Stripe, which provides digital payment infrastructure to millions of businesses, announced Wednesday that it had secured an additional $245 million in funding, at a valuation of $20 billion. That will make many early investors very happy, but pretty much nobody else should follow the mainstream financial press in jumping on that celebratory bandwagon.
That’s because A) thanks to antiquated and unjust rules, only “accredited investors” with a net worth above $1 million or an income above $200,000 can make venture capital investments. So Stripe’s early investors, who will reap great rewards from its growth, were already rich. Congratufuckinlations to them. And because B) Stripe’s business involves expansive control over the financial innards of the future.
E-commerce and digital payments will grow massively in coming decades, and Stripe wants to capture a big slice of that. As we’ve already seen with Paypal and Visa, that sort of control also entails broad, unilateral power to cut off services to inconvenient customers. Stripe, despite paying occasional lip-service to the wonders of decentralization, will prove no better. For-profit processors also impose strangling fees for moving your money: Stripe’s is 2.9% of most transactions, which amounts to half of the average profit margin in some industries.
It’s easy to get distracted by headlines about price bubbles and investor squabbles, but this is why cryptocurrency is vitally important. The fact that a company like Stripe is poised to take over the world is a bad thing, and decentralized systems like bitcoin have the potential to provide an alternative that’s more democratic and more just.
And this is much bigger than Stripe. The digital world has so far produced one centralized behemoth after another, and nothing shows that more clearly than a look at the rest of top 10 private startups (courtesy of Quartz). For anyone who believes in the crypto-ideals of decentralization, privacy, and financial independence, the list is proof that we live in a nightmare of authoritarian control, monopolistic strangulation, constant monitoring, and rapacious rent-seeking by the monied few.
Stripe (ranked #9 on the list) and Ant Financial (#1, and valued at $150 billion) are centralized payments services that make money largely from transmission fees. Ant is likely an even bigger threat to humanity than Stripe; the company has been repeatedly linked to China’s Orwellian “social credit” scheme, which limits access to basic services if you’ve been a naughty little apparatchik (though the company has denied working with the country’s authoritarian government).
Uber (#2, $72 billion), Didi Chuxing (#3, $57.6 billion) and Lyft (#10, $15.1 billion) make money by taking as much as 25 PERCENT of the fares paid to independent drivers. In exchange for that, they provide no guaranteed wage or consistent benefits. There’s reason to believe that the future will be shaped by flexible, independent work organized through the internet, and that could even be positive for many people—but not if centralized platforms are siphoning off a quarter of the money workers earn.
Toutiao (#5, $30 billion) and Palantir (#8, $20.5 billion) are both in the apparently lucrative business of watching your every move online. Tuatiao is relatively unknown in the U.S., but it uses machine learning to monitor the news-consumption habits of its massive Chinese audience. As Facebook and YouTube have demonstrated in the U.S., that sort of centralized, algorithmic management of information flows has cancerous social impacts. Palantir, co-founded by aspiring deathless night-lord Peter Thiel, is even worse—it collates data, including public data from social media, to create intelligence reports for big corporations and governments.
Only three of the top 10 private startups have managed to build attractive businesses with approaches that are even nominally benign. Airbnb (#4, $30 billion) rents out unused bedrooms (though it has arguably also helped drive up urban rents), while WeWork (#7, $21.1 billion) runs flexible office spaces (though there’s broad skepticism that it will ever deserve its valuation). And SpaceX (#6, $24.7 billion) creates the reusable rockets that might someday affordably ferry us away from this devastated hunk of rock…though in the meantime they’re also launching the satellites that spy on us. Whoops.
Until we can all flee to Mars, though, take Stripe’s milestone towards global domination as your regular reminder that cryptocurrency and blockchain aren’t just about chasing 100x gains on some random ICO ponzi. They’re about hacking away the tentacles of a swarm of vampire squid before they can be plunged into your carotid artery, again and again, forever.