Research design: case studies

I initially chose three case studies – Bitcoin, Ethereum and Faircoin – with the aim of understanding processes of deliberate differentiation and enabling a comparative approach between these. The intention was that each of the cases would reveal different aspects of the ideas and possibilities in blockchain technology, as well as allowing for a comparison that might reveal political intent and effects. The three case studies were therefore selected on the basis of providing a good general understanding of ‘blockchain’ as well as the particular instantiations of different political assumptions and aims. This justification was later confirmed as the Bitcoin and the Ethereum networks grew to become the largest and second largest blockchain networks, therefore setting much of the standard that the rest of the industry and community would respond to, while the Faircoin project drew from and articulated a distinctly different and politically motivated understanding of decentralisation, trust and consensus. It also became clear that not only were there stated differences that covered unique angles on the technology in each case, but that this was also materialised in different consensus algorithms at the core of each project that pointed to deliberately different development pathways. The first was the initial invention of consensus algorithms in Bitcoin, using what is called ‘proof-of-work’ cryptographic hashing (explained and discussed in detail in Chapter 4). Ethereum then looked to change the Bitcoin protocol because of issues of energy waste and possible centralising tendencies, developing a ‘proof-of-stake’ algorithm to take its place. Finally, Faircoin invented a ‘proof-of-cooperation’ algorithm with the intention of removing market dynamics from the protocol operations and introduce more community-based oversight drawing on socio-political rather than technical understandings of trust and consensus.

Over the course of my analysis, however, I decided to let the Faircoin case recede to the background, as it opened up a range of new debates and themes that were beyond the scope of this thesis. The Bitcoin and Ethereum cases raised the question of the possibility of replacing aspects of political decision-making and enforcement with forms of algorithmic mediation. The consensus algorithms in their architectures became propositions for a resolution of the political in and through an algorithmic or protocological agency, which Roio terms ‘algorithmic sovereignty’ (Roio, 2018), and which I discuss as a form of animism in 4.2. While the Faircoin case served to highlight this very novelty, to do it justice as a case study in its own right required drawing on and opening up a different set of debates, including but not limited to social movement organising strategies, heterodox economics and alternative and social currency projects, all of which are highly relevant to blockchain discussions and developments but require and deserve a fuller treatment in their own right. The focus, in other words, became what might be articulated as common sensibility amongst blockchain projects, such that it is possible to even speak of a coherent ‘blockchain industry’ or ‘community’ in the

first place, and the kinds of politics that are being shaped through such a sensibility. I here introduce each of the cases, including Faircoin, to give an idea of how each of them enabled me to address my research questions.

Bitcoin: the invention of the blockchain

Bitcoin was first introduced in a post to the Cryptography mailing list by the anonymous Satoshi Nakamoto, who subsequently articulated the Bitcoin project into a concise whitepaper outlining its reasoning and design in a short nine-page document (Nakamoto, 2008).18 The project was a proposal for a peer-to-peer electronic payment system, a transaction system without the need for trusted third parties to facilitate payments. There is a large body of work that discusses Bitcoin as a form of money, addressing questions of currency design, the nature of money and so on (cf. Roio, 2013; Robleh et al., 2014; Cheang, Rivoire and (eds.), 2015; Peters, Panayi and Chapelle, 2015; Vigna and Casey, 2015; Bjerg, 2016; Scott, 2018). My focus in this thesis is specifically on blockchain and I therefore treat the Bitcoin case primarily as the invention of this particular data verification and storage method that it comprises, rather than assess its appropriateness as ‘money’ per se. As I argue in chapters 4 and 5, however, the monetary and economic decisions and aspects of blockchain protocols cannot be so neatly separated from its data structure and computational approach, and so my research does also address these aspects of the cases. There is justification for such an approach in that the Bitcoin whitepaper itself has not a single reference to monetary or economic theories and so what arguably holds a blockchain assemblage together are primarily particular computational ideas, an observation that I expand on in Chapters 4 and 5

(Nakamoto, 2008; Nakamoto, Bridle and Brekke, 2019). The Bitcoin case study was intended to provide the backdrop to the two subsequent case studies; by understanding the ‘original’ blockchain, I would then be able to compare and analyse the ways other projects sought to differentiate from Bitcoin, pointing to moments of decision and deliberate differentiation, the case serving as a basis for answering each of my three research questions. Over the course of the analysis, the Bitcoin case instead became the main case in my thesis, a key point and project through which to understand how concepts and understandings from network computation became more broadly relevant, and in turn generalised and ‘tokenised’ (in the sense of integrating currencies as a core aspect of decentralised protocol design) as I discuss in Chapter 4 and 5.

