by George Hess
Within the mainstream media and economic journals, Bitcoin and other alternative currencies have become synonymous with fake money, price instability, and speculative investment. To some extent, these media outlets are correct. Bitcoin has no inherent value; it is very similar to the dollar bill and all fiat currencies in that regard. It is worth little more than the memory it occupies or the paper it is printed on. It does not have intrinsic value like gold or silver. What gives bitcoin and other currencies value is confidence, or people’s willingness to use the currency for transaction. Furthermore, Bitcoin has had a rapidly fluctuating price and is a very volatile market laden with speculation. So while the mainstream media has adequately discussed the basic qualities of Bitcoin and the recent alternative currencies market, it has failed to perceive Bitcoin’s wider implications.
Bitcoin is freedom. Bitcoin is a currency completely outside of government control. It breaks the rules. It is non-taxable, immune to inflation, and completely decentralized. What does this mean? All transactions with Bitcoin must be voluntary. It breaks down the government’s ability to quickly and forcibly levy funds. Imagine for a moment a world where bitcoin is the universally accepted form of currency. Governments can no longer tax in the same way that they could with physically currency. Because all transactions are voluntary, they must petition the people for funds. What does that mean? It means an incredibly accountable government, one that can no longer indiscriminately wage war, or redistribute wealth without the express consent of its citizens. Poor results prompt the withdrawal of funds. Morally reprehensible actions also prompt the withdrawal of funds. The government would then be accountable in the same way that businesses are accountable, and can be boycotted.
This is why governments have taken action against bitcoin. They have associated it with money launderers and terrorists, when in actuality Bitcoin represents something much nobler. It represents the ability to decide whether your money goes into drug prohibition, aggressive and expansionist foreign policy, the prison-industrial complex, or none of the above. It puts the power in the hands of the people and breaks the monopoly of state power.
Where has Bitcoin become popular? It has given the Argentinian people an alternative to the disastrous monetary policy that has been in effect since the early 1900’s. It has become popular in the United States where inflation has become the state’s catch-all solution for the ever increasing national debt. Bitcoin is a free-market solution to a problem created by governments. It is a revolutionary development towards individual freedom and away from state mandated spending and control. The state’s attempts to ban it are promising indications of its ability to challenge government hegemony and affect sweeping social change in the future.