There are clear advantages to be had by Palestine in adopting Bitcoin, but the path to do so is not so straightforward as has been claimed before.
This is an opinion editorial by Seth Cantey, an associate professor of politics, and Mohammed Mourtaja, a Palestinian student studying international economics.
A debate is taking shape over whether bitcoin can play a role in Palestinians’ quest for freedom from Israeli occupation. It began a year ago, in September 2021, when Chief Strategy Officer at the Human Rights Foundation Alex Gladstein published “Can Bitcoin be Palestine’s Currency of Freedom?” on Bitcoin Magazine. The argument goes like this: Bitcoin allows users to securely send, receive and store value without reliance on any third party. In doing so, it enhances personal autonomy and serves as a form of resistance to occupation. In Gladstein’s words, “It is a peaceful protest, a digital shield, that could lead to big change.”
One of us authors has spent a lot of time down the bitcoin rabbit hole in recent years. The other, newer to bitcoin but well versed after months of intensive research on the topic, is Palestinian and until recently lived in Gaza. We address concerns about the need for caution and qualification in some of Gladstein’s arguments toward the end of this article, but in general we agree with him that bitcoin has the potential to play an important role in Palestine’s pursuit of freedom.
Not everyone does. Over the past year, knives have come out for this argument. That’s a good thing: More debate is needed on whether and how bitcoin can improve the lives of marginalized people, not less. But the quality of debate matters. Too often, analysts make points that are misinformed, usually a consequence of not putting in the work to understand a place or technology, and sometimes they misdirect readers to score points. A recent article includes both kinds of bad takes and is worthy of a considered response. In our critique below, we highlight the kinds of points that critics are getting wrong and try to model analysis that can be taken seriously by scholars, policymakers, and the general public.
In July, Hadas Thier — a writer and activist published in The Nation and Jacobin among other outlets — responded to Gladstein in an article titled “Bitcoin Cannot Free Palestine.” Writing for the Middle East Research and Information Project (MERIP), a non-profit independent research group, Thier acknowledges the “urgent and necessary pursuit of Palestinian financial independence,” which she characterizes as “indisputable.” But she argues that bitcoin should have no role in that pursuit. There is a “yawning chasm between the far-reaching promises made by Gladstein and others and the actual technological capabilities of cryptocurrencies,” she writes. These “faux-humanitarian promises” only offer Palestinians “dangerous economic and political risks.”
Those who have spent time in the space will already smell a problem. The title of Thier’s article refers to the role of bitcoin in Palestine, but she conflates bitcoin with cryptocurrencies throughout. The word “bitcoin” appears more than thirty times in the article, but some version of “crypto” appears just as often. Thier mostly uses crypto as an adjective: crypto adherents, proponents, enthusiasts, cheerleaders, millionaires, projects, assets, wallets, payments, entrepreneurs, transactions, exchanges, etc. Bitcoiners have long been at pains to distinguish between bitcoin and other cryptocurrencies; indeed, this is the raison d’?tre for the term “altcoin.” Bitcoin is the oldest, most decentralized, most secure and most widely adopted blockchain, one with a known and immutable monetary policy and a fixed supply. These characteristics meaningfully distinguish bitcoin from its competitors. To the extent that any nation-state has expressed even the prospect of adopting a digital currency not backed by a central bank, only one has been considered: bitcoin. In 2021, El Salvador crossed that Rubicon. Earlier this year, the Central African Republic did the same.
Beyond injecting crypto into a conversation about bitcoin’s role in Palestine, much of Thier’s argument rests on criticisms that, she claims, make the asset unsuitable for adoption. Cryptocurrencies, she writes, are characterized by “wild volatility, inbuilt inequalities, environmental consequences and associations with criminal activity.” Assuming for a moment that she means bitcoin specifically (not cryptocurrencies generally), there is some truth in each of these allegations. On balance, though, they are unconvincing. Let’s go through each briefly.
First, it’s no surprise that an asset as small as bitcoin, which trades 24/7 in perhaps the world’s only truly free market, is volatile. But volatility goes both ways. A dozen years ago the price of bitcoin was under $1. Today it’s around $20,000. For the vast majority of the past decade and more, it has been a lucrative investment. While that doesn’t mean the future will look like the past, the word volatility need not be a pejorative. If we are watching the monetization of a new asset, a new money — and that may be exactly what we’re watching — then early adopters will benefit disproportionately. It shouldn’t be a surprise that developing countries, which tend to suffer more in the existing international financial system, are thinking harder about alternatives than developed ones.
