Is Bitcoin Political?

Whenever I hang out on Bitcointalk, I often see discussions of the politics involved with Bitcoin. This country is banning cryptocurrencies when it could benefit from being one of the early adopters. That city wants to regulate it at the risk of driving away Bitcoin startups. I still think it’s no coincidence that the city involved is New York City. That’s where most of the career-minded Wall Street types are located. It’s a case of politics getting involved when a new innovation begins to threaten the old guard. It’s very possible that Satoshi Nakamoto did not intend for Bitcoin to be political. The Satoshi team may have simply built Bitcoin to be a new way to buy and sell things in the digital age at the very most.

The idea that cryptocurrencies could be political probably came along later, when they started becoming controversial. Events like the Mt. Gox meltdown and Silk Road trials didn’t help matters, as they gave the impression that Bitcoin itself was some kind of scam. People have actually turned away from Bitcoin when they heard all the bad news about cryptocurrencies from their banks and in the newspapers. This is the kind of thing that hurts widespread adoption of a new technology and it didn’t reassure Wall Street types or politicians who suddenly started talking about how Bitcoin itself needs to be regulated.

If I were to assign a political stance to Bitcoin, I’d probably say it’s more Libertarian than anything. It’s based on the idea that people don’t need to store value in fiat currencies backed by governments and financial institutions. It’s been compared to gold and silver because of the idea that a troy ounce (or a Bitcoin) is pretty much the same thing whether it’s earned by a freelancer in the USA or purchased by a member of the Sudanese royal family. While governments could reasonably create their own cryptocurrencies just by paying one of the many people who do this, the original Bitcoin does not need any government to validate its existence. This will take some time for the average person used to storing fiat currency at their local bank to get used to the idea that they don’t need to make a choice between the savings account, a 401(k) or stuffing money into an old mattress. They can just store currency on a hard disk in their basement and remember not to throw it out, and if those people dot their i’s and cross their t’s, the government might not even know they have it without doing more digging than it’s really worth.

Bitcoin’s main strength pretty much has to do with the idea that people don’t really need the big banks to do business. As a freelance writer, I’m used to the idea that I might be writing product descriptions for a new ecommerce site owned by somebody in England one day and writing an article for a blogger in India the next. I used to do a lot of business with Paypal simply because it was convenient but the fees I had to pay just for the benefit of receiving money online could be annoying. With the right plugins added to my other blog, I no longer have to put up with that – or, at least, I’m only paying a very affordable 0.50% fee to Coinpayments.net for providing an easy way to accept several cryptocurrencies. You might prefer to take advantage of C-Cex’s easy payment tools or just download the Mycellium wallet, depending on your specific situation. If you are a freelancer, you may want to consider accepting cryptocurrencies for your work and give Paypal one more reason to sweat.

Bitcoin is pretty good at protecting the rights of the vendor in ways that Paypal simply doesn’t. There’s no such thing as a chargeback in the current Bitcoin technology. Because of this, caveat emptor is pretty much the rule even though most honest merchants acknowledge that the free market system that Bitcoin represents has ways of weeding out the bad actors like the Silk Road users who got its owners into so much trouble. It’s hard to make a living using Bitcoin when you’ve gotten stuck with a reputation as a scammer. Mt. Gox should be proof enough that nobody is too big to fail in the cryptocurrency world. Bitcoin took a hit, but it’s recovering nicely. This is pure capitalism at work.

The thing about Libertarianism is that it can be unforgiving. It’s often seen as one step above anarchy. However, it’s not quite “anything goes” when pure capitalism depends on people voting with their cryptocurrencies. Libertarianism rewards people who can spot bullshit a mile away and aren’t afraid to attract customers simply by being honest in a world full of cheats. Then you become serial entrepreneur Seth Godin’s “Purple Cow” in a world of boring brown cows, the person who isn’t afraid to stand out from the pack. That’s the attraction of Bitcoin. It’s different, it can attract the people who might have been failed by the old system where most of the power is in the hands of governments and big banks.

I’ve heard people grumble about the explosion of altcoins in the wake of Bitcoin’s popularity. Most of them are, indeed, junk coins that are pretty well worthless. However, the growth in the number of altcoins can actually be a good thing when it comes to propagating the original ideas behind Bitcoin. People can hop from cryptocurrency to cryptocurrency in a world where everything tends towards centralization. Bitcoin could well become the stalking horse for minor cryptocurrencies simply because it’s the best known and this gives permission for little cryptocurrencies that might be quietly innovating new technologies that improves anonymity, the efficiency of transactions, and the security of the network. By the time Bitcoin is replaced as the top cryptocurrency, altcoins should have performed enough innovation to bring more economic power to people who might have missed out on the Bitcoin bubble but are still interested in cryptocurrencies as a valuable tool that can help them keep more of the money they earn in their pockets and out of the hands of the big banks.

So maybe Satoshi didn’t intend for Bitcoin to be a Libertarian tool, but cryptocurrencies can work well as a tool that brings power back to the individual who might be shut out by governments and large financial institutions. Freedom isn’t free and people who use cryptocurrencies should still be as cautious as they would be while shopping on eBay now. However, cryptocurrencies can end the idea that some companies are “too big to fail” and act as an equalizer that forces even the largest corporation to respect potential customers.