Libertarianism, in the most general sense, is “…a political philosophy that affirms the rights of individuals to liberty, to acquire, keep, and exchange their holdings, and considers the protection of individual rights the primary role of the state.”1 This political ideology, in which individual human beings are the primary actors, is an attractive political position to the American public; approximately one-in-ten Americans now describe themselves as Libertarian, and the 2016 presidential election had the largest turnout ever for a Libertarian candidate2.
Now, more than ever, is the time to take Libertarianism as a serious political ideology with the power to sway the American public, and bitcoin is sure to play a large role in the rapidly rising movement.
Bitcoin – Taking Back Monetary Control
Libertarians, with their contempt for the government and its perceived excessive role in society, have flocked to bitcoin. According to an online survey by Lui Smyth, a University College London Researcher, an astounding 44.3% of bitcoin users identify themselves as libertarians.3 In their eyes, the traditional methods of managing money are inefficient and counterproductive. Central banks, which control the money supply, are entities of the state. Financial payment networks, such as Visa and Mastercard, are corporations and not much better. Bitcoin, heralded for its decentralizing nature, takes power out of the hands of these powerful government agencies and corporations and returns them to the people, maintaining the purity of the Libertarian ideology.4
Informed by the thinking of the Austrian School of economic thought, whose members included renowned economists Friedrich Hayek and Ludwig Von Mises and later American born economist Murray Rothbard, classical Libertarians are drawn to bitcoin for its capacity to “denationalize” money, which is to say, it would allow individuals to make use of whichever currency they see fit.5 Furthermore, many bitcoin-promoting libertarians also espouse the values of hard money; because bitcoin is designed to reach a hard cap at 21 million units, it becomes resistant to inflation. Whether or not this is achievable is under scrutiny by many economists. Nevertheless, the argument persists among many bitcoin aficionados.
A Libertarian Utopia
Libertarian activists such as Roger Ver have been some of the most vocal proponents of the cryptocurrency, noting that it provides … “[a chance] for the individual to be in complete control of his or her funds.”6 Taking the concept to the next level, Ver has begun orchestrating moves to create his own libertarian utopia.
In September of 2017, Ver announced at the Nexus Conference alongside early Bitcoin investor Olivier Jannsens, that $100 million in funds had already been raised for the project, and that realistically, a total of half a billion to a billion dollars could be raised.7 Ver and Jansens announced they had propositioned various governments in the US, Europe, and Asia, and that they had found more support than previously anticipated. The utopia would function on a voluntary basis, meaning that “enforcement will happen through private arbitration, competing court systems and private law enforcement.”8 Residents of this libertarian utopia are free to use whichever currency they see as most appropriate, but it seems likely that they employ use bitcoin and other cryptocurrencies for their daily exchanges.
The very same Libertarian advocates of Bitcoin, however, could now be potentially doing more harm than good. In December of 2017, investment writer Martin Tiller wrote ““What is probably the greatest danger to the future of bitcoin [is] politics. … The decentralized, non-governmental nature of digital currency makes it particularly appealing to those of an extreme libertarian bent. When those voices are the only ones heard, it makes wider adoption and acceptance less likely.”9 To be fair, libertarians promotion of the digital currency has helped push bitcoin from a niche commodity to a household name; Ver, after hearing of bitcoin on the libertarian talk show Free Talk Live in 2011, went to the Porcupine Freedom Festival in 2012 and distributed 1000 bitcoins at $5 a piece (today those bitcoins would be worth an astonishing $16,613,785), who then went on to spread the gospel of bitcoin to the masses.
Nevertheless, the very same fervency that initially made bitcoin a household name could now be more of a hindrance than an asset. Tiller argues that bitcoin libertarians can be so determined to point out the evils of government that they will drown out other voices. When those other voices are silenced and only a rabid hatred of central governance is espoused, the layman could potentially become disenchanted with the idea of alternative currencies. Tiller goes on to explain that “There are supporters and Bitcoin believers who have a different approach [than the libertarian one] and their voices must also be heard.”10
Instability as a Currency
Furthermore, there are other practical limitations to take into consideration when dealing with bitcoin as a currency. Bitcoin as a currency is largely unstable; over the course of 2017, the price rose from approximately $1,000 to over $19,000; while bitcoin enthusiasts marvel at this growth, it would be a catastrophe if the main currency depreciated by the same amount.11 Additionally, bitcoin miners can generate an overwhelming amount of the currency. With an ever increasing amount of bitcoins, these miners could eventually control a majority and form a cartel, defeating the decentralized purpose of the currency.12 Bitcoin as a main currency could also lead to significant issues should they be lost, as it can be impossible to recover them once this has happened. The most infamous example is of a man who threw away a hard drive containing 1400 bitcoins five years ago, not realizing the immense value they would come to eventually hold.13
Proponents of the cryptocurrency and zealous libertarians, however, do not see these potential roadblocks as obstructing their ultimate goals. Advocates of bitcoin argue that as the cryptocurrency continues to gain traction and acceptance by the public, its price will eventually even out. In addition, it is unlikely that a group of miners will ever accumulate such a massive wealth that they would have the power to influence markets single-handedly; the closest person to having a centralized control is the creator of bitcoin, Satoshi Nakamoto, and his absence from the community as a whole limits the possibility of him or her making a power maneuver.14 Finally, libertarians would argue that it is the responsibility of the individual to make sure that his or her bitcoins are safely stored and readily accessible in the future. After all, the vast majority of libertarians affirm personal responsibility as a central moral and political value of the individualistic political philosophy.
Libertarianism can no longer be considered a fringe movement. Powerful figures like Ron Paul, Rand Paul, and Gary Johnson have championed the rights of the individual in the 21st century, boldly raising its profile in the eyes of the American public. While the utility of libertarian voices in the crypto-community may be up for debate, they will continue to be attracted to the digital currency. Bitcoin, with its freedom from any central authority and its decentralized nature, is surely coming along for the ride.