{"id":29044,"date":"2014-03-10T18:25:52","date_gmt":"2014-03-10T18:25:52","guid":{"rendered":"http:\/\/ci027cfe7a300b2697"},"modified":"2014-03-10T18:25:52","modified_gmt":"2014-03-10T18:25:52","slug":"bitcoins-actual-privilege-problems-1394457952","status":"publish","type":"post","link":"https:\/\/bitcoinmagazine.com\/culture\/bitcoins-actual-privilege-problems-1394457952","title":{"rendered":"Bitcoin\u2019s Actual Privilege Problems"},"content":{"rendered":"
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ThinkProgress has published a blistering critique of bitcoin called Bitcoin: By The Privileged, For The Privileged<\/a>. It\u2019s full of misunderstandings, misinformation, and, most distressingly, a few points that are actually really spot-on and important for bitcoin foes and friends to understand. The piece points out the unfortunate fact that bitcoin is now primarily held and used by the most privileged people. This is unfortunate because its greatest promise, I would argue<\/a>, is for the people at the bottom.The fallout from an argument made ignorantly is that people who know better then feel free to dismiss the entire premise. Right now people who actually know something about bitcoin are tearing the piece apart<\/a>, and rightly so. But just as Annie-Rose Strasser has more to learn about bitcoin, there is no doubt that the bitcoin community has more to learn<\/a> about privilege.So, first, the corrections, mostly culled from my numbered Twitter rant, where I for some reason missed #5. The first misunderstanding is a common one, and can be found in my first writings about bitcoin. For the uninitiated, bitcoin is the currency, Bitcoin is the protocol.Then Strasser writes, \u201cThe whole idea<\/a> behind Bitcoin is that it segregates economic markets and currency from a country\u2019s government.\u201d The truth is that there is no one “whole idea” behind bitcoin. And that seemingly minor point is actually key. While some person or group of people manage other currencies, bitcoin is decentralized. No one controls it. Bitcoin does have a creator, but he or she never laid out a plan to separate money from government. The plan was only to create an open-source decentralized network on which one can build a currency, and more. So if there were one idea behind bitcoin, it would be that.\u201cIt wants to replace<\/a> our current economic system and practices in their entirety.\u201d Sounds sinister, doesn\u2019t it? But bitcoin is a currency. It doesn’t have agency, so it’s not aiming to do anything. Some people would like to see it upset the extremely unfair and inefficient economic system. Others want to use it as an escape hatch for oppressive regimes. Many are interested in mircopayments and near-feeless remittances abroad. Retailers are interested in a more-secure-by-default online payment system with no chargebacks and low transaction costs. Many people are interested in trustless systems.Describing bitcoiners: \u201cThey\u2019re the same people who want to \u2018end the fed.\u2019\u201d As a libertarian I\u2019ll go ahead and let you know that those people generally prefer gold. And it doesn\u2019t take a libertarian mindset, just a pinch of critical thinking, to realize no one should trust the government to handle their money.One thing Strasser isn\u2019t totally wrong about is bitcoin\u2019s demographic makeup:<\/p>\n

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According to an online poll from Simulacrum<\/a>, the average user is a 32.1-year-old libertarian male. By users\u2019<\/a>accounts<\/a>, those men are mostly white.Breaking that down, about 95 percent of Bitcoin users are men, about 61 percent say they\u2019re not religious, and about 44 percent describe themselves as \u201clibertarian \/ anarcho-capitalist.\u201d<\/p>\n<\/blockquote>\n

In my personal experience, bitcoin developers are not overwhelmingly, or even mostly, white. Almost none of the developers who\u2019ve reached out to me were. They are all, however, male. What explains the demographics, whatever they are? \u201cWell, there\u2019s a fair amount of privilege built directly into the currency: In order to buy the sometimes wildly expensive currency, Bitcoin users need to be wealthy.\u201dBrian Doherty at Reason eviscerated<\/a> this claim:<\/p>\n

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In fact, for years the price of a bitcoin remained under $10, not quite the sign of something meant to block the less-well-to-do by design. Maybe she meant to say that if you were smart enough to get involved in Bitcoin early, that you are now wealthy? (You also don’t need to buy an entire Bitcoin, so any amount of any other money is sufficient to get you that-much-worth of Bitcoin. It’s like complaining money is expensive.)<\/p>\n<\/blockquote>\n