Second, inbuilt inequality through pre-mines, pre-sales, etc. has been at the heart of nearly all cryptocurrency launches. That was not the case for bitcoin, however, which arguably had the fairest launch of any, and whose creator, as far as we know, has never profited. We recently heard it put this way: Satoshi Nakamoto was a buyer of bitcoin, not a seller. They purchased hardware and electricity to secure the bitcoin network, disappeared and have never touched the block rewards they received. And while it is true that some early investors in bitcoin profited immensely — this is typical of early investors in any successful technology — bitcoin wealth is becoming more evenly distributed over time. That stands in contrast to wealth distribution trends generally. According to recent data from the U.S. Bureau of Economic Analysis, for example, the United States is currently in its “fourth straight decade of rising income and wealth inequality.”
Third, the purported environmental consequences of bitcoin are serious, well known and much discussed. They can also be exaggerated. Anyone who says the protocol’s environmental footprint is insignificant or unimportant is wrong, but often critics begin with the assumption that any energy the protocol uses is wasted. In fact, all monetary systems use energy, including the petrodollar system. Citing data from the University of Cambridge, Lyn Alden notes that the bitcoin network currently accounts for less than 0.1% of global energy consumption. “In the very long run,” she writes, “if Bitcoin is wildly successful and becomes a systemically important asset and payment system used by over a billion people at 10-20x its current market capitalization, it should reach several tenths of one percent of global energy usage.” If it fails, on the other hand, “its energy usage will stagnate and shrink as the block subsidies continue to diminish.” Three questions, then, should be at the center of any discussion about bitcoin and the environment. First, is the energy dedicated to securing the network in pursuit of better money worth the environmental consequences, especially for the large part of humanity that desperately needs better money? Second, how do positive trends in renewable energy adoption within bitcoin mining affect that calculation? Third, could bitcoin meaningfully contribute to climate solutions over time, for example through flare mitigation or the capture of vented methane? We believe the answers to all three questions favor the continued exploration of this technology, including its proof-of-work consensus mechanism.
Finally, it is true that bitcoin has been associated with criminal activity, and that association will never go away entirely. The same can be said for the U.S. dollar. But the FBI isn’t worried about bitcoin. It worries instead about vulnerabilities in smart contracts. Citing data from Chainalysis, a recent public service announcement by the Bureau notes that of $1.3 billion in cryptocurrencies stolen from investors in the first quarter of this year, almost 97% was stolen from DeFi platforms. The percentage of activity on the bitcoin network associated with criminal activity, in contrast, is declining. According to a recent report by former acting CIA director Michael Morel, “The broad generalizations about the use of Bitcoin in illicit finance are significantly overstated.” Indeed, the transparent nature of public blockchains means they can even be useful to law enforcement. In Morel’s words, “Blockchain analysis is a highly effective crime fighting and intelligence gathering tool.”
So Thier’s article seems to have been written without a grasp of differences between key technologies (i.e., bitcoin as a subset of, and not the same as, crypto) and without a sense of known rebuttals to common criticisms of bitcoin. Another kind of problem in her analysis is the straw man argument. On several occasions, Thier cites an interview she conducted with Sara Roy, a senior research scholar at the Center for Middle Eastern Studies at Harvard and an authority on the Palestinian economy. She frames Roy’s comments both as contra-Gladstein’s argument and in support of her own. It may be that Roy doesn’t agree with Gladstein on bitcoin’s role in Palestine, and that she does agree with Thier, but that is impossible to know based on how Roy’s views are presented. Quoting Thier:
“I spoke to Roy about Gladstein’s article. She strenuously disagreed with the notion that ‘cryptocurrency is somehow impervious to the political reality in which Palestinians and Israelis reside’ or that it could ‘give dispossessed Palestinians parity with empowered Israelis, eliminating the gross asymmetries of power between them and granting Palestinians economic sovereignty.'”
