Maintaining sovereignty in a social credit system

If you’ve watched Black Mirror, seen enough Zoomer memes, or simply delved into the John-Cena-dunking TikTok world, I’m sure you’ve heard of social credit systems.

China is nearly synonymous with most people’s understanding of social credit systems. And there are certainly valid reasons for that. But, how is social credit related to crypto and what might those of us in the US and the rest of the West need to be on the lookout for in our own societies? Can crypto help us brace against a potential social credit future on our home turf?

What is a social credit system?

There are ominous descriptions of China’s social credit system all over the internet. The communist regime began implementing it in phases back in 2014 and it’s still working to make it a cohesive, nationwide system. The concept is similar to financial credit scores in the US—certain actions you take can affect your score and impact your ability to participate in the market. Your credit score in the US can affect your eligibility for a home loan, for example. And there are things you can do to improve your score like paying off debts. Socal credit works in a similar way, but it’s, shall we say…more comprehensive.

China’s social credit system is used to track individuals and companies’ behavior and rate them based on their “trustworthiness” and adherence to norms. It’s not entirely clear what actions affect a person’s score but one can earn or lose social credit points for things like donating blood, bad driving, “unacceptable” purchases, or posting on social media. If a person’s score drops too low, there are punishments. These could include being blocked from public transit or air travel, or ecommerce.

One of the reasons that social credit systems are unpalatable to freedom-loving Westerners is that there is no due process for alleged crimes and no recourse for “perpetrators” of said crimes. Some are adamant that social credit is a calculated way to make an end-run around legal systems and place an authoritarian boot on the necks of a population.

How social credit impacts personal sovereignty

Certainly, if you’re unable to use public transportation or make online purchases, your individual sovereignty is being eroded—those who are diversifying their assets already recognize this. But let’s parse what a complete social credit system might actually mean for those of us who have a default way of living that assumes our personal sovereignty will remain intact.

Your behavior is monitored

The advent of technology has been a boon to modernization in so many ways—remember physical maps and pay phones? But with the increase of big tech and its access to our digital information, being monitored and tracked is not only a reality, it’s an inevitability. Because, for now in the US, your data is held mostly by private companies who make at least some pretense of protecting your privacy, we worry about being monitored a little. However, most of us don’t worry about it enough to live completely off the grid. And even if we wanted to, that’s getting harder and harder to pull off. A social credit system could harness the power of big tech to track and monitor you in an incredibly microscopic manner, policing your every behavior.

You’re coerced into compliance

Simply being tracked and monitored is uncomfortable enough for those of us who enjoy our privacy and anonymity. But, the threat of punishments for not complying with certain “standards,” thus dropping a social credit score, would effectively coerce people into obedience. If that’s not a violation of a person’s individual sovereignty, I shudder to think what is.

You’re restricted if you don’t comply

If you’re no longer free to travel where you want or buy what you want, you no longer have sovereignty. If you’re barred from businesses, restricted from certain activities and services, you no longer have sovereignty. The only way to make sure you don’t lose your autonomy is to adhere to the rules, even when you think you’re completely alone. Perhaps that sounds dystopian, and perhaps it is.

Is a social credit system coming to the US?

Because the last decades in the US have afforded incredible freedom and sovereignty to its citizens, it’s difficult for many Americans to entertain the possibility that something so drastic and sinister as a social credit system could be implemented in the West.

But, there are already signs it could be on its way.

Mastercard’s carbon max-out card

A major American credit card company has partnered with a Swedish fintech company Doconomy to make a credit card that tracks carbon emissions and deactivates spending once a person has “maxed-out” their carbon limit. This card is used voluntarily but some people argue that systems like this that track behavior and limit actions are building a psychological foundation at the least, and perhaps even a structural foundation for social credit.

Insurance companies check your social media

We’re all used to the gatekeepers who check our information before giving us access to things like loans and insurance—distaste for gatekeepers was one of the motivations for creating Bitcoin. But nowadays, life insurance companies even look at your social media accounts to see if there are any risks in your behavior that might deter them from approving your life insurance policy. If you’re planning to swim with sharks and get life insurance in the same week, perhaps reconsider posting it on the gram.

Cancel culture is already here

Despite half of X (formerly Twitter) and big media companies insisting that cancel culture isn’t a real thing, it’s hard to ignore your lying eyes. Regardless of politics, the former president being booted off Twitter doesn’t bode well for free speech. Neither does Bari Weiss being bullied out of the New York Times, or JK Rowling getting accused of transphobia and canceled.

Companies blocking people from services

It’s not just hordes of Twitter activists canceling individuals for their follies, either. Companies can and do block people from services if they hold “incorrect” views or publicly say the wrong thing. Patreon can easily ban creators from its platform, cutting off their source of income. Uber and Airbnb maintain their right to ban customers without giving an explanation.

The role of cryptocurrency

Ok, none of us probably relish the idea of a social credit system in our own country. But what does cryptocurrency have to do with all of it? Perhaps you already know where I’m headed.

Social credit needs central power

In order for a complete takeover of your personal sovereignty, the state would need a centralized social credit system. This may seem pretty far from where we stand now, but it’s not out of the question. Combatting centralization was precisely one of the driving values that led Satoshi Nakamoto to develop cryptocurrency in the first place. By removing any single power’s ability to manipulate or control the currency, individuals can continue to make peer-to-peer transactions without needing the permission of gatekeepers like governments or corporations.

No one can control crypto transactions—payment processors banned you cause your social credit score is too low? No problem, use cryptocurrency.

No one can block dApps and DAOs—you can’t use services or apps because governments or centralized companies banned you? No problem, use decentralized apps and services.

No one can remove Web3—got your website taken down or booted off the centralized servers? No problem, the decentralized web can’t be censored.

Crypto as a safe haven isn’t just a pipedream

Maybe you’re skeptical of everything you’ve read so far—from the possibility of losing your own sovereignty to the idea of cryptocurrency as a safety and security measure. Well, it’s already happening. Way back in the early days of Bitcoin, Wikileaks was on the receiving end of a US government imposed financial blockade and was only saved by cryptocurrency. In countries with authoritarian governments like Cuba and China, cryptocurrency enables aid and economic participation that are otherwise blocked. Frances Haugen, who is also known as the Facebook whistleblower, says she’s able to support herself because of her cryptocurrency investments. Even normal citizens can become dissidents in a centralized power grab, and crypto can help them hold onto their freedom.

What’s the future of social credit systems?

While it’s not inevitable that the US and other Western countries could see a social credit system implemented at home, it’s definitely not a possibility to ignore. The goal of cryptocurrency from day one was to improve security and privacy and help citizens maintain their personal sovereignty in the face of ever encroaching centralized powers. Even if a social credit system is not coming today, it’s much easier to get yourself positioned well with decentralized options now, while you can.

Building out new crypto projects and supporting the ones that can fend off a sovereign state will help all of us maintain our personal sovereignty.