Elizabeth Warren’s Crusade to Nationalize Payday Lending Squeezes Native American Tribes

Recently, two seemingly unrelated things happened in the so-called “payday lending” world. First, Senator Elizabeth Warren began trumpeting a plan to offer short-term lending and banking services through the United States Postal Service. Then Native American Tribes sued New York’s Superintendent of Financial Services for illegally cutting them off from offering their own online lending services. Since claiming the mantle of Native American, it’s not surprising that Warren hasn’t gone on record supporting Ben Lawsky’s persecution of the tribes. However, the agency she founded and staffed, the CFPB, filed an amicus brief supporting him.

Warren claims the Post Office could offer alternative banking services profitably. But for that to be possible, it would need a monopoly. It appears that’s exactly what Warren and Lawsky are trying to achieve. However, without a change in federal law, they will fail. And luckily so, because if they could succeed, the result would be ruinous not just to Native American tribes, but to the millions of customers who rely on them for short-term loans.

Native American tribes have gotten into online lending for the same as the reason Warren uses to justify getting the Post Office into the game. From her Huffington Post op-ed:


 [M]ore than a quarter of all households have no checking or savings account and are underserved by the banking system. Collectively, these households spent about $89 billion in 2012 on interest and fees for non-bank financial services like payday loans and check cashing, which works out to an average of $2,412 per household. That means the average underserved household spends roughly 10 percent of its annual income on interest and fees — about the same amount they spend on food.


Warren fails to mention the impact interest-rate regulations have had on keeping people locked out of banking services. New York’s usury laws cap interest rates at 25% interest on small, unsecured loans for banks and 16% for non-bank institutions. Between interest rate caps and regulatory compliance costs, it’s simply impossible to profitably lend to certain populations at these rates because of their higher risk.

Rates like 1,095%, which some online lenders charge, sound high. But it’s important to remember that these loans are generally only held for about two weeks, so the actual money spent on interest is fairly trivial, and clearly favorable to the person taking out the loan.

According to a recent study, 41% of American households reported using what the agency calls “alternative financial services,” including online lenders in 2011. It’s interesting that while 75% of American can access the default banking system, 41% are choosing to pay higher interest rates to use the alternatives. And these aren’t the people you might have in mind when you think about brick-and-mortar payday lending. Users of online lenders tend to be middle-class and well-educated.

So what are New Yorkers doing now that they no longer have access to online lending? They’re taking advantage of payday loans, going to their friends and family, and, most troublingly, relying on black-market alternatives. That’s what happened when Virginia cracked down on alternative financial services. Kicking alternative lenders out of the game doesn’t force traditional banks to work with people they previously excluded. And it doesn’t cause people to change their spending patterns so they no longer need short-term loans. It only further limits their white-market options for getting quick cash.

At least it will until Lawsky loses the lawsuit. Native American Tribes are not subject to state regulations, so Lawsky had zero authority to order them, along with 31 online lenders, to stop lending in New York, or to send a letter to 117 banks asking them to cut off their access to electronic payments systems.

“States and tribes do not have a relationship with each other,” explains Dr. Katherine Spilde. She is a Cultural Anthropologist and professor who has spent the past 20 years working with tribes on economic development. “States don’t understand the full weight of tribal sovereignty.”

Only the U.S. Congress can regulate tribes, according to Executive Director of the Native American Financial Services Association, Barry Brandon. “We wrote a letter to Lawsky with our concern about his actions, requesting a meeting,” Brandon said during a telephone press conference. “We received no response from him.”

States can, however, force non-tribe online lenders to comply with regulations capping interest rates. This is exactly what would be necessary to realize Warren’s Post Office prediction. “If the Postal Service offered basic banking services… then it could provide affordable financial services for underserved families, and, at the same time, shore up its own financial footing,” Warren claims. But how?

If banks can’t profitably lend to underserved families, how could USPS? The only possible way this plan could work is if regulators actually succeeded in putting all alternative lenders out of business. This would force American families to choose between the loan sharks and the Post Office. This would be a tragedy for the millions of Americans who rely on payday and online lenders. And it would devastate Native American tribes.

If Elizabeth Warren wants to try to use the Post Office to offer another banking option, it’s ill-advised, but acceptable. Why anyone would want to make cashing checks and borrowing money as fast, up-to-date, pain-free and convenient as a trip to the Post Office is baffling. Despite a legally mandated monopoly on non-urgent letter delivery and direct shipping to U.S. Mail boxes, the USPS is broke.

