One of crypto’s most important goals is to create a radically free market for goods and services. The most radical proponents of cryptocurrencies want people to be able to buy anything anywhere without anyone interfering. But here’s the catch; the environment that creates that radically free market also creates a radically free market of ideas.
When people think of this, they often think it’s a great thing. After all, how does one get incredible innovations without radical freedom of ideas? And that’s true, in a way. But freedom of ideas doesn’t only mean freedom of good ideas or even sane ideas. It also means freedom of bad ideas, insane ideas, and completely incredible ideas. This is why the crypto ecosystem has been described as a hotbed for conspiracy theories.
The fact that crypto is counterculture means that it’s the perfect place for people to plant and believe conspiracy theories. Cryptocurrencies are also mysterious in their own right, meaning there are plenty of conspiracy theories about them. And here are six of the very biggest conspiracy theories about crypto.
1. Blockstream Hobbled Bitcoin
In the beginning, Bitcoin was one whole protocol and wasn’t divided in any way. But as the network expanded and demand from the market piled on it, the Bitcoin development team began to notice certain things.
The first thing that the community noticed was that Bitcoin went through transactions slowly. The network cannot process more than five to seven transactions per second. While that wasn’t a massive issue in the earlier days, it soon became a huge problem.
There was no way Bitcoin would compete with the likes of Visa and MasterCard if it took days for transactions on the network to be approved.
The solution proposed by some to solve this problem was to create a hard fork. This meant that the protocols running the Bitcoin network would change, and a fundamentally different network would be created. This new network would be quicker and faster than the regular Bitcoin, making adoption easier.
However, this proposal created a huge rift in the crypto ecosystem. A group of developers, Bitcoin activists, and Chinese miners supported Bitcoin, while others preferred a smaller block limit for Bitcoin, keeping it roughly at the same speed.
This disagreement turned into a hard fork on the Bitcoin network. The new chain arriving from the fork was Bitcoin Cash, and the two communities separated. Since then, the value of Bitcoin Cash has fallen drastically while the value of Bitcoin has risen dramatically.
According to a few people, Blockstream, one of the biggest companies in the crypto ecosystem, was behind the failed fork. These theorists claim that Blockstream put its weight behind the original Bitcoin network because it didn’t want to create a scalable Bitcoin protocol. The theorists claim that Blockstream did this because it wanted to retain control over Bitcoin and stop it from going mainstream.
2. Blockstream Hobbled Bitcoin: Part 2
For some reason, Blockstream is a rather popular fodder for conspiracy theories. This theory doesn’t claim that Blockstream hobbled Bitcoin through Bitcoin Cash. Instead, it claims that Bitcoin hobbled it through Bitcoin core, the development team that maintains Bitcoin.
This conspiracy theory argues that MasterCard and a few other companies hijacked the infrastructure for Bitcoin in 2015. That was when MasterCard led a seed round with Transamerica Ventures, FirstMark Capital, New York Life, and Bain Capital to create a company called “Digital Currency Group.”
This company went on to found other companies such as Blockstream. The company also invested in giants such as Coinbase, BitPay, Circle, Chainanalysis, eToro, Fireblocks, Grayscale, Ledger, Parity, Hedera, Shapeshift, Curve, and several other firms.
The theory claims that this gave MasterCard pseudo-hegemonic control over Bitcoin and hobbled it. This was done by creating an unpleasant user experience and craftily executed downtimes in the ecosystem.
According to this theory, MasterCard did this both to profit off the inadequacy of crypto and ensure that the blockchain never became a global system of payments.
3. Bitcoin is Controlled by the Deep State
While some people believe that Bitcoin is way out of the control of the state, others believe the opposite. They think Bitcoin is in the control of the state and that the government even created it.
Around 2013, a website appeared claiming that the CIA created Bitcoin. The website, CiaProject.org (which no longer exists), suggested that the CIA essentially created Bitcoin and cryptocurrencies as tools to move illegal funds.
The mystery behind the creation of Bitcoin also lends some credence to this theory. No one knows who Satoshi Nakamoto is, and no one has ever come close to even uncovering the first clue about his identity.
According to conspiracy theorists, four pieces of evidence link Bitcoin to the CIA. The first is that the name Satoshi Nakamoto essentially translates to Central Intelligence. The second is how careful Satoshi was with his identity. They say that proves he had extensive intelligence training.
The third is that Satoshi Nakamoto is likely to be more than one person. Hence, it’s believed to be a pseudonym used by a group like the CIA. The last is that Bitcoin Talk, a forum Satoshi regularly posted on, censors talk about Bitcoin being a CIA project.
