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Michael Cervantes
CST 300 Writing Lab
14 October 2022

To Blockchain, or not to Blockchain

The new frontier is among us with rapid advancement in technology. One of those

frontiers is Blockchain. It was all started by an individual named Satoshi Nakamoto. The purpose

was to take a non fiat currency and establish a decentralized currency. Taking the government

out of the picture and putting the power to the little guy. The birth of Bitcoin then followed right

after other alternative coins. NTFs and DAO followed suit with the creation of Bitcoin. Creation

of new tech comes with problems and debate.

The pro cryptocurrency movement has created a system in theory that gives power to the

little guy. Without big banks, hedge funds, or government regulation this movement pitches an

idea of a utopia for financial stability, even becoming rich in the process. Freedom of no

oversight or taxation on their wealth. With these principles the idea of no taxation gives more

wealth to the individual. Another claim is privacy and secrecy.

While the crypto movement has an ideology of a utopia future, the anti-crypto movement

has emerged. Their stance on crypto is based on one main idea with a subcategory. The main

problem they have with crypto is that it's a scam to take advantage of the little guy. With claims

of the very people that the pro crypto movement advocates against is the very same movement

that has established a strong presence. Banks, hedge funds, and bad faith actors are pumping and

dumping crypto. An environment that favors the wealthiest people.

The Argument
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Is cryptocurrency a Ponzi Scheme? One side believes that cryptocurrency will set you

free and give power to the little guy. Disabling any banks, governments, or wealthy elites from

controlling your fiancé. While the opposite side claims it is a Ponzi Scheme. The very system

they built to protect themselves from, is a system that favors the wealthiest groups they fear.

The Investors

The New Frontier

The blockchain is the core of it all for crypto enthusiasts. A decentralized system that

stores data securely according to enthusiasts. Another explanation it’s similar to how an office

filing cabinet works. Each cabinet stores information that is secured. You can add more cabinets

to the file cabinet to store more information. This creates a chain of information. This is the

backbone of crypto currency. Every stakeholder has a type of cryptocurrency. Bitcoin being the

main one while other alternative coins can be used but are usually forks of Bitcoin. Since

blockchain stores data as a technology it is also marketing something revolutionizing the way it

does it. New way of distributing data and storing it by incentivizing people with cryptocurrency.

With blockchain technology there has been a push to implement its technology with other

technologies. The argument has been since the blockchain is more secure and can be expanded

with information. Make a new way to do things. One example is the push for Web 3. While Web

1.0 was the first stage of the World Wide Web. That included web pages, emails, and servers for

example. Web 2.0 is the stage where it was the user that contributed to the World Wide Web.

Giving birth to social media companies like MySpace and Facebook. Web 3 introduces

blockchain to the World Wide Web. Putting the web content on the blockchain. Even though

there are some skeptics about Web 3, people who back Blockchain are eager to use Web 3 “We

may have to go through one or two hype cycles before the most important elements of the
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technology break through, says Gavin Wood” (Fonda, 2022b). Twitter for example has flirted

with the idea of putting it on the blockchain. They’re not the only ones incorporating blockchain,

“There are strong use cases for stablecoins. The economies of a “metaverse” will probably be

powered by stablecoins - Shah” (Fondab, 2022).

While Web 3 is the new topic of blockchain that has overshadowed other

implementations. Non-fungible token or NTF is one of those. While very popular when they first

came out. Still has some steam among crypto enthusiasts. NTFs main purpose is to give the

creator the power to create and sell stuff on the blockchain. The creator can sell an art piece,

make money on the sales and make future off types of royalties. This means whoever bought the

NTF and ends up selling it again a percentage of that sales goes to the original creator. Thus,

giving the power to the creator. It is also marketed in a way to gain indie movement of small

creators to make it big or compete with bigger artists known to the industry.

To the Moon

The technology side of crypto is marketed in a way to inspire people to use the

technology or embrace it. It also has great promises to people who invest into cryptocurrencies.

There are two ways to invest in cryptocurrencies. One is to be a miner for cryptocurrencies.

That’s a person that uses hardware to solve a complicated mathematical formula to verify the

stakeholder of that coin. Another way you can be a retail investor and use real money to buy

coins on a cryptocurrency market. Robinhood, Webull, and Coinbase are the main but among

many ways to buy cryptocurrencies. There have been very successful stories of people who

invested in cryptocurrencies early and became very wealthy. One of the biggest talking points is

to sell blockchain to people who invest early and become rich. With the implementation of

blockchain for example gaming or web you can earn cryptocurrency giving you wealth on using
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their product. The earlier you get in on the fun you can become wealthy like some have. As

Alexis Ohanian said, “Someone who grew up playing video games. I can’t help but feel a little

bit jealous, because there are kids are going to be making more than I was making at Pizza Hut”

(Technology, 2021).