But the truth is far more sinister. Warren is supporting state regulators in order to give the Post Office its next monopoly, this time over alternative banking services. This time, instead of barring private entities from delivering non-urgent letters, she’s using state regulations to make it impossible to lend to high-risk families profitably.

Vigorous enforcement of state-mandated interest-rate caps would put alternative lenders out of business, and effectively nationalize alternative banking. This will force American families to choose between loan sharks and the Post Office. Thankfully, without a change to national law, the plan will fail. However, state regulators could succeed in putting all non-tribe alternative banking providers out of business. Creating another option for payday lending customers is a worthy goal. But using state regulations to give this option a monopoly hurts everyone.

This post originally appeared at Townhall.com.

What the Data Reveal About Whether ‘Bossy’ Matters

Recently, Beyonce joined the banbossy.com campaign intended to empower young girls aspiring to become leaders while raising awareness about the obstacles they will have to overcome in order to achieve their goals.

The campaign and its reactions two important questions. First, do women actually still face any unjust barriers? Second, if indeed they do, is the appropriate response to address the systematic bias directly, or focus on empowering women? In other words, women are always going to face adversity, but learning to cope with such adversity develops stronger female leadership in the long run. Therefore, there is no need to do anything except encourage them to be tough and persistent.

To address the first, question, let’s look at the data. In “Gender and the evaluation of leaders: A meta-analysis,” the authors concluded that female supervisors are perceived less favorably than male supervisors, especially when female supervisors use “stereotypically masculine styles.” This effect was greater for women “in male-dominated roles and when evaluators were men.”

As one might imagine, these perceptions seem to have an impact on the relative effectiveness of female supervisors. For example, Eagly et al. (1995) found that male and female supervisors were equally effective according to the aggregate data. However, they also found that women had a more difficult time in roles that were typically seen as more masculine while being more successful than men in roles that were seen as more feminine.

The data also shows how women had a more difficult time in male-dominated fields. Taken together, the two meta-analyses suggest that female supervisors face social barriers based in gender. It’s interesting to think about how these variances in perception might reinforce gendered choices, subtly incentivizing women to stay in the roles people think of as feminine.

What’s worse is Ritter and Yoder (2004) found that gender stereotypes overall encourage people to prefer male leadership. This is true even in heterosexual relationships with more dominant females and less dominant males, when tasks were “masculine-typed or neutral,”, thus decreasing women’s chances of taking on leadership roles. (Click here for more evidence of leadership gender bias against women.)

In summary, there is evidence in the literature which supports the Ban Bossy claim that systematic biases persist against female leadership, especially when it comes to leadership styles and tasks that are traditionally seen as more masculine and in male-dominated fields. This bias also does not appear to just be a phenomenon of the work place.

For the second question, it should be obvious that there are benefits to a focus on female ‘empowerment,’ as opposed to female victimhood. However, the two are not mutually exclusive. In order to be fully empowered, women (and people in general) need to recognize, and know how to cope with and combat adversity.

Another important part of empowerment also comes from social support systems that acknowledge their struggles and provide support. Sometimes that support is emotional and moral support. People need to know that others have their back and that prejudiced behavior applied against them is not okay. It helps when they are confident that others, especially their friends and other coworkers, are willing to stand up for them. Therefore, it seems that as a part of a social support system, we are all obligated to our female friends and associates to provide the support that they need.

Banbossy.com provides a kind of social support intended to empower girls. Whether you believe it is empowering or not, that’s the purpose.

Even if you disagree that a part of empowerment involves peers standing up for their friends and associates in open opposition to gendered social barriers, you should be opposed to such barriers as a matter of justice.

Systematic biases create and reinforce social barriers on morally arbitrary grounds. Assuming we value equality in the sense that all individuals have equal moral worth and rights, then prejudices on the basis of sex, gender, race, sexual orientation, etc. are morally wrong as they cultivate attitudes that promote actions that disrespect people’s moral worth as equal individuals. Acting on those prejudices is also morally wrong and unjust. As a matter of justice, we should oppose such attitudes and actions. That does not mean we are permitted to use force to restrain or silence the prejudiced, but it does mean we have a duty to oppose them whenever their prejudices are manifest.

In conclusion, we, as a moral community, have a duty to empower and support each other. This means we should recognize the immorality of gender-based discrimination and the attitudes which disincentivize women from leadership roles, and inform others of this view. This empowerment also entails a commitment to provide support when needed. We should also resist gendered biases as a matter of moral duty and justice even if we believe female empowerment does not entail resistance.

