We now discover the context of libertarian speculative currency, where Bitcoin found its most devoted initial audience. Tracing these currencies—and understanding the significance of coins and precious metals in particular—takes us into rogue mints, agorist fiction, wildcat banks, digital gold currencies, the coinage of nonexistent high-seas micronations, and finally the aftermath of the Sealand project to create an offshore data haven: imaginative territory suited to Bitcoin’s version of digital cash.
Coins carry a weight—literally and figuratively—for libertarians, Austrian School proponents, Objectivists, and the hardcore, hard-money theorists of the (mostly) far right wing: they are minted as a numismatic artifact from future history. Coins symbolize access to and control over tangible forms of value, physical manifestations of new sovereign orders. They are artifacts from and investments in a new arrangement of territorial power in the world: tokens from the geographical outside. Sometimes they are just symbols, issued at a loss to bolster morale; sometimes they are sold at a premium, a fund-raising tool to be redeemed in a time to come. In every case, they conjure a different order of values.
By the time of his arrest in 2009, Bernard von NotHaus was the mintmaster of the Royal Hawaiian Mint Company and self-described monetary architect of Liberty Dollar coins through Sunshine Minting in Coeur d’Alene, Idaho, under the aegis of his National Organization for the Repeal of the Federal Reserve and the Internal Revenue Code (NORFED). (He was also high priest of the Free Marijuana Church of Honolulu—“One Toke to God”—which he founded.) But his story began in 1974, when he produced a nineteen-page essay with his partner, Telle Presley: “To Know Value—An Economic Research Paper.”1
This eccentric document was the result of a “spiritual epiphany”; it opens with a dedication to “the Dreams of Aldous Huxley” and quotes Swami Kriyananda alongside goldbugs, deflationary theorists, and issues of TV Guide. At heart, it is a statement about ontology and epistemology: about how something is “real” and how it is known to be real. The argument is neither complex nor convincing, filled as it is with circular logic, crisis-mongering, and Yoda-as-economist statements like: “Why buy gold? Because of what it is. It is gold.” In its directness, though, it is an exemplary document of the fundamental conviction of precious metal coinage—of specie—as a kind of superior monetary knowledge. “Gold is only uncertain for those who do not know,” they wrote. “Each individual sees the commodity, evaluates it, and agrees to accept it”: a sequence of ways of knowing, with mystical implications.2
Appropriately, then, the legal struggle over the currencies von NotHaus would issue ultimately turned on a string of questions not about value but about knowledge—about the cultural and legal meaning of a coin. Because it’s not a coin, first of all: it’s a “medallion.” In the United States, it’s illegal to “make or utter or pass … any coins of gold or silver or other metal … intended for use as current money.” The Liberty Dollar’s “private voluntary barter currency” was therefore not issued in coins and notes but instead in “medallions” and “warehouse receipts” redeemable for metal from a facility in Idaho. The receipts existed in paper and as digital “eLibertyDollars”—a form of “digital gold currency,” a curious offshoot of electronic money.
The minters were meticulously explicit in their issue statements and purchase agreements that they were not creating money: “never claimed to be, does not claim to be, is not, and does not purport to be, legal tender,” they wrote. To purchase a “New Liberty Dollar” silver piece—from a different organization with a shared ideology and audience—you must begin by answering a series of questions: “Do you understand that the New Liberty Dollar is 1 troy ounce .999 fine silver private issue silver piece medallion, and not any government issued coin? … Do you understand that silver pieces such as these New Liberty Dollars may also have numismatic, artistic, sentimental, historic, or other value[?]”3 You should, in theory, encounter these pieces of metal as something you know in person, in an immediate and bodily way, rather than with reference to a bank or a nation—though the coins were, at the same time, meant to call exactly these abstract entities into question for you. Von NotHaus’s motion for a retrial in his case turned on this paradox: “The jury’s verdict conflates a program created to function as an alternative to the Federal Reserve system with one designed to deceive people into believing it was the very thing Mr. von NotHaus was protesting in the first place.”
Like the “sovereign citizen” movement, with which the Liberty Dollars were closely connected, these ideas are based on a sense of realness. There is real experience, which is immediate, in the body “on the land,” and there is the pernicious fiction of government and society. The coins mean something because you can hold them, weigh them, assay them. The receipts mean something because you could, in theory, go to Coeur d’Alene to redeem an equivalent quantity of silver; indeed, the receipts noted that, after five years, 1 percent of the value of the silver would be kept in fees for storage and insurance.4 Someone has to drive the forklift and stack the pallets of silver ingots in the strong room of the warehouse in Idaho, inspect the fire sprinklers, and watch the CCTV feed: the realness of storage and maintenance.
The key sales technique to use on people ideologically unconverted to this radical money, as taught through the Liberty Dollar University training program, was “the Drop”: “The NORFED member,” summarized an undercover FBI agent, “holds out an ALD [Liberty Dollar] coin and drops the coin in the person’s hand so that they can feel the weight of the silver. The NORFED member then asks, ‘Do you take silver?’ ”5 Never, the agent points out, does the member “describe or offer any explanation that the ALD is an alternative currency.” The feeling in the palm is the prelude to the idea: money from the real world, and money for the coming disaster.