Libertarian Utopia

How can individuals become wealthy with a system that promises it? With

cryptocurrency there is an ideology that the government plays a role in. It’s the government

interference that restricts individuals from maintaining wealth. Taxation is another talking point

that’s echo. Individuals see taxation as a problem within their own governments. Form to escape

taxation is cryptocurrency. Cryptocurrency is labeled as a decentralized currency that’s not based

on fiat currency. Another concern with crypto enthusiasts is having a non-fiat currency as a

safety net from a market crash from a fiat-based economy. Leaving the control to the individual

investor not a government system.

Doesn’t end at personal wealth gain. Crypto activism token blockchain to a new level.

Decentralized Autonomous Organization or DAO for short. Is a forum for making decisions on

the blockchain with a vote among stakeholders. Example you can raise money for a charity on

the Blockchain. Using DAO, you can place a vote on how to use that fundraising for. Giving

power to the investor and not a selective group of elites. DAO isn’t just limited to charities. It

can be used as GoFundMe.

Blockchain doesn’t just revolve around currency. Another feature of it can be security.

People prefer having their information secured. One of the features Blockchain offers is

anonymous use. Keeping the investor identity secured. With the rise of data collection and
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invasion of privacy from Big Tech. The demand for private information and anonymity is a

wanted thing people want. Blockchain claims to offer this to their investors and users.

Conclusion

While crypto enthusiasts will support blockchain for a number of reasons or for all the

reasons. Their motive seems to align with Ethical Egoism. Their purpose for Blockchain is to

serve their needs and only of their needs. While given a utopia argument it still serves for the

crypto enthusiast. Individualism is a key component which also has features of Individual

Relativism.

Activists

Revolutionary, the Rebranding Gimmick

The crypto enthusiast might claim they’re paving a path of a new tech revolution.

Activists who oppose them have very strong opinions about it. Anti-crypto activists would say

this isn’t new technology. The Blockchain is a Merkle tree or also known as a hash tree. Not the

average person would know this unless they have some background in mathematics or computer

science. Even then they can fall for tricky marketing that the cryptocurrency market has made.

For the average person for simplicity. A Merkle tree is like a family tree but it's upside down.

Which was created during the late 70s. Activists have argued that this is just a marketing

gimmick to pull in retail investors.

While the Blockchain adds more features like NTFs, and Web 3. This can be considered

to keep people interested in. Not add anything new with substance to keep thinking its growing

and maintaining technological growth. This adds a layer of falsehood to new or retail investors

thinking they’re buying an investment. Anti-crypto activists have compared this form of market

to Pokémon cards. Pokémon cards are released with a new season of playing cards not because it
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is at substance but to keep relevant. Web 3 is a perfect example of this. Each web 1 and 2 it

added new technology that advanced the World Wide Web. From emails to social media. Web 3

just adds Blockchain. Which is a step back from cloud services.

The Wolf of Crypto Wallet

While marketing isn’t the only thing being questioned. It is also the players who back

cryptocurrency. While crypto enthusiasts claim to have built a system to protect themselves from

failure of government, bankers, hedge fund entities, and the rich elites. Instead, the system favors

such entities. Since there are no government regulations in most countries. This sets an

opportunity for people with the needs and means to manipulate the market. Causing the market

to be very volatile. Where big corporations, or investors with abundant wealth can buy a good

amount of cryptocurrency. At the same time, the market allows people to buy cryptocurrency.

Activists have claimed market methods promising wealth by claiming get on board before it's too

late plays into the regular investor to buy in. While the market is hot these bad faith actors then

dump their cryptocurrency selling double what it’s worth. “The difference is that central banks,

at least in theory, operate in the public good and try to maintain healthy levels of inflation that

encourage capital investment. By comparison, private companies issuing stablecoins are

indiscriminately inflating cryptocurrency prices so that they can be dumped on unsuspecting

investors” (Mortazavi, n.d.). Making a killing on selling crypto while leaving the regular

investors in the negative.

Stable coins are another crypto currency that tries to market to the safe investor. A stable

coin is pegged to a dollar or 1 to 1 to a dollar. Which means for every stable coin there is a dollar

backing it. Which is a big claim from Tether. They’re a crypto company that has stated their

Tether coin is stable and is 1 to 1 with the dollar. Tether has been coming under fire from
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activists and from government agencies. While claims can’t agree how much of Tether coins is

backed by the dollar, what they can agree on is that it is not 100% backed by the dollar. This

grabs the attention of the New York attorney general. NY took Tether to court accusing Tether

manipulating the market, “However, an investigation by the Office of the Attorney General

(OAG) found that iFinex — the operator of Bitfinex — and Tether made false statements about

the backing of the “tether” stablecoin, and about the movement of hundreds of millions of dollars

between the two companies to cover up the truth about massive losses” (New York Attorney

General, 2021).

Another false claim is NTFs. While marketed as digital content being sold. The reality is

that you don’t own the rights or the digital material. You just own the number of that blockchain.