Fortunately, things are getting better. Women are taking on more leadership roles (and succeeding!) than ever before and that is partially thanks to female empowerment and social support.

I would admonish libertarians to take more of an active stance in support of women on this and other issues. The progressive left is growing and if we surrender the moral high ground and allow them to hold a monopoly on it, they will continue to grow with less resistance on that front than there could otherwise be. The reality is that Hillary Clinton is likely to run in 2016 with a platform that includes many ‘women’s issues’. We have a great opportunity to change the discussion in our favor and help prevent the progressives from continuing to make further encroachments on individual liberty. I hope we take advantage of that opportunity.


Chet Lake holds a Bachelor’s of Science from Arizona State University. He likes to draw upon insights from psychology, sociology and other relevant fields of inquiry in his analysis of various political, economic and social issues. His other interests include philosophy, science, exercise, hanging out with friends, movies and spending quality time with loved ones.


Will Florida’s Money Laundering Laws Apply to Bitcoin?

Lawyers for the two men recently arrested in Miami for engaging in “too-large” bitcoin transactions are claiming that the men’s actions were legal because state law covers only money issued by the US or another country.

Many in the bitcoin community are hopeful that this argument is persuasive, seeing money laundering laws as an attempt to regulate thoughtcrime in finance. Others also argue that citizens do not currently owe the state of Florida any kind of explanation for why they want to buy or sell bitcoin.

Sting operation

In what may be the first instance of citizens being charged under state law for buying or selling bitcoin, Pascal Reid, 29, and Michell Abner Espinoza, 30, were charged on 6th February with money laundering and engaging in an unlicensed money-servicing business.

The two were contacted by undercover officers who were looking to exchange $30,000 dollars each for bitcoin, an amount that violates the state’s money laundering laws.

Those laws makes exchanges above $10,000 illegal without offering information to the government. The state also forbids frequent unlicensed transactions of more than $300 but less than $20,000 in any 12-month period.

However, Reid’s attorney, Ron Lowy, argues that “the language of the Florida statutes excludes and was never intended to cover bitcoins.”

It appears that, despite this, undercover police officers were conducting stings which were aimed at netting “individuals engaged in high volume bitcoin activity,” according to Miami-Dade State Attorney Katherine Fernandez Rundle.

Contrasting views

The prosecutor’s office claims that “bitcoins are often seen as a perfect means of laundering dirty money or for buying and selling illegal goods, such as drugs or stolen credit card information.”

Bitcoin is far from an ideal, or even particularly popular, method for laundering money, however.

Katherine Mangu-Ward noted for online magazine Slate: “About $8 billion worth of transactions were conducted in bitcoin from October 2012 to October 2013. During 2012, Bank of America processes $244.4 trillion in wire transfers and PayPal processed $145 billion.”

She summed up:

“The bitcoin haystack just isn’t big enough or messy enough to be a useful place to launder money right now. A better option: cash-heavy businesses, such as casinos or – yes – laundromats.”

“High level international cybercriminals have not by-and-large gravitated to peer-to-peer cryptocurrency, such as bitcoin,”said Secret Service Special Agent Edward Lowery. Adding:

“Instead, they prefer ‘centralized digital currency’ that is based somewhere with looser regulations and lazier enforcement.”

A spokesman for the Miami-Dade State Attorney’s Office told Bloomberg in a recent email correspondence, “As prosecutors, we relish the opportunity to help define the law regarding this potentially important field.”

Considering that money laundering laws are mostly uselessunevenly applied and very costly to comply with, many hope that Florida will not define the laws as applying to bitcoin.

This post originally appeared at Coindesk.


Checking My Hot Lady Privilege Before I Ban Bossy

Well, between FEE, Stossel, and the ban bossy campaign, it appears the libertarian world is in a full-blown privilege discussion. I kind of hate that this is like, my deal. What some people know me for. Because everyone is right about the fact that it generally sounds hostile and dismissive to say “check your privilege” to someone who doesn’t already regularly do so.

But sometimes it takes something a little more intense than, “Hey, there’s oppression that exists and is a big deal and you’re probably not super aware of it or concerned with it right now because you’re not really a victim of it due to identity factors such as your sex, gender, education or orientation but other people are super concerned with these oppressions, and part of the reason they’re not listening to your ideas about ways to end these kinds of oppressions is that you don’t seem particularly concerned about oppression that’s not your own,” to get a conversation started.

