In the blockchain movement’s ideology, the 2008 financial crisis holds a special spot. A critical juncture in the history of global capitalism, it readily provides a bedrock narrative that justifies the very purpose of a decentralized digital currency. This is what happens when we put too much trust in centralized custodians of wealth; this is what the breakdown of centralized trust — taken to the extreme — looks like. The year of 2008 is thus the legendary beginning of cryptocurrency — both the moment of the incumbent institutions’ great meltdown that paved the way for digital money’s being, and also the alleged inspiration for Nakamoto’s scripture[1], published the same year.
A part of the foundational narrative is the idea that the crisis wouldn’t have happened had blockchain been around at the time. Correspondingly, distributed ledger technology (DLT), if widely deployed in finance in the near future, could save us from the next Great Depression. At least that’s what many crypto visionaries and financial experts often claim — the latest being Pang Huadong[2], the former vice president of North American investment banking for J.P. Morgan Chase.
The ex-Wall Street executive offered little detail beyond his observation that blockchain is capable of reducing global financial risks and establishing trust at a low cost. In order to pin down Huadong’s argument, it wouldn’t go amiss to review how other influential crypto thinkers have reflected on the relationship between financial crises and blockchain technology.
The crisis of trust
In the recently published The Truth Machine, fintech journalists Michael Casey and Paul Vigna invoke the story of the Lehman Brothers’ collapse to illustrate one of the overarching ideas of their book — that of trust as a vital social resource. They
