As known to the students of political economy, cryptocurrency means a form of government where the real leaders are hidden, or merely unknown. Taking a cue from that and riding on the advancement in digital technology, the ‘fertile’ brains of the shady money dealers comprising even big shots in the field of industry, business and stock market as well as underworld dons have found a new mode of financial transactions which would exist outside the control of governments and central authorities. This mode of exchange or so called digital currency is known as cryptocurrency. Cryptocurrency is a form of digital asset based on a network that is distributed across a large number of computers. This decentralized structure allows the transactions in that currency to bypass detection in the prevailing economic set up.
We know black money represents unaccounted money or in other words, undisclosed wealth which evades tax. But that black wealth is held in either paper currency or anonymous bank accounts or assets which can be converted into cash by sale or transfer. The monitoring authorities or vigilance mechanism of the existing utterly corrupt capitalist system remain either passive or indulgent onlookers to such huge accumulation of black money by the unscrupulous industrial tycoons, businessmen, bureaucrats, administrative high ups, professionals, bourgeois political leaders, smugglers and punters. Because they all fall in the category of ‘‘Caesar’s wife’’ as they are the cogs and screws of the ruthlessly oppressive crooked capitalist system. Black money is not ‘undetectable’ but is abetted by the system. Internet banking or transactions using debit or credit cards-commonly termed as digital economy–also reflect in the system as valid transactions. On the contrary, the newly discovered cryptocurrency operates outside the system amidst a few digitally connected elements. Let us elaborate a bit.
How does cryptocurrency operate
Cryptocurrencies allow for secure payments online which are denominated in terms of virtual ‘‘tokens,’’ which are represented by ledger entries internal to the system. ‘‘Crypto’’ refers to the various encryption algorithms and cryptographic techniques such as elliptical curve encryption, public-private key pairs, and hashing functions, that safeguard these entries. Any investor can purchase cryptocurrency through crypto exchanges like Coinbase, Cash app, and more. (NB. Do they represent some medium or are they like digital apps?) Blockchains, which are the organizational methods for ensuring the integrity of crypto-transactional data, are an essential component of many cryptocurrencies. It is completely decentralized with no server or central authority.
Every single entity or peer who wants to use cryptocurrency needs to have a list of all transactions to check if future transactions are valid or there is an attempt to double spend. The decentralized nature of the blockchain makes cryptocurrencies theoretically immune to the prevailing ways of government detection, control and interference. Like traditional currencies, cryptocurrencies express value in units. For instance, one can say, ‘‘I have 2.5 Bitcoin,’’ just as one would say, ‘‘I have Rs 2.50’’. Because most cryptocurrencies are not regulated by national governments, they are considered alternative currencies-mediums of financial exchange that exist outside the bounds of state monetary policy. Ownership of cryptocurrency units can be proved exclusively cryptographically.
The system allows transactions to be performed in which ownership of the cryptographic units is changed. Due to their political independence and essentially impenetrable data security, cryptocurrency users enjoy benefits not available to users of traditional fiat currencies, such as the Indian rupee or US dollar, and the financial systems which those currencies support. Bitcoin has been the first cryptocurrency, followed by others such as Ethereum, Litecoin, and Cardano. It bears recall that cryptocurrency existed as a theoretical construct long before the first digital alternative currencies debuted. Cryptocurrency’s technical foundations date back to the early 1980s when an American cryptographer named David Chaum invented a ‘‘blinding’’ algorithm that remains central to modern web-based encryption. However, cryptocurrencies were launched in 2009. (It may be worthwhile to note that the launch coincides with the present hour of intense crisis of the world capitalist system. How and why, we discuss in due course.)
