Crypto-Colonialists Use the Most Vulnerable People in the World as Guinea Pigs

Blockchain technologies bring surveillance and political pressures, undermine local sovereignty, and create resource allocation controls on recipients. 
June 29, 2021, 1:00pm
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Image: Keegan Hamilton/VICE News

Vanuatu is an island nation in the Pacific Ocean, with an estimated population of just over 300,000. It’s routinely impacted by extreme ocean weather events like typhoons and hurricanes, a pattern which has attracted support from international charitable aid conglomerates to boost the country’s weak technological infrastructure. 

UK non-profit Oxfam, in partnership with an Australian financial app, has developed an eyebrow-raising solution for Vanuatu: a disaster relief payment system that runs on blockchain and cryptocurrency so that when other systems go down, people can still pay for essentials.

“The idea was that as soon as a disaster event happened, they can just switch on this economy,” explained Pete Howson, a senior lecturer at Northumbria University who studies cryptocurrency and blockchain, in an interview. When the situation becomes less dire, the system can be shut down. But it’s not the Vanuatuan people who control the system.

“It’s just someone at Oxfam that decides when the disaster is over,” said Howson. “People lose their economic sovereignty.”


Oxfam’s blockchain intervention in Vanuatu is part of a broad trend in charity and aid work toward innovation and solutionism—the belief that every social problem has a technological solution—via programs based on blockchain and cryptocurrencies. Non-government organizations and aid agencies have said that the shift from dollars to Bitcoin will enable a more efficient, transparent charity system. But along with aid, these technologies bring surveillance and political pressures, undermine local sovereignty, and create resource allocation controls on recipients. 

Critics have a simple name for this phenomenon, which is taking hold in many developing countries: crypto-colonialism.

Blockchain and crypto technologies carry a well-cultivated ethos of libertarianism and individualism, and proponents often market it as a tool aimed at escaping government capital controls. With crypto-giving, mythologies of moralism and solutionism are grafted onto these technologies as well. This lays the groundwork for the execution of ambitious and often incoherent master plans in poor countries by private interests, like El Salvador’s Bitcoin Beach.

“Crypto-colonialism is the act of coordinated groups of tech-savvy individuals leveraging their wealth, which is often but not always generated by cryptocurrency investments, to settle in and exploit lands and laws favorable towards continued crypto activities,” Jillian Crandall, an architect and educator at Rensselaer Polytechnic Institute, told Motherboard. 

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“Crypto-colonialism leverages existing neo-colonialist tools like economic policy, but differs in that it also uses insular internet platforms to galvanize and coordinate like-minded individuals to enact their desires on land,” she added.

Crandall studied what has become known as one of the premier examples of crypto-colonialism in Puerto Rico, where crypto-evangelists led by investor and Mighty Ducks star Brock Pierce attempted to establish a kind of crypto-capitalist utopia, initially to be called “Puertopia”, after Hurricane Maria devastated the island. Cryptocurrency investors in Puerto Rico organized a conference in 2018 to both benefit local nonprofits involved in hurricane recovery and stoke interest in the country as a crypto playground.

Crandall says Puerto Rico soon became a test bed for decentralized funding for hurricane relief via blockchain infrastructure, like WaterChain, a privatized project to expand access to clean water. Most projects never took off, but the crypto-investors stayed in part thanks to tax incentives

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Puerto Ricans haven’t, broadly speaking, directly benefited from the crypto invasion. “To the degree that these new residents have to buy food and drink from local businesses, perhaps there has been some ‘trickle down’ economic benefit to Puerto Rico,” Crandall said. 

Crandall said that solutionist narratives around “benevolent blockchain and cryptocurrency” usually suggest the technologies can spur economic development and empower marginalized communities, but the rhetoric ignores reality. “If you don’t have reliable internet access, like in many rural areas in Puerto Rico, it’s hard for this to be on your radar,” she said. “Until the digital divide is addressed, there’s no way crypto or blockchain can be more democratizing, and in the meantime it may actually serve to further entrench digital inequality.”

Crandall said that while Puerto Ricans and Puertopians alike blame the local government for financial mismanagement, the current scenario is “a broader symptom” of the United States’ treatment of Puerto Rico as a financial asset. “Their ability to determine their own future has been systemically limited, and until that system changes, no amount of technological bandaids, blockchain-based or otherwise, will be able to give Puerto Ricans the help they may really need.”

The sales pitch for crypto-solutionism in charitable giving is simple: these interventions circumvent mismanagement and corruption to maximize impact for recipients and donors alike. The immutability and transparency inherent to blockchains—once an entry is made, it’s effectively irreversible, and transactions can be traced on a ledger—are supposed to enhance trust in the system. AidChain, a blockchain service for charitable giving, has called the intersection of blockchain and humanitarian aid “the revolution of the non-profit sector.” 

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What this looks like in practice, however, can look more dystopian than utopian. Beginning in 2017, the World Food Programme developed its Building Blocks initiative to provide funding to Syrian refugees in Jordan using blockchain tech. In order to access the aid, refugees had to upload their biometric data onto a shared blockchain to verify their identities. When they buy groceries, they pay for them via retinal scan. This means that every time they access their money, there’s an immutable record of it. For some observers, building a surveillance database for precarious, stateless people trying to stay secure sounds like a privacy and human rights nightmare waiting to happen.

In developed countries, says Howson, registering people’s identities on a blockchain would be a non-starter. “But everyone’s queuing up to do it for poor people in vulnerable situations,” he said.

This is where projects like Bitcoin Beach become problematic: private, pro-crypto foreign interests are testing an economic model via a non-profit organization in one of the poorest nations in Central America. “The international community are using the most vulnerable people as their guinea pigs,” says Howson. “Every time you spend money and move around and use a taxi, everything goes on a blockchain.”

Howson wrote a paper on how crypto-giving platforms Promise and AidChain tout control over recipient expenditures as a benefit for donors. On Promise’s homepage, the company outlines a four-step process for money allocation which specifies that before more funds for a project are released, “Donors [will] vote to validate [the] milestone.” For recipients, it means having someone—or some organization—a world away telling you what you can and can’t spend money meant to help the community on. 

“At least with dollars, and all of the violence that comes with petro dollars, you’re free when you have them in your hand to spend them however you wanna spend them,” says Howson. “When you’ve got these tokens built on the Ethereum blockchain, you’re much more limited in terms of how you can spend them.”

In Fiji, the anti-poverty-focused Asian Development Bank created a blockchain land registry pilot to track and appraise land in an apparent effort to “harmonize” government records. Indigenous land owners in Fiji have resisted colonial apprehension of their lands for centuries in part because of government inability to accurately document and register, let alone assign value to, these lands. “This was a key anti-colonial tactic for thwarting the British land commission,” Dr. Olivier Jutel, a communications lecturer at the University of Otago, said, adding that the proposed blockchain registry would destroy that resistance technique while prepping the land for investment from the global market. “Now it’s a problem in need of a techno-solution.”

“Blockchain in the case of Fiji’s land registration program does what colonial administrations could not: appraise and survey Indigenous lands in order to bring them into the global market,” Jutel said.

Jutel says this land-grab is related to the Washington Consensus crisis response policies for developing countries inspired by Peruvian economist Hernando de Soto, who emphasized land registry and rights as means to end poverty. Now, de Soto is an avid supporter of the blockchain’s marriage with satellite technology to map land and value in the developing world. “Bringing resources into the global marketplace is a means of imperial control and extraction,” said Jutel.

“We can easily imagine what kind of exploitation ensues from this,” Jutel said. “We would be talking about the ability of platform developers to control vital developing world resources whether in terms of data extraction or governance.”