Of course Roy disagreed with these notions. Even the most hardened bitcoin maximalist would. Gladstein did not write these things, has not said them and would not agree with them. The suggestion in Thier’s article is that she presented Gladstein’s argument to Roy, who forcefully objected to it. But the relevant quotation is not attributed to Gladstein for good reason; the thoughts aren’t his. This kind of analysis is either an unfortunate attempt to bolster an argument by misdirecting the reader or a gross misunderstanding of what bitcoin advocates believe the currency’s adoption in Palestine could achieve.
A final critique relates to a big topic, one squeezed into just two sentences in Thier’s analysis. “In a best-case scenario,” she writes, “some individuals from the Palestinian middle class — nearly non-existent in Gaza and struggling in the West Bank — could benefit from receiving international payments or remittances in bitcoin. But given the wild volatility in the value of cryptocurrencies, it will more likely harm those taking on the risk.” One of us has direct experience with remittances in Palestine and knows what it’s like to lose money to middlemen — be they banks, governments, or Western Union. A recent World Bank report shows that last year $3.5 billion dollars’ worth of remittances entered the West Bank and Gaza, accounting for 20% of Palestinian GPD. Unemployment in those territories hovers around 16% and 47%, respectively, and GDP per capita in Palestine overall is around $3,600. In other words, this affects everyone. When $1,000 turns into $920 because of transaction fees, or when $100 turns into $92, families and individuals who may earn the equivalent of only a few dollars per day feel those effects acutely. But only after a substantial delay. Transferring fiat to Gaza can take weeks.
Does bitcoin fix this? Maybe, and in the future it certainly could. If someone wants to send bitcoin to Gaza right now, they can do so with a smartphone. Via the Lightning Network, the transaction fee is essentially free. Almost immediately, that bitcoin will land in someone’s wallet on the ground. It can be transferred to Binance and converted to the stablecoin Tether (USDT) before being cashed out for Israeli Shekels at a currency exchange office. All of this can happen quickly — much faster than any fiat transfer — with minimal risk posed by volatility. In the future, if and when a company like Strike is operating in Palestine, fiat-to-fiat transfers across the bitcoin network could become common and replace the need for alternatives entirely.
Before shifting to our own critique of Gladstein’s argument, we want to acknowledge that Thier makes several points that we agree with. First, bitcoin is not a cure-all for the ills of Palestinians or any other people. Second, “The monetary relationship between Israel and the Palestinians reflects a more fundamental asymmetry of power.” Third, “An independent Palestinian economy will not arise magically out of a sovereign currency, digital or otherwise. It can only come about through the capacity to produce and trade goods and services, which has been systematically undermined through the destruction of physical infrastructure and the elimination of a geographical basis on which Palestinian capital accumulation could effectively take place.” These things are true. The question is whether informed bitcoin adoption has the potential to help Palestinians pursue economic freedom. We believe that it does and would encourage Thier to speak with those who have interacted with bitcoin in Palestine, as Gladstein and we have. Unfortunately, no Palestinians were interviewed for her article.
This topic matters. Over the past dozen years, bitcoin’s market cap has grown exponentially, and the pace of cryptocurrency adoption — a majority or plurality of which has always been bitcoin — has exploded in developing countries in particular. The United Nations Conference on Trade and Development (UNCTAD), which advocates for increased regulation of cryptocurrency to mitigate investment risks in the sector, notes in a recent report that 15 of the top 20 economies globally, in terms of digital currency ownership as a share of the population, are in emerging market and developing countries. In other words, the current global financial system is not working for many of the world’s poor, who are increasingly looking for alternatives.
Topics that matter generate debate, and Gladstein is to be commended for kicking this one off. He is a thoughtful analyst, his arguments hold up well to the criticism articulated in Their’s critique, and his work has attracted attention for good reason. He has also authored a book that explores the use of bitcoin by people throughout the developing world, among other topics, which we believe is well worth reading.
But we also want to sound a note of caution. Often analysts become advocates and, while that is not a problem per se, advocacy can undermine analysis. We have seen some of that in Gladstein’s work. In his book, for example, Gladstein draws on Greek history to paint bitcoin as a kind of Trojan Horse:
“Bitcoin will continue to gain worldwide adoption because of its effectiveness as digital gold, but hidden within the prized Trojan Horse is a remarkable freedom technology. At this point, the reader may think Bitcoin proponents must be saying, ‘Quiet in the back! Keep the noise down. We just need to last a few more hours until midnight, and then we can pop ourselves out of this horse and let the rest of our army into Troy.’ But it is already too late. There is nothing the Trojans can do.”