Implicit throughout was a simple future of decisive crisis, familiar from decades of libertarian prognostication and daily ads on Fox News. A crash is coming for the US dollar, with hyperinflation, unsustainable deficits, trade wars, and systemic crises combining to produce financial collapse. Gold, silver, and platinum will come (back) into their own, and decades of keeping coins buried under your floorboards will suddenly prove worthwhile.
This money is an act of allegiance to a state of affairs that does not yet exist, a value meant to pass—to become current—not in the fullness of ordinary time, in Keynes’s “indefinitely postponed future” of accumulating wealth, but in an extraordinary period of crisis, contraction, and breakdown.6 “Tell them,” wrote von NotHaus for the (old) Liberty Dollar Association, of those unconverted to his bimetallic standard, “to get ready for the Nazi-ization of America and a reign of terror, the like of which this country has never seen. Tell them to get out of government money, seek privacy at all costs and buy silver to stave off the rainy days/years ahead”7 (emphasis in original). It is an opportunity for commitment to an order at once archaic and futuristic—with “digital warehouse receipts” for silver and gold, email-ready units of money based in fantasies of stateless, objective value older than Croesus. A few pages later comes the contract and an order form for Liberty Dollars: the prospect of disaster is a sales pitch.
“With Pecunix, I understand it is a goldbacked [sic] digital currency,” wrote Ross Ulbricht, as he developed the plan that would become the Silk Road cryptomarket for drugs and other contraband—Bitcoin’s first significant transaction platform. “Can I anonymously and securely withdraw funds in the form of fiat currency or gold?”8
Pecunix was a digital gold currency (DGC). Other DGCs included OSGold, IntGold, e-bullion, the Aspen Dollar, the Second Amendment Dollar (issued by a gun store in Kentucky), GoldMoney (operating out of the tax haven Jersey in the Channel Islands), and e-gold.9 They shared various promises around the properties of gold: borderless transactions, transferable into many currencies, with the stability of bullion—the promise of gold as a safe harbor from the coming emergency—and, handled appropriately, the possibility of anonymity.
E-gold exemplified the field: launched by an American libertarian oncologist in 1996, years before the formation of PayPal and more than a decade ahead of Bitcoin, it promised (and trademarked) “Better Money” for payment around the world. It was inspired in part by Vera Smith’s The Rationale of Central Banking and the Free Banking Alternative (originally published in 1936), which began as her doctoral dissertation under Friedrich Hayek, envisioning a world of “free banks” issuing banknotes as “promises to pay … on demand in the generally accepted medium which we will assume to be gold.”10 E-gold accounts were denominated in grams and troy ounces of metal, and the site maintained meticulous lists of every single bar of metal with its brand, weight, serial number, and current location. Again, this was a digital currency available to a particular kind of knowledge: “Weight units have a precise, invariable, internationally recognized definition,” noted the e-gold site, and the assets had a chain of provenance, quantification, and custody few objects could claim—bar #9272–41 from the US Assay Office, for example, .9950 purity, weighing 380.775 oz t.
In October 2008, as Nakamoto was presenting the idea of Bitcoin on a mailing list, e-gold was suspending their operation and turning over their assets, after pleading guilty to numerous felony charges. (The platform had become a high-volume venue for specialists in credit card fraud, Ponzi schemes, and money laundering.) A year later, Ulbricht was weighing the pros and cons of other DGCs for doing business on a secret marketplace: “I can see how it would work as a closed system, but is there a way to integrate it with the rest of the economy securely?” His interlocutor was Arto Bendiken, a young cypherpunk software developer, whose site featured things like a lecture transcript from the Mises Institute on currency debasement in the monetary policies of the Roman Empire. Both men described themselves as agorists.
“The great thing about agorism,” Ulbricht wrote, “is that it is a victory from a thousand battles. Every single transaction that takes place outside the nexus of state control is a victory for those individuals taking part in the transaction. So there are thousands of victories here each week and each one makes a difference, strengthens the agora, and weakens the state.”11 (And every transaction would be conducted in Bitcoin.) Agorist theory was developed by the Canadian libertarian Samuel Edward Konkin III in the 1970s: the proliferation of unregulated covert marketplaces would draw people away from state arrangements and fiat currencies into alternative zones of countereconomics and counterinstitutions. It was popularized by his friend J. Neil Schulman’s 1979 novel Alongside Night. For Ulbricht, Alongside Night and Konkin’s work were “the missing puzzle piece!” in building the Silk Road—a convergent evolution with Tim May’s Xth Column: spurring the adoption of new currencies and encrypted platforms by offering access to contraband and illicit goods.