And I still think that THAT is a conversation worth having. So if I need to be “privilege girl” to help make it happen, awesome. If I had a better way to do it, I would have done it that way. But the sad reality is that I’m just not that smart. Or maybe I’m lazy. Definitely I’m lazy.

Soooo. Beyond the legit criticisms of the phrase, I think many people tend to misunderstand the idea. Many people think that acknowledging privilege means putting people in privilege hierarchies, based on their identities. I can see how this could be offensive to, well, everyone. But I think that’s a misreading of the phrase and hides an important truth. We are all privileged. And we are all oppressed.

It’s very difficult to hold two conflicting ideas in your head at the same time. But let’s try, and we’ll use me as an example. Because this is my blog. And I love me. And because the same misunderstanding is marring the discussion of Ban Bossy.

Let’s talk about the fact that I’m a fairly young and fairly conventionally attractive female who’s doing okay in a fun career for a second. I want to make two points, which seem to conflict, but don’t.

First, to my knowledge, these aspects of my identity have helped me far, far more times and in more ways than they have hurt me.

Second, sexism is still real.

So, the advantages here are many. I suspect I got my first job in part because my boss’ boss thought it would be easier for her, a young woman, to manage another young woman.

I know I get invited to speak at conferences, my short-lived YouTube show got more viewers, my articles get more views, my blog gets more traffic, my Twitter gets more followers, my Facebook gets more friends, all at least in part because I’m a young, pretty lady. I’m marketing ideas here, and it’s hard to do that if no one is paying attention. I’ve had an easier time than most in getting eyeballs on my work in part due to factors mostly outside of my control.

But, that isn’t to say that women aren’t discriminated against as well.

I will likely never know which mentors didn’t choose me, which clubs I wasn’t invited to, which people discounted my opinions because I’m a carrier of a vagina. Or maybe even because they figured (and I’ve been told as such) that my work isn’t good and only gets attention due to how I look.

I do know that as Sheryl Sandberg points out in Lean In, the data shows that women must choose between success and likability in a way that men don’t. Other studies have shown that hiring managers discriminate against women in their childbearing years because they don’t want to lose them. Other studies have shown that women feel pressure to be responsible for the majority of childcare and household duties, disincentivizing their working the long hours necessary to really succeed in a full-time job.

For me, this wasn’t ever much of a problem because I didn’t see likability, childrearing or keeping a nice home as in my wheelhouse anyway. And certainly if I wasn’t hired no one ever told me it was due to discrimination. But if I check my childless, dirty, asshole privilege, I realize that just because I succeeded despite that discrimination, and just because other women CAN too, doesn’t mean it isn’t real and it isn’t a problem.

Because the truth is that being a woman is both a blessing and a curse. And, that it’s not the same for me as it is for other women. I can feel like sexist perception problems never held me back, and they can still be real problems for other women.

And if it’s true that in general, women are held to different standards for likability, or discriminated against in employment, it would follow that that would discourage them from leading and succeeding. I desire for women to have every opportunity and advantage to lead, both for them, and for the world which will benefit from their unencumbered contributions.

So whether I feel like I have succeeded despite my gender, or because of it, has no bearing on whether or not barriers to other women’s success like the likability gap or employment discrimination exist. Again, most people will never know where and when they’ve not had opportunities due to factors outside their control.

In short, I can be genuinely grateful for every advantage, every privilege I have, and they are many. And I can still understand that sexism exists, and I can advocate for a world in which generally speaking, it is no disadvantage in any way to be a woman.

How do we get there? I think becoming aware of things like the likability gap or an impulse toward hiring discrimination or gendered expectations in our own minds is the first step. We must first recognize the problem. Then, let’s work to get better, and teach others to do the same. Let’s all reset our expectations of women, so they are neither incentivized nor disincentivized to work hard or lead outside the home. It’s not going to be easy. There’s only so much we can do, but it’s worth it.

Because this, to me, is freedom. I want to live in a world where arbitrary factors like identity don’t keep people from opportunities to add value. I think sexism is an abhorrent thing, and worthy of voluntary response. But I don’t need to think of myself as a victim to advocate for it.


Cathy Goes to Berlin for ESFLC and to Spend Some Bitcoin

I wasn’t sure I’d make it to Berlin for ESFLC. Certainly not on time.