I\u2019ll just add on that ironically, one of bitcoin\u2019s best qualities is making microtransactions possible. If you have to be rich to use anything, it\u2019s a credit card.Despite the fact that Strasser is wrong in her identification of why (and maybe whether) bitcoin is overwhelmingly white and male, It matters who uses it.It matters because, as Strasser also correctly points out, \u201cThe unbanked, comprised of women<\/a> and people of color<\/a>, are much more frequently turned down for auto loans<\/a>, mortgages<\/a>, and investment advice<\/a>.\u201d And bitcoin has the potential to bank the unbanked, if they use it. To understand why, we must first understand why some people lack access to credit.Lending and check cashing are a game of risk-versus-reward. Risk is determined primarily through error-prone<\/a> credit scores. Reward is reaped through interest rates and fees. The unbanked are primarily made up of people who have poor credit scores, people for whom the risk of non-repayment or bounced checks is high. Unfortunately, banking regulations make it impossible for banks to charge high enough interest rates to make up for the risk these people pose.As Strasser points out, \u201cInstead [of using banks], they\u2019re taken advantage of<\/a> by unregulated<\/a> banking \u2014 unbanked households on average spend over $2,400, about 10 percent of their income, to use services like payday lending and check cashing.\u201dEven though payday lenders can charge higher interest rates than banks, they still are barred by law from automatically deduct payments from a delinquent customer\u2019s checking account. This artificially makes lending much more expensive by drastically raising the cost of recovering funds.So while payday lenders are calling up customers and sending angry letters, both of which cost time and money, bitcoin contracts can be set up in such a way as to automatically transfer bitcoin to repay a loan. It also obviates the need for check cashing, as bitcoin can be sent immediately from employer to employee, and spent, without fees, or trust. There is no easier or cheaper way to transfer currency from person-to-person than bitcoin right now, except maybe an in-person cash transfer.So how do we get the unbanked on bitcoin? Here\u2019s where privilege comes in.Using bitcoin right now requires either a patient guide or a fair amount of computer literacy. The gap in computer literacy between blacks and whites is nearly 20. According to<\/a> \u201cExploring the Digital Nation<\/a>,\u201d 76 percent of white American households use the Internet, compared with 57 percent of African-American households. In addition, people with some college experience and household income of more than $50,000, you know, the people who are most likely to be white and male, are high heavier internet users.Not growing up in a white, middle-class household vastly decreases your exposure to computers and computer literacy.As does being female. Women are told, subtly and less subtly that they don\u2019t belong and aren\u2019t needed<\/a> in tech and bitcoin. True, there are people telling<\/a> women that they do belong. But messages of exclusion, and instances of harassment, however limited they may be, are extraordinarily powerful.One more reason the privileged may get into bitcoin first is that they can afford the risk. The spectacular crash of Mt. Gox put millions of dollars of wealth into the hands of thieves. Not everyone can afford to put that kind of money on the line. But rather than paint people as villains for having the time and energy and risk capacity to get screwed by Gox, we should instead thank these people. Through their sacrifice we\u2019re learning<\/a> how to build a better currency, which, eventually, will tremendously benefit everyone.Strasser doesn\u2019t make bitcoin her beat. It\u2019s understandable that there\u2019s a lot about the complex currency that she doesn\u2019t understand. But what Strasser clumsily points to are real challenges that will absolutely need to be overcome for bitcoin to really help the unbanked and reach widespread adoption.Bitcoin enthusiasts don\u2019t generally spend any time thinking about privilege. But greater computer literacy among the poor and easier-to-use interfaces, along with addressing tech\u2019s gender problems should be a goal we all strive toward.It\u2019s not essential, or possible, that the privilege crowd fully understand bitcoin or that the bitcoin crowd fully understand privilege. What would be very helpful, however, is for both parties to admit the vast sums which comprise what they do not know.<\/p>\n","protected":false},"excerpt":{"rendered":"

ThinkProgress has published a blistering critique of bitcoin called Bitcoin: By The Privileged, For The Privileged. It\u2019s full of misunderstandings, misinformation, and, most distressingly, a few points that are actually really spot-on and important for bitcoin foes and friends to understand. The piece points out the unfortunate fact that bitcoin is now primarily held and […]<\/p>\n","protected":false},"author":3674,"featured_media":29043,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[33],"tags":[587,2362],"class_list":{"0":"post-29044","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-culture","8":"tag-banking","9":"tag-people"},"author_data":{"id":3674,"name":"Cathy Reisenwitz","nicename":"cathy-reisenwitz","avatar_url":"https:\/\/bitcoinmagazine.com\/wp-content\/uploads\/2024\/12\/cathy-reisenwitz-promo-image-96x96.jpg"},"featured_image_url":"https:\/\/bitcoinmagazine.com\/wp-content\/uploads\/2024\/11\/bitcoins-actual-privilege-problems.png","_links":{"self":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts\/29044","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/users\/3674"}],"replies":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/comments?post=29044"}],"version-history":[{"count":0,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts\/29044\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/media\/29043"}],"wp:attachment":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/media?parent=29044"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/categories?post=29044"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/tags?post=29044"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}