But all this “evidence” can be explained away by Occam’s Razor, a mental model that assumes the easiest explanation is often the truth.
First off, Satoshi Nakamoto is a fairly common Japanese name. Secondly, it doesn’t take extensive intelligence training to remain anonymous online.
Thirdly, not all anonymous identities are run by multiple people, even if said identity is prodigious. After all, prodigies exist in real life and are usually not four people hiding in a trench coats.
And the last claim is false. Bitcoin Talk censors threads, but some threads about the CIA sponsoring Bitcoin still exist.
4. The Government Will Seize All Bitcoin
This conspiracy theory is fairly recent, but that doesn’t mean it’s not important. Early in 2022, the author of the bestseller Rich Dad, Poor Dad, Robert Kiyosaki, made a chilling prediction on Twitter.
He predicted that the government would turn wrong and seize everyone’s Bitcoin through some legal process. He also said that Joe Biden was a communist.
BYE-BYE BITCOIN: Prediction. Biden to sign EXECUTIVE ORDER regulating Cryptos. NEXT: Fed Crypto. NEXT: all crypto currencies seized & folded into GOVERNMENT crypto. “Let’s Go Brandon” you criminal. You commie.— Robert Kiyosaki (@theRealKiyosaki) March 8, 2022
As expected, his tweet was met with mockery and scorn from the crypto community. One reply by @AutismCapital was, “You’re deranged. You should hang out with your Poor Dad more, he’s probably more based”.
You’re deranged. You should hang out with your Poor Dad more, he’s probably more based.— Autism Capital 🧩 (@AutismCapital) March 8, 2022
But that wasn’t Kiyosaki’s only strange tweet that day. Barely six hours earlier, he’d tweeted that people should “stay out of the stock market, create own assets, use debt as $, save G, S, BC, guns.” Before saying that, he predicted that the world was going into a “possible depression with hyperinflation.”
DO YOU HAVE a PLAN “B”? We are in BIGGEST BUBBLE in world history. Bubbles in stocks, real estate, commodities & oil. FUTURE? Possible DEPRESSION with HYPER-INFLATION. My PLAN B: be an entrepreneur, stay out of stock market, create own assets, use debt as $, save G,S, BC, guns.— Robert Kiyosaki (@theRealKiyosaki) March 8, 2022
Kiyosaki isn’t the first person to get scared that the government would move in to seize Bitcoin. But that’s the beauty of Bitcoin and the blockchain. If users keep their private keys safe, it’s near impossible to seize them. The only way the government could seize bitcoins would be to kidnap citizens en masse and interrogate them.
Fortunately, that’s an impossible ask for even the most repressive governments.
5. New World Order?
Cryptocurrencies have always been linked to a new world. However, some things have made that conspiracy theory take on new life and go mainstream.
In 2018, Danish firm BiChip released an update to their subdermal chip, which allows people to store the XRP token in their bodies. For a lot of people, that was just neat tech. But for others, it was just the proof they needed to realize that crypto was a vehicle for the Antichrist.
Religious people, in particular, were quick to argue that allowing people to store money in their bodies was a sign of the antichrist. According to the New Testament, the antichrist will create a new world order. This world order would be characterized by people having a mark on themselves called the mark of the beast. People who don’t have this mark will not be able to trade or even own money.
For some conspiracy theorists, XRP developing a chip that lets people store money on their bodies was just the first step.
6. Tether Isn’t 1:1
This one isn’t quite a conspiracy theory, as it has been proven true. When Tether first started releasing USD stablecoins, the company claimed that it had reserves that backed up all its coins. But this turned out to be false.
In 2019, Tether had to disclose that its coins were not 100% backed by dollar reserves. Instead, they were only 74% supported by dollars and short-term securities. When Tether was forced to make that disclosure in court, the company had to change its claim on its website that it had reserves for every USDT on the market.
But that was in 2019. Tether now claims that it can back up every USDT on the market with its reserves. However, that’s a difficult claim to believe, as they’ve said the same before and were found out.
On the Flipside
- While conspiracy theories are often farfetched, they can nevertheless be true. For example, Operation Paperclip was considered a conspiracy theory until redacted US Government documents proved it to be true.
Why You Should Care
Conspiracy theories may be implausible, but on the off chance that they are true (like with Tether), it’s important to know what they are. While this knowledge may not change your investing behavior, these theories could nevertheless be vital to understanding the crypto landscape.