The analogy continues:
“Many authoritarians, central bankers, and establishmentarians may already realize what is concealed in Bitcoin’s Trojan Horse. There are plenty of modern Laoco?ns and Cassandras saying, ‘We need to stop this thing!’ But, just like in the kingdoms of lore, these words will fall on deaf ears. The prize glitters too bright.”
The suggestion here is that bitcoin is inevitable, that the steady march to global adoption and the implications of that — both for “number go up” and “freedom go up” — are already baked into the cake. The truth is that that future is far from certain. Bitcoin continues to face a variety of risks, from the internal to the external to the local. Will a fee market develop over time to replace the block reward that has so far been essential to bitcoin’s security? What of the policymakers and regulators in the U.S. Congress and beyond, not to mention those in Europe, who seem determined to regulate proof-of-work mining out of existence? And in a place like Palestine, where electricity (and thus access to the internet) can be intermittent, and is mostly controlled by Israel, what would bootstrapping a resistance economy based on bitcoin really look like?
One can believe that bitcoin is freedom technology, that adoption will continue and that Palestine (and other places) will benefit from increased adoption over time. One can also believe that the ability to opt into a free and open, censorship-resistant monetary system offers Palestinians something important and in desperately short supply on the ground: dignity. The autonomy of choice in a context of occupation. And one can believe that Palestinian investments into bitcoin today will reap rewards over the long term. As it happens, we believe these things. But to argue that the game is already won, that widespread adoption of bitcoin in Palestine or elsewhere is inevitable, is to encourage uninformed adoption. People who accept and act on that argument are likely to take risks they don’t fully understand.
To his credit, Gladstein has also used more measured language when talking and writing about bitcoin and Palestine. Indeed, his article is framed as a question — “Can Bitcoin Be Palestine’s Currency of Freedom?” — rather than an answer. We agree with his suggestion that the answer could be yes, and hope to work alongside him and others to create the fair and just reality that Palestinians deserve.
This is a guest post by Seth Cantey and Mohammed Mourtaja. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.
This is an opinion editorial by Seth Cantey, an associate professor of politics, and Mohammed Mourtaja, a Palestinian student studying international economics.
A debate is taking shape over whether bitcoin can play a role in Palestinians’ quest for freedom from Israeli occupation. It began a year ago, in September 2021, when Chief Strategy Officer at the Human Rights Foundation Alex Gladstein published “Can Bitcoin be Palestine’s Currency of Freedom?” on Bitcoin Magazine. The argument goes like this: Bitcoin allows users to securely send, receive and store value without reliance on any third party. In doing so, it enhances personal autonomy and serves as a form of resistance to occupation. In Gladstein’s words, “It is a peaceful protest, a digital shield, that could lead to big change.”
One of us authors has spent a lot of time down the bitcoin rabbit hole in recent years. The other, newer to bitcoin but well versed after months of intensive research on the topic, is Palestinian and until recently lived in Gaza. We address concerns about the need for caution and qualification in some of Gladstein’s arguments toward the end of this article, but in general we agree with him that bitcoin has the potential to play an important role in Palestine’s pursuit of freedom.
Not everyone does. Over the past year, knives have come out for this argument. That’s a good thing: More debate is needed on whether and how bitcoin can improve the lives of marginalized people, not less. But the quality of debate matters. Too often, analysts make points that are misinformed, usually a consequence of not putting in the work to understand a place or technology, and sometimes they misdirect readers to score points. A recent article includes both kinds of bad takes and is worthy of a considered response. In our critique below, we highlight the kinds of points that critics are getting wrong and try to model analysis that can be taken seriously by scholars, policymakers, and the general public.
In July, Hadas Thier — a writer and activist published in The Nation and Jacobin among other outlets — responded to Gladstein in an article titled “Bitcoin Cannot Free Palestine.” Writing for the Middle East Research and Information Project (MERIP), a non-profit independent research group, Thier acknowledges the “urgent and necessary pursuit of Palestinian financial independence,” which she characterizes as “indisputable.” But she argues that bitcoin should have no role in that pursuit. There is a “yawning chasm between the far-reaching promises made by Gladstein and others and the actual technological capabilities of cryptocurrencies,” she writes. These “faux-humanitarian promises” only offer Palestinians “dangerous economic and political risks.”
