Is Bitcoin a Good Form of Currency?
Three philosophers walk into a crypto-currency. Resistance Money: A Philosophical Case for Bitcoin, I’d argue, is a slightly inaccurate title. Messrs Bailey, Rettler and Warmke have composed a book that is a meticulous and unphilosophically lucid examination of the origins and properties of bitcoin. No Hegel, no Husserl, no fuss. ‘We don’t prophesy,’ they state. ‘We don’t preach.’ They plead a Socratic humility. ‘We’d forgive you for thinking that three philosophers aren’t up to the task.’ They describe themselves as ‘epistemic trespassers’ in matters of economics and cryptography.
Access to bitcoin has changed from a muddy country path to a six-lane highway
The editorial sessions for Resistance Money must have been hell. Unlike many academic books where one particular aspect of a subject is assigned to a specialist, this one is a joint text by all three. It’s all the more remarkable, then, that they have written one of the best introductions to bitcoin. Perhaps precisely because they aren’t experts, they’re better at explaining things. Andreas Antonopoulos’s Mastering Bitcoin breaks down the tech stuff in greater detail, but you need some serious sitzfleisch and maths muscle to get through the elliptical curve cryptography and Merkle trees.
Bitcoin is a teenager. Satoshi Nakamoto’s white paper came out in 2008. Bitcoin production, ‘mining’, started in 2009. The story of its outlandish growth is so implausible you couldn’t put it in a novel. It was envisaged as digital cash, a cash outside the control of wicked, inflation-creating governments, the ‘sly, roundabout solution’ that Friedrich Hayek had hoped for.
Is bitcoin functioning as digital cash? Not really. You can use it to buy a slice of pizza or a coffee, but deploying it like that is a real headache. And if you possess some bitcoin, you’d be better off spending your evaporating fiat currency to buy your refreshments. Bitcoin is notoriously volatile, with spectacular pumps and dumps; but over the years its value has been rising inexorably. Its ferocious tenacity has earned it the nickname of the honey badger of money.
For the moment bitcoin functions as ‘gold with wings’ – a store of value, if a capricious one, that is much easier to move than bullion and a little harder to confiscate. The future? The philosophers scrupulously assess the arguments against bitcoin – its mining will boil the seas, it’s the drug dealer’s delight – and its possible shortcomings.
The book is laid out in neat, clearly marked sections, obviously for teaching purposes, but the smorgasbord arrangement also allows the casually inquisitive to home in on the questions that interest them most. Writing a book about bitcoin or crypto presents an insurmountable problem, though. Things move so rapidly that the production time of a book will guarantee that you’re recording ancient history and your work will probably have some glaring gaps.
Bitcoin’s basic protocol is now Stone Age in terms of transaction speed and costs. Like the internet, it seems that bitcoin and crypto will evolve by layer after layer of development. The authors make some mention of ‘layer 2’ phenomena, such as the Lightning Network, which has much faster transaction speed and insignificant costs. But as I write this, it’s had little adoption, for various reasons. What has taken off dramatically in the past year is the ‘smart contract’ side of layer 2s, Defi, NFTs and meme coins (dogs ’n’ frogs) anchored by the bitcoin network. Will all these extras boost bitcoin in the long run, or simply clutter its network?
The most grievous absence in the book is the launch of bitcoin spot Exchange Traded Funds in the United States this January, the frenzied embrace of Wall Street. Access to bitcoin has changed from a muddy country path to a six-lane highway. Now the fuddy-duddies, the timid and the lazy can get an easy chunk of bitcoin without the perils of self-custody. The Blackrock Bitcoin ETF is the fastest growing ETF ever, and Blackrock’s CEO Larry Fink is now bitcoin’s most fervent evangelist. The Suits are on board.
Hailed by many of its early proponents as an almost universal financial panacea, bitcoin has one important function, the authors assert – as a form of resistance. Spawned in the world of cypherpunks, it has always had a groovy guerrilla, trickster, snook-cocking, sticking-it-to-the man side to it, along with the Austrian economics.
Wobbly, wheezy currency? Dodgy or dastardly government? Bitcoin can offer some comfort or a way out. If you can remember a dozen words (a bitcoin seed phrase, to recreate your wallet) you can flee any country, no matter how zealous the cavity-search, with your stash. Bitcoin adoption is an appealing savings option in Europe or the US. In other places it can be much more significant. In Vietnam, Nigeria, Argentina and Ukraine, bitcoin is big – it provides an emergency exit. Power to the people? Well, some of them.
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