As I posted to Facebook, it began on Monday when I woke up at 11 am because my alarm didn’t go off. I arrived at work two hours late. Then my boss reminds me that my flight to Berlin is today, not tomorrow. So I dash home to hurriedly pack for a 7-day international trip and dash off to Reagan. Except Reagan isn’t an international airport. My flight leaves from Dulles. So I metro to Rosslyn and call an Uber. Who gets lost, makes me wait for 10 minutes, then cancels. So I hail a cab. I’m on track to miss my flight because I’m a space cadet, and then I get a notice. My flight has been delayed. Hallelujah! For 5 hours. I was $30 into fare from Rosslyn when I found out. But thank God Dulles has free wifi and I always have crap-ton of work to do!

So, Berlin. This is my first and only European city. There is graffiti absolutely everywhere. None of it makes any sense. Well, two things did. There was an anarchy A on the train about the size of my fist. And someone wrote the word “sex” on a wall. I generally associate this with overall lawlessness, but as my host mother Maria explained, there are “high levels of social trust” here. It’s unusual to be robbed, for instance.

Every young person speaks excellent English. Most are more than happy to help me.

Word to the wise: Get cash from the ATM, not money changers. There, and buying train tickets, the flag for English is British. Fuck you, Germany, the US is now the world’s foremost imperial power.

The sound I heard most often while walking was a bicycle bell. Because I could not wrap my head around the fact that half the sidewalk is a bike lane, even though I was reminded every 7 minutes by a pissed off pedaling German.

Having established my conspicuous lack of common sense and practical ability to take care of basic shit in the first paragraph, you’ll understand my hesitation at wandering alone around a strange city in a strange country on a strange continent. Especially without cell service, as I didn’t set myself up for it before I left. Are you beginning to see a pattern re: my shit not being together?

The venturing out was to find the bitcoin neighborhood.


Finding transit selfie!

I’d sincerely hoped that finding the general area would lead me to the correct places of business. A neon blinking Bitcoin-accepted-here sign would have been super clutch. Instead, I internetsed a few choices places over a chocolate chip cookie and water I had to pay for (wth, Germany?)

This led me to two closed bars. So I found a bar with wifi and asked for a wheat beer. I can’t imagine why I asked in English when I know the German. The pretty young barkeep was like, “What?” “Hefeveizen.” Ya!

So I finally found two places which sold things I wanted (namely food and beer) and took bitcoin for them. Both were closed. So I chilled out and Facebooked til one opened. Sadly, I was felled by a lack of a bitcoin wallet on my phone and an inability to download one over the wifi. But, I got some pix!


The beer I would have bought with bitcoin


Wise words in Room 77

One of the things I’m most struck by is how are just kind of cities, even in Europe. I imagine back in the day things varied more. But less so now with international travel and commerce commonplace. Berlin if anything had a small city feel, as it’s really spread out, with a low population density and no high rises.

Stereotypes: the service at a really nice bavarian restaurant indeed was pretty terrible. Not really rude, just neglectful and to-the-point. People really do take their dogs everywhere. Ladies are much more dressed down here than in America’s East Coast. More so too than in the American northwest, but I’m overall less familiar. Spike heels are incredibly uncommon on the street. Heels are chunky, Clark’s-style. But most women are in flat ankle-high leather boots of some fashion. Lucky for me that’s exactly what I brought.

I had wondered how most everyone I talked to about going to Europe for the first time had been and didn’t act like it was a big deal to go. Keep in mind I just talked to people who live in D.C. At this point, I think going to Europe is like group sex. It’s a way bigger deal before you do it than afterward.

Spend Thursday with Moriah at the East Side Gallery. Here is my whole Flickr photoset from the trip so far.

Tomorrow is the start of ESFLC!


South Dakota GOP Proves They Only Care About Unborn Women

Not content to regulate their uteri, the government of South Dakota wants to get in women’s heads as well. The South Dakota House passed a bill on Wednesday banning “sex-selective” abortions. The law, now before the state Senate, requires physicians to ask patients whether their reasons for abortion relate to the fetus’ sex. Affirmative answers will require doctors to turn the patient away or risk prison and fines.

The reasoning behind the bill appears to be that there are too many Asian Americans in South Dakota. “Many of you know I spent 18 years in Asia,” said Republican State Representative and bill supporter Stace Nelson. “And sadly, I can tell you that the rest of the world does not value the lives of women as much as I value the lives of my daughters.” U.S. Census data estimates that in 2012, 1.1 percent of South Dakotans were of Asian descent.