Ethereum: generalisation of the consensus algorithm

Ethereum inventor Vitalik Buterin was one of the first to explicitly articulate and build ‘blockchain’ as significant in and of itself, and therefore as more than a proposal for

decentralised electronic money.19 Ethereum launched in 2014, some years after Bitcoin and after a period of ‘alt-coins’, which were experiments with different cryptocurrency designs in the wake of Bitcoin. The aim of Ethereum was to expand the remit of Bitcoin from being a decentralised payment system (the invention of ‘cryptocurrencies’) to a more general decentralised system able to handle any kind of application (reframing Bitcoin as the invention of ‘blockchain’.) Ethereum in this sense also marked the expansion of the understanding and operationalisation of concepts in Bitcoin, the ‘platformisation’ of blockchain and decentralised protocols (see Chapter 5). I therefore chose the Ethereum case study with the intention of understanding the ways in which the specific assumptions, ideas and logic of the Bitcoin consensus algorithm were generalised to serve any kind of currency, protocol or application. This in turn, would address my first research question, making more evident some of the core ideas informing Bitcoin by building and expanding on these, as well as my second research question, pointing to some of the ways that concepts of decentralisation, trust, consensus and related concepts are operationalised. Because Ethereum launched as I was beginning my PhD research, I had the opportunity to follow the case as it developed, which also saw the project, developers and enthusiasts work through very fundamental questions about the ability to replace authority with code – culminating in a major conflict and ‘fork’ of the project towards the end of my empirical research. The question of the political re-emerged through these conflicts in the Ethereum community itself. As the research progressed, my third question, and methodological strategy of focusing on difference, disagreement and disputes (whether technical or otherwise) were both fully justified and served as a timely input to the debates at the time (outlined below).

Faircoin: political differentiation

I chose the third case study, namely Faircoin as it represented a deliberate and explicitly political differentiation from both Ethereum and Bitcoin, started by anarchist networks in Catalonia, Spain, in 2014.20 The project was initiated and funded by the anarchist Enric Duran, who had escaped from Spain after publicly declaring that he had taken out loans from banks amounting to €500,000 between the years 2006-2008 that he was not intending to repay.21 Instead, the money went to fund infrastructure, land and capacities of what was called the Cooperativa Integral Catalana (CIC), a cooperative network with the aim of an ‘integral revolution’ that would involve a transformation of the means to support ‘all aspects of life’, which also incorporated several local social currencies and bartering networks.22 Through the CIC Duran in particular sought to politicise aspects of money, finance, accounting and taxation, not just in terms of critique of established processes and institutions,

19

See What is Ethereum (2014) available from: http://youtu.be/Clw-qf1sUZg [accessed 24.03.2015] 20 See https://fair-coin.org/
 21 See https://vimeo.com/darkoptimism/robinbank 22 See https://cooperativa.cat/es/

but as a direct action strategy, also called ‘tax disobedience’. When Duran escaped court by leaving Spain, he sought to expand many of the ideas of tax disobedience, financial, economic and political autonomy of the CIC, and FairCoin was launched under the organisational umbrella of FairCoop with the motivation to scale these initiatives to global scale – a global social currency for use amongst cooperatives across the world and under direct democratic control.

Many of the critiques of existing institutions and strategies of disobedience have significant and interesting overlaps with the cryptocurrency ecosystem more broadly, although the political reasoning varies significantly. The Faircoin project draws on explicitly social movement ideas of ‘decentralisation’ as well as consensus, trust and other major concepts in blockchain. The Faircoin project altered the Bitcoin consensus algorithm in order to correspond with ideas that prioritised direct democratic oversight over algorithmic processes, naming the ‘global assembly’ as the primary determining body. This reliance on assembly- based decision-making, and the mediums through which assemblies took place – which were a combination of Telegram group chats and online pads for note taking – suggested a different set of questions, theories and literature than were my primary concern in this thesis, and so have not been included in the empirical chapters. I include the case here, and discuss it briefly in the conclusion, because it nevertheless served as an important marker of differentiation during data-collection and in my analysis and therefore forms part of the analytical backdrop even if not explicitly discussed in the empirical chapters 4-6.