The Seductive Reactionism of Coinbase
They have built a a businesses offering simple, easy ways for (mostly US-based) regular people to buy and hold Bitcoin and other cryptocurrencies.
While their approach can be simplistic and overly-centralized for the taste of some of the more radical blockchain enthusiasts, anyone who truly cares about the values behind crypto has been rooting for Coinbase. The importance of mass-adoption is one of the very few principles with which most people in the blockchain space agree.
A Brief History of Crypto Activism
The truth is that the crypto world, such as it is, is the very product of activism.
People dissatisfied with the status quo – the economic framework, the financial system, the intrinsic corruptibility of any authority – have turned their energy towards building an ideal world devoid of corrupt institutions and explorative middle-men.
Activism is so entrenched in the community, that sectarian-like schisms are an outrageously common occurrence – and a major turnoff for newcomers to this world. People in crypto are some of the most passionate activists I have ever come across – and I have spent two decades crisscrossing the world in the company of human rights advocates.
Satoshi Nakamoto the activist
The bitcoin white paper was a bomb shell. The very idea of a peer-to-peer cash, allowing irreversible transactions on the internet and not requiring any trusted institution to mediate transactions was a revolutionary, activist idea that galvanized people all over the world – yours truly included.
Keenly aware of the way the economy has been rigged by corrupted authorities in cohorts with rent-seeking intermediaries, we saw in blockchain a radical equalizer – a way to protect ourselves from the sort of people and institutions that caused the last few economic crises. Greed praying on the honest. The very root of every modern injustice.
Early bitcoiners were textbook activists. Talking – and arguing endlessly – about higher principles: decentralization, censorship resistance. Freedom. before 2017 they were the geeky bores that couldn’t shut up about these lofty ideas: at dinner tables, around watercoolers or online.
Conviction does that to people.
The rest is history: These people created communities and networks out of which business opportunities emerged. Coinbase emerged as one of the biggest – 100% capitalizing on this activism.
And they have done well. They have raised hundreds of millions from traditional venture investors and enjoyed the support of the community – activists, the lot of them – throughout good and bad times. People all over the world have wanted to join the team as a way to do their part. Contribute to the revolution.
So what can we make of the Coinbase CEO publishing a letter basically proclaiming activism unacceptable and claiming basically that the only mission that matter is profits for the company.
Did Atlas Shrug?
I often wonder how awful companies manage to keep people? Tobacco. Oil. Who are these people who go to bed every night and then spend long days, every day bleeding for the man, knowing that their work contributes to pollution or increased the death rate in communities far away or whatever?
I think what they tell themselves is versions of:
“What I do is not illegal, therefore it must be ethical”. Or “If I don’t do it someone else will”
And of course
“Profits are ethical” They can then be spent wisely making the world a better place”
Basically, the Friedman Doctrine, straight out of the Nixon era. A business’ only social responsibility is to make profits. End of story.
I guess that may have made sense in the 70s, when men in suits and cigars run every joint worth running, the planet’s resources were plentiful and up for grabs and, you know, people kind of knew their place in the world.
Business was business. Politics was politics. The two did not mix.
This is the sort of bullshit that got us in the mess where we are today: a few super-wealthy individuals hiding from the unwashed in fortified mansions on a dying planet.
There are countless pieces of evidence refuting Friedman’s controversial theory (including from such business-friendly places as The Economist or Harvard Business Review), to the point that in this day and age, anyone unconditionally defending this doctrine is basically not more than an ideologue.
And that is even before 2020.
2020 has changed everything
In 2020 we have clear evidence of a man-made impact on the environment with disastrous consequences to humanity in our life time;
In 2020 we are in the midst of a global pandemic that is bringing death, destruction and economic collapse to communities all over the world;
In 2020 we are dealing with more inequality than ever before;
2020 is a mess.
Above all, 2020 is bloody emotional for most normal people.
2020 is the sort of year that breeds activism.
Expecting intelligent people to ignore what is going on around them just to help their employer line their shareholder’s pockets is unrealistic and basically tone deaf.
In times like these, expecting a workplace to be conveniently insulated from the realities of our world is tone deaf. Expecting people to leave their convictions at the entrance door and laser-focus on unconditionally enriching shareholders is proper reactionary.
Why can’t everyone just eat cake?
It is not unheard of for wealthy people to grow out of touch with what is going on around them, right? Life is comfortable in the bubble and no-one enjoys to be inconvenienced.
There are a few more interesting points in the letter that are just old school reactionary:
- Brushing everything inconvenient as “activism” and contrasting “activism” with profits. As if you could not do both? Business suspicion of “activism” has a long and grim history, that allowed reactionary businesses to survive – say through the civil rights era – without reforming their ways until the pressure came down from the regulators. It allowed institutions to shut up, even expel – “activist” voices and claim “political neutrality”.
- The “championship team” metaphor is rich, in an era where spectator sport is confronted with the same “activism” that Mr. Armstrong wants to avoid in his business. To the surprise of exactly no-one, the reactionary arguments against the “activism” of the likes of Kaepernick are identical: keep politics out of the sport, they said. You have one job – win championships, they said.
Leadership is Political
I am actually a supporter of businesses staying out of politics and focusing on their product and market (and definitely a big proponent of focus in business).
As much as I respect and support small businesses taking a stand on issues in their community, no-one expects a mum-and-pop store to take any active position on social or environmental issues.
But a leading company that dominates a whole sector? They don’t have the luxury of not caring. Not in this day and age, where modern consumers and investors expect authenticity and transparency from the brands they interact with/ invest in.
I respect Mr. Armstrong’s decision to publish this letter A LOT. His strategy makes sense – by making it clear where he stands, he simplifies his work in the short term.
But what is going to happen in the long term?
Ultimately, as always happens, on a long enough timeline, Coinbase may go the way of other out of touch, tone-deaf businesses. By clarifying which side of history they want to be, they make everyone else’s job easier.
Sure, at first, they will have a motivated core team that will feel liberated by not having to deal with “activism” at work. But then, as they grow they will struggle to attract diverse enough segments of talent, which may lead to two combined problems:
- They will have to increase pay to offer a clear differentiator to attract talent; and
- They will have to mitigate the group-think that eventually settles in an ideological “monoculture”
Ultimately, what Mr. Armstrong may be ignoring is the fact that the “activist” ranks of consumers, investors and perhaps even regulators, are still small but growing fast. In a few short years, today’s activism will be tomorrow’s mainstream.