Protests against vaccine mandates in downtown Ottawa, Canada's capitol, on Feb. 13, 2022. If protesters succeed in funding themselves with bitcoin, they’ll have proven it can perform its function immune to any political or public-opinion pressure, whether you like it or not.BRETT GUNDLOCK/The New York Times News Service
Ethan Lou’s latest book is Once a Bitcoin Miner: Scandal and Turmoil in the Cryptocurrency Wild West
If bitcoin flies over your head, if all you hear is abstract talk of tech and monetary policy and no everyday, real-life use case, then the story of its swift embrace by the self-described “freedom convoy” protesters is for you. It is not just a potential concrete demonstration of bitcoin’s value but also a test of it. What’s at the heart of the surging prices? It’s encapsulated in bitcoin’s role in the protests, and depending on how events unfold, there could be more such examples to come.
Rallying against COVID-19 restrictions and other perceived injustices, the protests began in Ottawa last month and have paralyzed the city and supply chains nationwide.
Acting separately, Toronto-Dominion Bank and GoFundMe quickly barred donations from that fundraising platform, which amounted to more than $10-million. The Ontario government obtained a court order to freeze US$9-million on another fundraising platform, GiveSendGo. Then the federal government invoked the Emergencies Act, granting it broad new powers to cut off protesters from banks and fundraising platforms. Finance Minister Chrystia Freeland said the move “covers” cryptocurrency.
Why the Ottawa truckers protest has turned to cryptocurrency for fundraising
Crypto enthusiasts keep funding convoy protests as traditional banks take action against it
There’s a reason Ms. Freeland specifically mentioned crypto. On Feb. 9, a black-bearded “bitcoin team lead” was introduced at the protesters’ Ottawa press conference, known only as “Nick” and the pseudonym “Nobody Caribou,” but later identified as local resident Nicholas St. Louis. He shepherds a donation drive that has amounted to more than 22 bitcoins – nearly US$1-million. Those funds are only for those in Ottawa protesting peacefully, Mr. St. Louis has said. In the wake of Ms. Freeland’s announcement, he said he was still distributing the funds.
Therein will lie the test. Bitcoin transactions happen without a traditional central administrator that can intervene or be pressed to do so. Control depends solely on one’s “private key,” the equivalent of a password. Advocates call bitcoin “unconfiscatable.” Now, with all sorts of measures against the donated funds, can bitcoin’s much-touted properties translate into real-world application for the protesters?
Well, last week, the U.S. Justice Department announced the seizure of US$3.6-billion in cryptocurrency from a hack of the exchange Bitfinex. It has also recovered 64 bitcoins from the Colonial Pipeline ransomware attack in 2021. Those perpetrators had kept their private keys in places that the authorities could access – by subpoenaing cloud storage companies, for example.
Soon after the invocation of the Emergencies Act, the RCMP provided a blacklist of digital wallets to exchange platforms, and Ottawa residents suing the protesters obtained a court order to freeze those wallets. While there’s no indication the Mounties or the court have been able to control those wallets, by identifying them to the exchanges and ordering them not to be touched, they have made it highly difficult to cash out the donated coins.
All of that goes to show that bitcoin can be flawed because of its weakest link, the human user. That’s not just in guarding private keys. Bitcoin moves virtually without much interference, but its final destination is the real world – to be exchanged for goods and services for the benefit of the human users – a realm controlled by all sorts of higher authorities.
Yet human flaws also make people unpredictable and determined. German authorities once revealed that a hacker, even when imprisoned and with his digital wallet effectively blacklisted from cashing out, had prevented seizure by refusing to hand over his password.
Such defiance is seemingly reflected in how bitcoin has repeatedly proven resilient to external shocks, such as China’s ban last year on the “mining” that supports its network. Bitcoin can be cashed out through anyone with a smartphone and can even be spent outright in many places. Then there are the services – some better than others – that effectively legitimize coins from blacklisted wallets. Protesters might just succeed in using their donated bitcoins, and that will be significant not just for them.
Venezuela and Afghanistan, both with administrations unrecognized by the West, have had billions in overseas assets seized by the British and U.S. governments, respectively. Ai Weiwei, the Chinese dissident, once had his bank account closed over alleged political pressure. Meanwhile, WikiLeaks has successfully turned to bitcoin for donations after payment processors banned it. And because of Afghanistan’s collapsed economy, refugees often leave penniless, but one woman has funded a new life in Germany through a bitcoin password she memorized.
Some of those examples evoke less sympathy than others, and many reading this no doubt support cutting the freedom convoy’s funding. But bitcoin’s soaring prices over the years is precisely because of – not in spite of – the unpopularity of some it might benefit. The great demand for bitcoin against its limited supply has been based on its reputation as being immune to any political or public-opinion pressure. If protesters succeed in funding themselves with bitcoin, they’ll have proven it can perform its function whether you like it or not.
Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.