Those who have spent time in the space will already smell a problem. The title of Thier’s article refers to the role of bitcoin in Palestine, but she conflates bitcoin with cryptocurrencies throughout. The word “bitcoin” appears more than thirty times in the article, but some version of “crypto” appears just as often. Thier mostly uses crypto as an adjective: crypto adherents, proponents, enthusiasts, cheerleaders, millionaires, projects, assets, wallets, payments, entrepreneurs, transactions, exchanges, etc. Bitcoiners have long been at pains to distinguish between bitcoin and other cryptocurrencies; indeed, this is the raison d’?tre for the term “altcoin.” Bitcoin is the oldest, most decentralized, most secure and most widely adopted blockchain, one with a known and immutable monetary policy and a fixed supply. These characteristics meaningfully distinguish bitcoin from its competitors. To the extent that any nation-state has expressed even the prospect of adopting a digital currency not backed by a central bank, only one has been considered: bitcoin. In 2021, El Salvador crossed that Rubicon. Earlier this year, the Central African Republic did the same.
Beyond injecting crypto into a conversation about bitcoin’s role in Palestine, much of Thier’s argument rests on criticisms that, she claims, make the asset unsuitable for adoption. Cryptocurrencies, she writes, are characterized by “wild volatility, inbuilt inequalities, environmental consequences and associations with criminal activity.” Assuming for a moment that she means bitcoin specifically (not cryptocurrencies generally), there is some truth in each of these allegations. On balance, though, they are unconvincing. Let’s go through each briefly.
First, it’s no surprise that an asset as small as bitcoin, which trades 24/7 in perhaps the world’s only truly free market, is volatile. But volatility goes both ways. A dozen years ago the price of bitcoin was under $1. Today it’s around $20,000. For the vast majority of the past decade and more, it has been a lucrative investment. While that doesn’t mean the future will look like the past, the word volatility need not be a pejorative. If we are watching the monetization of a new asset, a new money — and that may be exactly what we’re watching — then early adopters will benefit disproportionately. It shouldn’t be a surprise that developing countries, which tend to suffer more in the existing international financial system, are thinking harder about alternatives than developed ones.
Second, inbuilt inequality through pre-mines, pre-sales, etc. has been at the heart of nearly all cryptocurrency launches. That was not the case for bitcoin, however, which arguably had the fairest launch of any, and whose creator, as far as we know, has never profited. We recently heard it put this way: Satoshi Nakamoto was a buyer of bitcoin, not a seller. They purchased hardware and electricity to secure the bitcoin network, disappeared and have never touched the block rewards they received. And while it is true that some early investors in bitcoin profited immensely — this is typical of early investors in any successful technology — bitcoin wealth is becoming more evenly distributed over time. That stands in contrast to wealth distribution trends generally. According to recent data from the U.S. Bureau of Economic Analysis, for example, the United States is currently in its “fourth straight decade of rising income and wealth inequality.”
Third, the purported environmental consequences of bitcoin are serious, well known and much discussed. They can also be exaggerated. Anyone who says the protocol’s environmental footprint is insignificant or unimportant is wrong, but often critics begin with the assumption that any energy the protocol uses is wasted. In fact, all monetary systems use energy, including the petrodollar system. Citing data from the University of Cambridge, Lyn Alden notes that the bitcoin network currently accounts for less than 0.1% of global energy consumption. “In the very long run,” she writes, “if Bitcoin is wildly successful and becomes a systemically important asset and payment system used by over a billion people at 10-20x its current market capitalization, it should reach several tenths of one percent of global energy usage.” If it fails, on the other hand, “its energy usage will stagnate and shrink as the block subsidies continue to diminish.” Three questions, then, should be at the center of any discussion about bitcoin and the environment. First, is the energy dedicated to securing the network in pursuit of better money worth the environmental consequences, especially for the large part of humanity that desperately needs better money? Second, how do positive trends in renewable energy adoption within bitcoin mining affect that calculation? Third, could bitcoin meaningfully contribute to climate solutions over time, for example through flare mitigation or the capture of vented methane? We believe the answers to all three questions favor the continued exploration of this technology, including its proof-of-work consensus mechanism.
