Bitcoin is Losing the Midas Touch

Bitcoin, the decentralised, mainly digital currency that is neither issued nor guaranteed by central banks, has always seemed like a magic trick. Rather than spinning straw into gold it transforms wasted computing power into money that people will actually accept as payment.

Radical libertarians have desperately wanted to believe in it because they hope it can resolve the following dilemma. They prefer markets to politics and they violently distrust states. But modern states in effect have a monopoly over the currencies that markets need in order to work.

Bitcoin, if it became broadly accepted, would challenge states’ dominance of the economy. It is designed to prevent monopoly by states or other entities, building a new currency based on shared information and making it hard for any entity to gain control. Politics disappears and a combination of technology and cryptographic proofs is conjured up in its place.

Unfortunately, the magic is wearing off. Some of the technological innovations associated with bitcoin will stick around. The political project will not. Rather than overcoming conventional politics, bitcoin is succumbing to it.

The biggest fights are focused on the most innovative element of bitcoin: the “blockchain”. This is a decentralised ledger of transactions using bitcoin. Bitcoin “miners” compete with one another to solve computationally hard problems. The winner receives new bitcoin but also validates a “block” of queued transactions, which is then added to the ledger and shared with the community.

Access the full article here.

Other Writing:

Essay

Bloggers and Parties: Can the Netroots Reshape American Democracy?

The “netroots”—an Internet grass roots that has set out to change the Democratic Party—are often maligned. These progressive bloggers and their readers, who emerged as an influential group during Howard Dean’s presidential campaign, are increasingly depicted as a sinister movement under the dictatorial control of Markos “Kos” Moulitsas Zúniga, the founder of the prominent political ...
Read Article
Essay

Choke Points – with Abraham Newman

Since the end of the Cold War, businesses have built an awe-inspiring global infrastructure. Digital pipelines move vast amounts of capital and data around the world, and supply chains crisscross international boundaries in a spider web of commerce. An intricate system of networks keeps the global economy running smoothly, but it’s easy to take for ...
Read Article