It’s interesting that South Dakota legislators are so worried about female fetuses considering the very real threats facing the state’s born women. In recent years, the state has seen a massive increase in sexual assaults against women. Rapes and assaults are out of control, with the rape rates of over one hundred rapes per 100,000 residents in Williston, nearly four times the national average. From Examiner.com:

A woman in Williston, South Dakota is four times more likely to report being forcibly raped than a woman living in Los Angeles and over seven times more likely than a woman residing in New York City. Williston’s per capita rape rate is higher than that of all but one of the 214 U.S. cities with a population of over 100,000 residents, including Detroit, Chicago and New Orleans, cities usually regarded as among the nation’s most dangerous places.

Domestic violence is also up. “Our domestic violence calls have definitely increased; alcohol-related calls have drastically increased as well,” Police Chief Jesse Wellentold NPR.

South Dakota is already one of the hardest places in the country to get an abortion. Despite this, in the past year, the legislature has submitted eight different pieces of legislation restricting a woman’s access to reproductive health services.

Exactly one bill deals with rape, and none deal with domestic violence. It ensures that a woman who gets pregnant through rape or incest (but not through sex) gets more TANF aid if she’s already on public assistance.

It’ll be a wonderful day when South Dakota’s GOP legislators value the lives of their daughters once they’ve exited the womb as much as they do when they’re still in it.

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Video: Bitcoin and the Federal Reserve Panel at CPAC 2014

At CPAC 2014 I was joined Rep Mick Mulvaney, Rep Marlin Stutzman, and moderator Steve Moore, Chief Economist at the Heritage Foundation for a panel entitled When the Fed Stops Building and the Mint Stops Printing: Rebuilding the American Economy After a Real Crash.

Here’s my portion, which focused on bitcoin as a potential escape hatch from oppressive monetary regimes (like ours under the Federal Reserve) and hyperinflation:

Entire panel:



Bitcoin’s Actual Privilege Problems

The article is below. But here’s a bit of backstory first.

I guess it was the week before last, I wanted to write a response to the ThinkProgress bitcoin privilege article. While pondering the matter in my head, I tweeted

The worst thing is there’s actually a case to be made. But this is extraordinarily ignorant. http://thinkprogress.org/economy/2014/02/27/3341411/bitcoin-privilege/# … @ARStrasser @Antiwar2

So Michael Goldstein replied:

.@CathyReisenwitz There is no “privilege” in a censorship-resistant protocol with perfect fungibility. #Bitcoin

So I asked:

@Bitstein what do you think privilege is and why wouldn’t it apply to bitcoin?

I genuinely never occurred to me that anyone could possibly think anyone was making the case that a protocol could be bigoted. That is too stupid for words! But… the internet. For asking a question, I was literally called names like “terrorist” and “stupid [sic] hoe.” People lost their minds. It was really sad, actually. I have a lot of thoughts about directing uninformed, insane rage at people asking questions, namely that it discourages this and drives sane people out of the libertarian and bitcoin communities. But I’ll save those for another time.

Anyway, here’s the long-awaited response, published originally in Bitcoin Magazine.

Bitcoin’s Actual Privilege Problems

ThinkProgress has published a blistering critique of bitcoin called Bitcoin: By The Privileged, For The Privileged. It’s full of misunderstandings, misinformation, and, most distressingly, a few points that are actually really spot-on and important for bitcoin foes and friends to understand. The piece points out the unfortunate fact that bitcoin is now primarily held and used by the most privileged people. This is unfortunate because its greatest promise, I would argue, is for the people at the bottom.

The fallout from an argument made ignorantly is that people who know better then feel free to dismiss the entire premise. Right now people who actually know something about bitcoin are tearing the piece apart, and rightly so. But just as Annie-Rose Strasser has more to learn about bitcoin, there is no doubt that the bitcoin community has more to learn about privilege.

So, first, the corrections, mostly culled from my numbered Twitter rant, where I for some reason missed #5. The first misunderstanding is a common one, and can be found in my first writings about bitcoin. For the uninitiated, bitcoin is the currency, Bitcoin is the protocol.

Then Strasser writes, “The whole idea behind Bitcoin is that it segregates economic markets and currency from a country’s government.” The truth is that there is no one “whole idea” behind bitcoin. And that seemingly minor point is actually key. While some person or group of people manage other currencies, bitcoin is decentralized. No one controls it. Bitcoin does have a creator, but he or she never laid out a plan to separate money from government. The plan was only to create an open-source decentralized network on which one can build a currency, and more. So if there were one idea behind bitcoin, it would be that.