Where is cryptocurrency used
The anonymous nature of cryptocurrency transactions makes them well-suited for a host of illegal activities. However, advocates of cryptocurrency argue in favour of anonymity of by citing benefits of privacy like protection for whistle-blowers or activists living under repressive governments. Notwithstanding such deceptive advocacy, cryptocurrency, for obvious reasons, are used by the smugglers, fraudsters, money-launders, tax evaders and those involved in illegal dealings including cross-border commerce of illegal goods particularly via the darknet. Clearly, anonymity is key to opting for such darknet transaction. It is estimated that 24 million bitcoin market participants use the cryptocurrency for illegal activities. ‘‘These users annually conduct around 26 million transactions, with a value of around $72 billion, and collectively hold around $8 billion worth of bitcoin,’’ says a report. Another media report says that total investment in cryptocurrency in last two years is around $93 billion. From 2017 to 2021, value of cryptocurrency has increased by 6,100% or 61 times whereas value of immovable properties in US has gone up by just 22%. So, a good number of affluent investors who are on the lookout for appropriate avenue to multiply money in quickest possible time is opting for cryptocurrency. Market value of cryptocurrency is mostly linked to its large core of illegality putting a big question mark on the ethics of investing in it or any other anonymous cryptocurrency.
Abuse of modern technology
Cryptocurrency is a glaring example of how the advancement in technology is abused for reaping illegal gains through unlawful activities just like the way, some iconoclastic discoveries of modern science were unethically commandeered to make weapons of mass destruction like atom bomb and other nuclear armaments. For example, there is no denying the fact that invention of nuclear power had been a great scientific discovery and ought to be harnessed for the development and progress of mankind. But we know that it was the US imperialists who, instead, preferred to abuse this immense nuclear power to descend upon the world a sustained period of horror and holocaust, destruction and devastation. In information technology also, hacking of others’ user profiles and planting fake posts in one’s internet accounts have become a common feature. Mega scale cyberattacks are also not short in number.
The latest revelation of use of spywares like Pegasus for hacking others’ computers and smartphones of targeted people to snoop into their privacy and keep track of their movements as well as communications is also a proof of that. What is noteworthy is that the spyware manufactured by an Israeli company is sold only to the governments for being used as a tool to keep surveillance on select individuals and organizations and frame them on false charges by implanting spurious mails or content in their computers or smartphones. Indian government too is alleged to have procured that spyware to record and share every move of the opponents or dissenters with a spook. Cryptocurrency is also similarly insidious as it seeks to do harm to the country’s economy by surreptitiously giving a slip to the tracking mechanism of bona fide financial transactions and thus distorting the system in place. Even Nobel laureate economist Joseph Stiglitz observed that digital currency is illegal as it does not have a ‘socially useful function’. ‘‘Bitcoin is successful only because of its potential for circumvention, lack of oversight,’’ he added. He even observed that ‘‘It’s a bubble that’s going to give a lot of people a lot of exciting times as it rides up and then goes down,’’
Dying Capitalism is promoting cryptocurrency
Yet, cryptocurrencies have found official recognition in many imperialist-capitalist countries. The US Department of Treasury which defines Bitcoin as a convertible currency with an equivalent value in real currency or one that can act as a substitute for real currency, has been issuing guidance on Bitcoin since 2013. The European Union (EU) recognizes Bitcoin and other cryptocurrencies as crypto-assets. It is not illegal to use Bitcoin within the EU. Same is the position with Japan and Australia.
While Bitcoin is welcomed by quite a number of big imperialist-capitalist countries, several less developed countries are wary of its volatility and decentralized nature. Some also perceive it as a threat to their current monetary systems while being concerned about its use to support illicit activities. Several countries have outrightly banned digital currency, while others have tried to cut off any banking and financial system support essential for its trading and use.
Why so? Why such an apparently parallel close-guarded covert mode of financial transactions that exist outside the control of governments and central authorities are reckoned by the big powers as valid dealings? Because capitalism in its decadent moribund stage has become not only reactionary and authoritarian, it is also patronizing all kinds of illegal, illegitimate and even criminal activities in every sphere the economic field included.