Finally, it is true that bitcoin has been associated with criminal activity, and that association will never go away entirely. The same can be said for the U.S. dollar. But the FBI isn’t worried about bitcoin. It worries instead about vulnerabilities in smart contracts. Citing data from Chainalysis, a recent public service announcement by the Bureau notes that of $1.3 billion in cryptocurrencies stolen from investors in the first quarter of this year, almost 97% was stolen from DeFi platforms. The percentage of activity on the bitcoin network associated with criminal activity, in contrast, is declining. According to a recent report by former acting CIA director Michael Morel, “The broad generalizations about the use of Bitcoin in illicit finance are significantly overstated.” Indeed, the transparent nature of public blockchains means they can even be useful to law enforcement. In Morel’s words, “Blockchain analysis is a highly effective crime fighting and intelligence gathering tool.”
So Thier’s article seems to have been written without a grasp of differences between key technologies (i.e., bitcoin as a subset of, and not the same as, crypto) and without a sense of known rebuttals to common criticisms of bitcoin. Another kind of problem in her analysis is the straw man argument. On several occasions, Thier cites an interview she conducted with Sara Roy, a senior research scholar at the Center for Middle Eastern Studies at Harvard and an authority on the Palestinian economy. She frames Roy’s comments both as contra-Gladstein’s argument and in support of her own. It may be that Roy doesn’t agree with Gladstein on bitcoin’s role in Palestine, and that she does agree with Thier, but that is impossible to know based on how Roy’s views are presented. Quoting Thier:
“I spoke to Roy about Gladstein’s article. She strenuously disagreed with the notion that ‘cryptocurrency is somehow impervious to the political reality in which Palestinians and Israelis reside’ or that it could ‘give dispossessed Palestinians parity with empowered Israelis, eliminating the gross asymmetries of power between them and granting Palestinians economic sovereignty.'”
Of course Roy disagreed with these notions. Even the most hardened bitcoin maximalist would. Gladstein did not write these things, has not said them and would not agree with them. The suggestion in Thier’s article is that she presented Gladstein’s argument to Roy, who forcefully objected to it. But the relevant quotation is not attributed to Gladstein for good reason; the thoughts aren’t his. This kind of analysis is either an unfortunate attempt to bolster an argument by misdirecting the reader or a gross misunderstanding of what bitcoin advocates believe the currency’s adoption in Palestine could achieve.
A final critique relates to a big topic, one squeezed into just two sentences in Thier’s analysis. “In a best-case scenario,” she writes, “some individuals from the Palestinian middle class — nearly non-existent in Gaza and struggling in the West Bank — could benefit from receiving international payments or remittances in bitcoin. But given the wild volatility in the value of cryptocurrencies, it will more likely harm those taking on the risk.” One of us has direct experience with remittances in Palestine and knows what it’s like to lose money to middlemen — be they banks, governments, or Western Union. A recent World Bank report shows that last year $3.5 billion dollars’ worth of remittances entered the West Bank and Gaza, accounting for 20% of Palestinian GPD. Unemployment in those territories hovers around 16% and 47%, respectively, and GDP per capita in Palestine overall is around $3,600. In other words, this affects everyone. When $1,000 turns into $920 because of transaction fees, or when $100 turns into $92, families and individuals who may earn the equivalent of only a few dollars per day feel those effects acutely. But only after a substantial delay. Transferring fiat to Gaza can take weeks.
Does bitcoin fix this? Maybe, and in the future it certainly could. If someone wants to send bitcoin to Gaza right now, they can do so with a smartphone. Via the Lightning Network, the transaction fee is essentially free. Almost immediately, that bitcoin will land in someone’s wallet on the ground. It can be transferred to Binance and converted to the stablecoin Tether (USDT) before being cashed out for Israeli Shekels at a currency exchange office. All of this can happen quickly — much faster than any fiat transfer — with minimal risk posed by volatility. In the future, if and when a company like Strike is operating in Palestine, fiat-to-fiat transfers across the bitcoin network could become common and replace the need for alternatives entirely.