That number is then used to point towards the content of the digital piece. There are few

exceptions where you can buy the rights to the digital content through NFTs but it’s rarely the

case. Most people don’t understand this and think they own the intellectual property. Leaving

them confused even risks lawsuits.

This has been an echo from anti-crypto activists that the crypto scene is a Ponzi scheme.

It’s a market designed to have the smaller investor put their money in the pot while bad faith

actors take advantage and scam individuals from their savings. It is more of a form of gambling

where the house always wins. While yes there are some special cases where an individual wins

but on the broad spectrum, he is just a blip on the map compared to other investors who have lost

their money.

Feudalism Isn’t a Utopia

While it seems like a libertarian utopia it is the opposite of one. Instead, it is familiar to

Feudalism. Where the rich and powerful have moved in and control the system. Or reflection of
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the wild west. While some governments have stepped in and regulated or even banned

cryptocurrency. A lot of governments that haven't taken the steps to do either. This leaves the

door open for lawlessness. Which ironically leaves a person who’s been a victim of fraud to seek

help from the very system they want to stay anonymous.

Decentralized Autonomous Organization (DAO) claims to bring a closer step to a

democratic process to blockchain. Giving the power to the small guy by being part of the voting.

This could be true if each stakeholder regardless how many crypto coins they have their vote

counted equally as everyone’s. There are no rules or laws of government to enforce this.

Activists have pointed out that a DAO allows people with the most coins of that blockchain to

have the most weight on voting. A rich stake holder can buy into this DAO by owning most of

the blockchain he can vote on behalf of his interest rather than the original purpose of the DAO.

While pump and dumps are rampant with the crypto investing scene. Scams happening

with NTFs with counterfeit content. Alternative coins being created and then closing the project

and taking the investors’ money. While other accusations have stated crypto can be used or has

been sued for dark web activities. This is also including money laundry from people who want to

evade. Cartels also participate in laundering money through crypto currency.

Conclusion (Care ethics)

While activists point out the flaws in cryptocurrency. Being a Ponzi scheme and its only

purpose is to scam the unknowing buyer. Their ethics are based on the care ethics. Their

objective is to spread awareness so people won't fall victims to fraudulent schemes. Another

concern is the toll of it taking on the environment. The best interest of the majority.

My Position
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I am also against cryptocurrency. It has proven to be very volatile. To many bad faith

actors taking advantage of the smaller guy. This is devastating not only to the individual but also

to the economy. Governments must step in have to regulate it by banning it. Banning it will

benefit everyone including the ones that are in favor it for their individual views. To many

greedy people not to take advantage of other people. The climate crisis is also a concern of mine.

Crypto miners don’t help by using a good amount of energy to mine cryptocurrency. This also

puts people at risk when smaller governments have put priority of their energy grid to farm

crypto. That’s not to mention rogue regimes laundering money. El Salvador is example where an

authoritarian like government has impose crypto friendly policy, “The government hasn’t

adequately explained to locals why the digital currency is shaking up their lives, but they know

this much: Some of them have to leave. Their land is needed for Bitcoin City” (Silverman,

McKenzie, 2022). Cryptocurrency is a byproduct when there is an overwhelming abundance of

wealth that is concentrated with the very few. The lack of government is to blame. They can step

in anytime and set the rules, but they haven’t.

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References

Fonda, D. (2022a, May 31). Crypto’s Future Is Even More Exciting Than Its Present. Barron’s.
Retrieved September 27, 2022, from https://www.barrons.com/articles/bitcoin-crypto-
blockchain-investing-51653676116

Fonda, D. (2022ba, May 26). Web3 Was Supposed to Save the Internet. It Has a Long Way to
Go. Barron’s. Retrieved October 14, 2022, from https://www.barrons.com/articles/web3-
crypto-coins-startups-51653531787

New York Attorney General. (2021, February 23). Attorney General James Ends Virtual
Currency Trading Platform Bitfinex’s Illegal Activities in New York [Press release].
https://ag.ny.gov/press-release/2021/attorney-general-james-ends-virtual-currency-
trading-platform-bitfinexs-illegal

Silverman, J., & McKenzie, B. (2022, July 22). El Salvador’s Embrace of Bitcoin Didn’t Bring
Prosperity — It Rode in With Waves of Repression. The Intercept. Retrieved September
27, 2022, from https://theintercept.com/2022/07/22/bitcoin-crypto-el-salvador-nayib-
bukele/

Mortazavi, S. (n.d.). Cryptocurrency Is a Giant Ponzi Scheme. Jacobin. Retrieved October 14,
2022, from https://jacobin.com/2022/01/cryptocurrency-scam-blockchain-bitcoin-
economy-decentralization

Technology, B. (2021, August 18). Alexis Ohanian’s Big Bet on Blockchain Gaming [Video].
YouTube. Retrieved October 15, 2022, from https://www.youtube.com/watch?
v=SBH2hijXfSM&feature=youtu.be