So alongside formulating one after another policies to fulfil the objective of profit maximization through maximum exploitation of the people, ruling monopolists and multinationals, besides dictating their subservient governments to formulate one after another anti-people economic and fiscal policies, are also constantly looking for further avenues to mint money for themselves as well as their servitors. For that, they are least bothered to distort all economic prescripts, norms and procedures propounded in the early days by the bourgeois think-tank and embrace any vile means at the cost of people’s interest. Granting legitimacy to cryptocurrency is a testimony to that.
Doublespeak of BJP-led Indian government
The same is true for the ruling Indian monopolists and their caretaker governments like the present one led by the BJP. Earlier, the BJP-led government had boasted of banning crypto-trade seemingly to deceive people. Late Arun Jaitley, erstwhile union finance minister said in December 2017 that India did not recognise cryptocurrency as legal tender. (money control 01-12-17) The Reserve Bank of India (RBI) has also cautioned from time to time about the risks of dealing with Bitcoin. However, late Shri Jaitley toned down his voice within 15 days to inform the Lok Sabha that ‘‘The Department of Economic Affairs had constituted an Inter-disciplinary committee to examine the existing global regulatory and legal structures governing Bitcoin; to take stock of the present status of Bitcoin both in India and globally; suggest the frame work for regulation of Bitcoin among others etc. The committee has submitted its report which is under consideration of the Government.’’ (ZeeBiz 02-01-18) Even the BJP Prime Minister himself commented in November last that cryptocurrencies could ‘‘spoil our youth’’. (BBC-12-12-21) But the mandate of the ruling monopolists and multinationals in capitalist globalization can hardly be disobeyed by their political managers and stooges. So, in a volte face, the same BJP PM on 17 December last called for united efforts to shape global norms for emerging technologies like cryptocurrencies so that they are used to ‘‘empower democracy and not to undermine it.’’ ‘‘We must also jointly shape global norms for emerging technologies like social media and cryptocurrencies, so that they are used to empower democracy, not to undermine it,’’ PM Modi said during his virtual address at the Summit for Democracy hosted by US President Joe Biden. (Hindustan Times-19-12-21)
Earlier, the current BJP Finance Minister Nirmal Sitharaman also remarked that ‘‘Even as we are thinking about at a national level, there should simultaneously be a global mechanism through which we are constantly monitoring the movement of technology, so that whether it is your cryptocurrency, whether it is a tech-driven payment system, data privacy, whether it is ensuring that data is used ethically,’’ (ibid) Now efforts are on to table a reworked bill on cryptocurrency in the ongoing Winter Session of Parliament after Cabinet approves it. Interestingly, the RBI which previously voiced stiff opposition to cryptocurrency is now slated ‘‘to create a facilitative framework for creation of the official digital currency to be issued by it’’.
Who does not know that just the other day, Prime Minister Narendra Modi’s Twitter account had been hacked with a message saying India had adopted bitcoin as legal tender and would distribute it to all citizens. That means such malevolent Information Technology (IT) operations and operators are well-equipped to undertake any kind of manipulations even penetrating howsoever strong protective wall. If these IT felons gradually take over the economic system, one can guess what would be the outcome. So long, common citizens were concerned about heaps of black money generation and reckless speculation in the stock market which have been playing spoilsport in orderly economic operation and contributing to growing inequality. Now, cryptocurrency would be another source of worry. True that high-tech crypto-transactions are incomprehensible to the common citizens and there are no means either to locate such transactions either.
Exactly that is what the ruling class wants– ignorance of the masses on which they can work their stratagem of fleecing. It is the duty of the conscious section of people particularly those wedded to the task of unfolding capitalist conspiracies and overthrowing it by revolution to expose the sinister designs and vicious machinations of the ruling capitalism and its hang-ons. (But at the same time it must be recognized that the impending danger will not spare anybody, if the situation so requires).
However, it is incumbent on the SUCI(C), the revolutionary party of the proletariat founded by Comrade Shibdas Ghosh, an outstanding Marxist thinker of the era, to warn people about the danger inherent in cryptocurrency.