the world’s first censorship-resistant money network and engineers are busy building really interesting technology on top of the Bitcoin base layer. You will see important functionality rolled out across the next few years with regard to what you can do with Bitcoin, ranging from privacy technology to micropayments to improvements in wallets and exchanges. Unfortunately, I think “blockchain” generally has been overhyped, and very few other “blockchain” projects beyond Bitcoin are unlikely to do any serious good for this world beyond enrich their creators. Especially when it comes to democracy and human rights. Some privacy-minded cryptocurrencies like Monero or ZCash are important exceptions, providing a useful service for people who want anonymous money.
HH: What’s at stake if we don’t act? What is the scale of the problems that we’re facing?
AG: If the trillion-dollar impact investing community skips out on human rights and civil liberties, that would be a terrible thing. We need the business community to take a lead here. As Yuval Noah Harari says, “if you dislike the idea of living in a digital dictatorship or some similarly degraded form of society — then the most important contribution you can make is to find ways to prevent too much data from being concentrated in too few hands, and also find ways to keep distributed data processing more efficient than centralized data processing. These will not be easy tasks. But achieving them may be the best safeguard of democracy.”
HH: What have you seen in your work that the average American would be shocked by?
AG: How about the fact that 4 billion people live under some sort of authoritarian government, where there’s no real independent media, independent judiciary, or way to hire a lawyer to protect you against the state? Billions live without institutions we take for granted here in the US like the New York Times, ACLU, EFF, or the tens of thousands of other nonprofits and media groups that are active here in this country. It’s a different environment in closed societies, and these people need our help. Yes, we need to assist them in traditional ways with efforts to promote civil society and democracy, but we also need to help them develop technology that will allow them to preserve privacy and keep themselves and their families safe.
There’s more to the Bitcoin revolution than Lambos and illicit activity. Bitcoin was invented to give people a life raft from which they could escape oppression of all kinds. Whether that oppression comes from censorship, hyperinflation, or unauditable records controlled by a central and corrupt authority. Bitcoin and the technology that has emerged in its wake have the potential to remove middlemen from positions where they can and inevitably will abuse their power. By switching our trust to a system of rules determined by the crowd and enforced by software, we have in our grasp for the first time a way to rethink the world of the future.
Organizations like Unicef have taken steps to invest in startups that can make a difference with blockchain technology, and they’re not alone. In “Event Horizon” I wrote about blockchain projects working towards the common good in Israel, Estonia, Dubai, South Africa the Philippines, and Chile. This is such an exciting time to be alive, but I believe it’s also such a critical time to act.