“It wants to replace our current economic system and practices in their entirety.” Sounds sinister, doesn’t it? But bitcoin is a currency. It doesn’t have agency, so it’s not aiming to do anything. Some people would like to see it upset the extremely unfair and inefficient economic system. Others want to use it as an escape hatch for oppressive regimes. Many are interested in mircopayments and near-feeless remittances abroad. Retailers are interested in a more-secure-by-default online payment system with no chargebacks and low transaction costs. Many people are interested in trustless systems.

Describing bitcoiners: “They’re the same people who want to ‘end the fed.’” As a libertarian I’ll go ahead and let you know that those people generally prefer gold. And it doesn’t take a libertarian mindset, just a pinch of critical thinking, to realize no one should trust the government to handle their money.

One thing Strasser isn’t totally wrong about is bitcoin’s demographic makeup:

According to an online poll from Simulacrum, the average user is a 32.1-year-old libertarian male. By users’ accounts, those men are mostly white.

Breaking that down, about 95 percent of Bitcoin users are men, about 61 percent say they’re not religious, and about 44 percent describe themselves as “libertarian / anarcho-capitalist.”

In my personal experience, bitcoin developers are not overwhelmingly, or even mostly, white. Almost none of the developers who’ve reached out to me were. They are all, however, male. What explains the demographics, whatever they are? “Well, there’s a fair amount of privilege built directly into the currency: In order to buy the sometimes wildly expensive currency, Bitcoin users need to be wealthy.”

Brian Doherty at Reason eviscerated this claim:

In fact, for years the price of a bitcoin remained under $10, not quite the sign of something meant to block the less-well-to-do by design. Maybe she meant to say that if you were smart enough to get involved in Bitcoin early, that you are now wealthy? (You also don’t need to buy an entire Bitcoin, so any amount of any other money is sufficient to get you that-much-worth of Bitcoin. It’s like complaining money is expensive.)

I’ll just add on that ironically, one of bitcoin’s best qualities is making microtransactions possible. If you have to be rich to use anything, it’s a credit card.

Despite the fact that Strasser is wrong in her identification of why (and maybe whether) bitcoin is overwhelmingly white and male, It matters who uses it.

It matters because, as Strasser also correctly points out, “The unbanked, comprised of women and people of color, are much more frequently turned down for auto loansmortgages, and investment advice.” And bitcoin has the potential to bank the unbanked, if they use it. To understand why, we must first understand why some people lack access to credit.

Lending and check cashing are a game of risk-versus-reward. Risk is determined primarily through error-prone credit scores. Reward is reaped through interest rates and fees. The unbanked are primarily made up of people who have poor credit scores, people for whom the risk of non-repayment or bounced checks is high. Unfortunately, banking regulations make it impossible for banks to charge high enough interest rates to make up for the risk these people pose.

As Strasser points out, “Instead [of using banks], they’re taken advantage of byunregulated banking — unbanked households on average spend over $2,400, about 10 percent of their income, to use services like payday lending and check cashing.”

Even though payday lenders can charge higher interest rates than banks, they still are barred by law from automatically deduct payments from a delinquent customer’s checking account. This artificially makes lending much more expensive by drastically raising the cost of recovering funds.

So while payday lenders are calling up customers and sending angry letters, both of which cost time and money, bitcoin contracts can be set up in such a way as to automatically transfer bitcoin to repay a loan. It also obviates the need for check cashing, as bitcoin can be sent immediately from employer to employee, and spent, without fees, or trust. There is no easier or cheaper way to transfer currency from person-to-person than bitcoin right now, except maybe an in-person cash transfer.

So how do we get the unbanked on bitcoin? Here’s where privilege comes in.

Using bitcoin right now requires either a patient guide or a fair amount of computer literacy. The gap in computer literacy between blacks and whites is nearly 20%. According to “Exploring the Digital Nation,” 76 percent of white American households use the Internet, compared with 57 percent of African-American households. In addition, people with some college experience and household income of more than $50,000, you know, the people who are most likely to be white and male, are high heavier internet users.

Not growing up in a white, middle-class household vastly decreases your exposure to computers and computer literacy.

As does being female. Women are told, subtly and less subtly that they don’t belong and aren’t needed in tech and bitcoin. True, there are people tellingwomen that they do belong. But messages of exclusion, and instances of harassment, however limited they may be, are extraordinarily powerful.

