The ideas presented in this article are not mine and simply constitute a brief summary of the main ideas in Sarah Jeong’s paper ‘The Bitcoin Protocol as Law, and the Politics of a Stateless Currency’, which can be found here. I highly recommend reading the whole paper.
Jeong jumps out of the gate claiming that discussions surrounding the essence of money are “intensely political in nature”. She proceeds by arguing that Bitcoin is undeniably a political project.
No one can refute the fact that money is inextricably linked to politics since the money we use today (and the different forms of money we’ve used for hundreds of years) is created and issued by governments. Look at the dollar bills you have, representing whichever government issued those bills. Or take a look at the digital money you have sitting in your bank, an institution heavily involved with and regulated by governments.
Bitcoin is a radical new conception of finance, what money is, and what money can be, which is a political statement in itself. Jeong then claims that conceptions of money are on 2 sides of a very specific spectrum:
Finance and money itself require the presence and mediation of governments, or money and finance do not require the presence and mediation of governments.
I’ve given you Jeong’s theoretical arguments. Now, in practice, how is Bitcoin a political project?
The BTC protocol is written in code. As a payment system and as a currency, certain behaviors are allowed by bitcoin’s code, and some are not allowed by the code. Jeong points out that the bitcoin protocol (its code) is therefore synonymous to monetary policy and law, since policy and enforcement of these policies are left completely up to the code itself. It is worth nothing that bad behavior on the network is not punished through force.
Since monetary policy and laws are created by governments, then political views are embedded in the bitcoin protocol.
Jeong also takes the time to recognize flaws in the design of bitcoin. One obvious flaw that anyone and everyone involved in the bitcoin space sees but may not exactly know about is represented below:
Bitcoin price: $6572.34
Did you catch it? It’s the dollar sign! If bitcoin intends to stray from traditional money and finance, the fact that its worth is accounted for by US dollars (and other fiat currencies) means its worth is entirely dependent on the the existence and the value of fiat currencies.
Continuing the conversation of bitcoin’s ability to be money, Jeong notes that not only will governments have a say in the legitimacy of bitcoin and other cryptocurrencies, but most of all people will. At the end of the day, whichever currency people choose to transact in will be ruled as money. In order for people to trust bitcoin ( or any cryptocurrency), it needs to have some essential qualities of the money that we’re used to nowadays:
Easily verifiable, (somewhat) easily transferable, and perhaps most importantly, the assurance that if you receive a payment from someone in a certain currency, that you’ll be able to pay someone else with that same currency.
To take a step back, this paper is not just about Bitcoin. Although Jeong frequently mentions bitcoin, the conclusions she draws about bitcoin are applicable to any blockchain-based token. Cryptocurrencies and blockchains are fundamentally different ways of thinking about money, and if any changes are to be made regarding money and finance, Uncle Sam and all the other Uncles out there are inevitably going to be part of that change, making bitcoin a