Before shifting to our own critique of Gladstein’s argument, we want to acknowledge that Thier makes several points that we agree with. First, bitcoin is not a cure-all for the ills of Palestinians or any other people. Second, “The monetary relationship between Israel and the Palestinians reflects a more fundamental asymmetry of power.” Third, “An independent Palestinian economy will not arise magically out of a sovereign currency, digital or otherwise. It can only come about through the capacity to produce and trade goods and services, which has been systematically undermined through the destruction of physical infrastructure and the elimination of a geographical basis on which Palestinian capital accumulation could effectively take place.” These things are true. The question is whether informed bitcoin adoption has the potential to help Palestinians pursue economic freedom. We believe that it does and would encourage Thier to speak with those who have interacted with bitcoin in Palestine, as Gladstein and we have. Unfortunately, no Palestinians were interviewed for her article.
This topic matters. Over the past dozen years, bitcoin’s market cap has grown exponentially, and the pace of cryptocurrency adoption — a majority or plurality of which has always been bitcoin — has exploded in developing countries in particular. The United Nations Conference on Trade and Development (UNCTAD), which advocates for increased regulation of cryptocurrency to mitigate investment risks in the sector, notes in a recent report that 15 of the top 20 economies globally, in terms of digital currency ownership as a share of the population, are in emerging market and developing countries. In other words, the current global financial system is not working for many of the world’s poor, who are increasingly looking for alternatives.
Topics that matter generate debate, and Gladstein is to be commended for kicking this one off. He is a thoughtful analyst, his arguments hold up well to the criticism articulated in Their’s critique, and his work has attracted attention for good reason. He has also authored a book that explores the use of bitcoin by people throughout the developing world, among other topics, which we believe is well worth reading.
But we also want to sound a note of caution. Often analysts become advocates and, while that is not a problem per se, advocacy can undermine analysis. We have seen some of that in Gladstein’s work. In his book, for example, Gladstein draws on Greek history to paint bitcoin as a kind of Trojan Horse:
“Bitcoin will continue to gain worldwide adoption because of its effectiveness as digital gold, but hidden within the prized Trojan Horse is a remarkable freedom technology. At this point, the reader may think Bitcoin proponents must be saying, ‘Quiet in the back! Keep the noise down. We just need to last a few more hours until midnight, and then we can pop ourselves out of this horse and let the rest of our army into Troy.’ But it is already too late. There is nothing the Trojans can do.”
The analogy continues:
“Many authoritarians, central bankers, and establishmentarians may already realize what is concealed in Bitcoin’s Trojan Horse. There are plenty of modern Laoco?ns and Cassandras saying, ‘We need to stop this thing!’ But, just like in the kingdoms of lore, these words will fall on deaf ears. The prize glitters too bright.”
The suggestion here is that bitcoin is inevitable, that the steady march to global adoption and the implications of that — both for “number go up” and “freedom go up” — are already baked into the cake. The truth is that that future is far from certain. Bitcoin continues to face a variety of risks, from the internal to the external to the local. Will a fee market develop over time to replace the block reward that has so far been essential to bitcoin’s security? What of the policymakers and regulators in the U.S. Congress and beyond, not to mention those in Europe, who seem determined to regulate proof-of-work mining out of existence? And in a place like Palestine, where electricity (and thus access to the internet) can be intermittent, and is mostly controlled by Israel, what would bootstrapping a resistance economy based on bitcoin really look like?
One can believe that bitcoin is freedom technology, that adoption will continue and that Palestine (and other places) will benefit from increased adoption over time. One can also believe that the ability to opt into a free and open, censorship-resistant monetary system offers Palestinians something important and in desperately short supply on the ground: dignity. The autonomy of choice in a context of occupation. And one can believe that Palestinian investments into bitcoin today will reap rewards over the long term. As it happens, we believe these things. But to argue that the game is already won, that widespread adoption of bitcoin in Palestine or elsewhere is inevitable, is to encourage uninformed adoption. People who accept and act on that argument are likely to take risks they don’t fully understand.
To his credit, Gladstein has also used more measured language when talking and writing about bitcoin and Palestine. Indeed, his article is framed as a question — “Can Bitcoin Be Palestine’s Currency of Freedom?” — rather than an answer. We agree with his suggestion that the answer could be yes, and hope to work alongside him and others to create the fair and just reality that Palestinians deserve.
This is a guest post by Seth Cantey and Mohammed Mourtaja. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.
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