One more reason the privileged may get into bitcoin first is that they can afford the risk. The spectacular crash of Mt. Gox put millions of dollars of wealth into the hands of thieves. Not everyone can afford to put that kind of money on the line. But rather than paint people as villains for having the time and energy and risk capacity to get screwed by Gox, we should instead thank these people. Through their sacrifice we’re learning how to build a better currency, which, eventually, will tremendously benefit everyone.

Strasser doesn’t make bitcoin her beat. It’s understandable that there’s a lot about the complex currency that she doesn’t understand. But what Strasser clumsily points to are real challenges that will absolutely need to be overcome for bitcoin to really help the unbanked and reach widespread adoption.

Bitcoin enthusiasts don’t generally spend any time thinking about privilege. But greater computer literacy among the poor and easier-to-use interfaces, along with addressing tech’s gender problems should be a goal we all strive toward.

It’s not essential, or possible, that the privilege crowd fully understand bitcoin or that the bitcoin crowd fully understand privilege. What would be very helpful, however, is for both parties to admit the vast sums which comprise what they do not know.


Michele Bachmann Didn’t Care for Religious Tolerance Until AZ Law

Tea Party favorite and former Republican presidential candidate Michele Bachmann is upset that Arizona Governor Jan Brewer vetoed a broad bill which carved out a special right for religious people to discriminate against gay individuals.

“I was sorry that she made the decision, and it’s because I believe that tolerance is a two-way street and we need to respect everyone’s rights, including the rights of people who have sincerely held religious beliefs,” the Minnesota Republican said in an interview with ABC News and Yahoo’s “Fine Print.”

The sentiment doesn’t exactly line up with what Bachmann said during her first Senate race, when she went on record with claims that members of the Muslim faith had an inferior culture to that of the United States and the West.

“Not all cultures are equal, not all values are equal,” Bachmann said. Apparently the belief is that that the only religious convictions worth tolerating are those she holds.


There is a movement afoot that’s occurring and part of that is whole philosophical idea of multi-cultural diversity, which on the face sounds wonderful. Let’s appreciate and value everyone’s cultures. But guess what? Not all cultures are equal. Not all values are equal.

But what may be most interesting about the conflicting statements is that there might be a kernel of truth to Bachmann’s earlier view. Josh Barro has certainly made a compelling case for the idea that cultures are not created equal.

There’s one America where comparing homosexuality to bestiality is considered acceptable, and another where it is rude and offensive.

In one America, it’s OK to say this of gays and lesbians: “They’re full of murder, envy, strife, hatred. They are insolent, arrogant, God-haters. They are heartless, they are faithless, they are senseless, they are ruthless. They invent ways of doing evil.” In the other America, you’re not supposed to say that.

There’s one America where it’s OK to say this about black people in the Jim Crow-era South: “Pre-entitlement, pre-welfare, you say: Were they happy? They were godly; they were happy; no one was singing the blues.” There’s another America where that statement is considered to reflect ignorance and insensitivity.

In one America, it’s OK to attribute the Pearl Harbor attacks to Shinto Buddhists’ failure to accept Jesus. In the other America, that is not OK.

There are two Americas, one of which is better than the other. And it’s instructive who’s sticking up for the worse America.

It seems clear here that what Bachmann is upset about isn’t tolerance. She is certainly not advocating for it with any kind of consistency. What seems to upset Bachmann is that America is waking up to the fact that a culture which used to dominate, the one where it’s cool to discriminate against gays and pretend the Jim Crow south was fun and make racist jokes is losing ground.

Peter Niger summed up the situation well:

There isn’t a “terrible intolerance” of religious people in this country. What there is is a shift of power away from a group (white Christians, primarily male) that has been able to dis-proportionally control government and other institutions since the founding. There is a move towards providing equality under the law for all and removing the injustice of the past, but that isn’t intolerance, that is the market adjusting to equilibrium. You aren’t being discriminated against, you are losing power and influence you shouldn’t have.

Tolerance is a two-way street. It’s important to respect religious freedom. It’s also important to not write, and then defend, overbroad, redundant, bigotry-oriented laws such as the one Brewer vetoed. Not supporting these kinds of laws does not constitute religious persecution. It’s actually part of creating and maintaining the right kind of culture, something Bachmann should support, not decry.

This post originally appeared in the Huffington Post.