Bitcon’s resistance to any control is illustrative to the libertarian mentality. It is because of this mindset that many libertarians support Bitcoin – a crypto currency that is not backed by any financial institutions.
Bitcoin is a digital currency, which unlike traditional non-fiat currencies that are backed by gold and silver, is based on distributed computing. While money today is printed by central banks, Bitcoins are “mined” with the use of computer networks.
But apart from the philosophical ideas of libertarianism, what makes Bitcoin such a fit for the libertarians of today?
The modern Libertarian
In a survey conducted by Pew Research Center back in 2014, about 10% of Americans identify themselves as libertarians.
In terms of the governments policies, the current US Libertarian Party runs on a 3 point platform: personal liberty (freedom of expression, reproductive rights, sexuality, etc.), securing liberty (reducing military interventions abroad), and economic liberty (healthcare, education, and property rights). While most libertarians today are not calling for a revolution like the anarchists of the past, they are asking for a change in the current economic setup. Bitcoin is seen as a tool of defiance. Not being backed by financial institution is part of the platform that libertarians truly believe in.
How does Bitcoin work?
FXCM says The Bitcoin Network consists of thousands of computers that are linked together through a ledger of all Bitcoin transactions known as “block chain”. Every Bitcoin transaction produces a “series of letters and numbers, known as a hash, which miners then add to the previous hash to generate a block.”
As soon as someone starts using Bitcoin, he or she will have full access to the chain. This means that any Bitcoin user will be able to see the currency’s previous transactions.
Many libertarians aren’t only interested in how Bitcoin fits their political standpoint. Some believe that the attraction of Libertarians is rather more from an ideological perspective.
“There’s a long trend of libertarian thought about the functions of the state and what can be done outside the state,” said Eli Dourado, Director of the Technology Policy Programme at Mercatus Center Research Institute. “For example, there’s a famous article by Nobel Laureate Friedrich Hayek on the denationalization of money; so this is very much in that current of thought: serious people thinking about whether money can be done without the state.”
Libertarians have found that denationalization convincing but some are also hooked on Bitcoin’s concept of “capping”. When the hard-coded limit of 21m BTC is reached, no more can be created. When there’s a cap, there can be no inflations for Bitcoin.
BTC’s limit is real but economists are skeptical about an economy with zero inflation. Many libertarians, however, are willing to take that risk, what with the weakening of the dollar when a stimulus program was put in place by the previous administration.
Money and State
Some Libertarians agree that there is a need for a change in terms of the country’s financial sector, and some are saying that the money and the state should be separated, just like the church and the government.
“Money and politics are intrinsically connected,” said Erik Voorhees, a well-known entrepreneur and libertarian among Bitcoin circles. “So if there’s a fundamental change in the way money works – such as with Bitcoin preventing governments from creating money out of thin air – then that necessarily changes what politics is able to do.”
Bitcoin seems to represent libertarianism by design, which exists disjointedly with the morals of those who use it. However, what’s true is that the continued success of the cryptocurrency is intrinsically a success for Libertarianism on a whole.