In Alongside Night, set in 1999, the United States is sinking into a currency crisis, complete with rapid inflation of the new, inferior, federally issued “blues”: “blue-colored notes, no engraving on one side, on the other side hasty engraving … resembled Monopoly money.” (A hallmark of libertarian fiction is detailed attention to the look and feel of different kinds of money.) There are bank runs, credit freezes, rationing, and jackbooted government thugs seizing private gold. The main character’s father, Nobel Prize–winning economist Martin Vreeland, predicted all this—any resemblance to Nobel Prize–winning Chicago School economist Milton Friedman, responsible for some of the most extreme free market policies ever enacted, is purely coincidental. (Friedman was, with fellow Nobel winner Hayek, another apologist for Pinochet’s Chile as an experiment in radical privatization; his disciples were its architects.) Vreeland’s son escapes to join the Revolutionary Agorist Cadre, who are constructing a parallel society with their own contracts, arbitration systems, markets, militant teams, counterintelligence, and, of course, money—“AnarchoBank” coins and gold-backed digital assets issued by wildcat banks.
In one of the Agorist hideouts the protagonist finds a library, which provides the audience of Alongside Night with a reading list. The nonfiction shelf has books by Mises and Rothbard. The fiction includes Ayn Rand’s Atlas Shrugged and Robert Heinlein’s The Moon Is a Harsh Mistress, canonical novels of American libertarianism that contain the same historical-spatial structure as Alongside Night itself. They are set in the future when systems of governance have become dysfunctional and are beginning to break down. Characters move to or inhabit alternative zones, where they can live outside the emergency, exacerbate the existing crisis, and return to the changed world on the other side of the disaster where their utopia becomes possible. “ ‘The road is cleared,’ says Galt,” as Rand’s characters look over the devastated landscape at the end of Atlas Shrugged. “ ‘We are going back to the world.’ ” Over Penn Station at the end of Alongside Night, “two banners flew at half staff, commemorating the dead of Utopia.… Things were looking up for a change.” (The two flags in Schulman’s book are the black flag of anarchism and the “Don’t Tread on Me” Gadsden flag; the current agorist flag is gray and black, the colors of their preferred markets.) Heinlein’s lunar revolutionaries prepare to head out to the asteroids: “Some nice places out there, not too crowded.”
In these fictions and in agorist and libertarian practice, using the right money (and using money right) is a philosophical way of knowing value, the passport to a new physical territory, the commitment to a particular future of crisis to come, and the entryway to a different model of society, all at once—their cosmogram, a way to align themselves with objective reality, against arbitrary fiat, as a kind of financial pilgrimage. You must find “trustworthy countereconomic contacts,” enter “the agora,” leave your home to follow “John Galt,” and abandon “Authority scrip” in favor of “Hong Kong Bank notes, backed by honest Chinese bankers instead of being fiat of bureaucracy. One hundred Hong Kong dollars was 31.1 grams of gold (old troy ounce) payable on demand at home office.”12 By doing this, you join an alternate history and its inevitable future. “Whenever destroyers appear among men, they start by destroying money,” wrote Rand in Atlas Shrugged, about two-thirds into one of those Randian monologues for which the other characters obligingly sit still page after page. “Destroyers seize gold and leave to its owners a counterfeit pile of paper. This kills all objective standards and delivers men into an arbitrary power of an arbitrary setter of values.… Paper is a check drawn by legal looters upon an account which is not theirs: upon the virtue of the victims. Watch for the day when it bounces, marked: ‘Account overdrawn.’ ”13 The reckoning—in both the current sense of the word and the archaic, when it referred to settling a bill—is coming, and adopting money with “objective value” makes surviving the reckoning possible: to adopt it is to become part of the next society.
The physical properties of gold exemplify the hard, gleaming, cold, elemental personalities Rand’s “utopia of greed” hoped to generate. Gold’s properties of being objective, measurable, and quantifiable are necessary for a social philosophy in which the accumulation of money itself is the direct expression of human worth, the social order embedded in its cosmogram. Rand’s monetary speculations were epistemological statements. Each coin from Galt’s mint would work as an assertion about truth, and grasping that philosophy would put you in exactly the position to become objectively rich. The three-foot-high gold dollar sign erected in Galt’s Gulch, the Objectivist fortress in the Rockies, works like the reference kilograms kept by metric institutions: the benchmark by which the world can be accurately assessed and against which the humans who live in Rand’s fantasy can be calibrated.
Knowledge is money, and money knowledge. When the libertarian pirate Ragnar Danneskjöld shows up in Atlas Shrugged to pay back Hank Rearden for “the money that was taken from you by force” (taxes and so on), he gives him, of course, a bar of gold: “an objective value.”14 Rearden’s encounter with the ingot is love and truth at once: “Rearden saw the starlight run like fire along a mirror-smooth surface. He knew, by its weight and texture, that what he held was a bar of solid gold.” This was not the only fantasy of men from the sea bearing speculatively real (and really speculative) utopian money—objects from a dream of a different way of knowing value that lay on the far side of longed-for catastrophe, a dream into which early Bitcoin was easily folded.
“In this philosophic struggle, no one person in recent years has done more in behalf of the cause of freedom than Ayn Rand”: so wrote Werner Stiefel, under the pen name Warren Stevens, in a 1968 booklet supporting his utopian project Atlantis.15 Stiefel, a skin care magnate, had bought a motel in Saugerties, New York, which he dubbed “Atlantis I.” It was an inexpensive base for housing his growing team of libertarians (with whom Rand would have had many doctrinal disagreements, but let that pass) in search of some new territory offshore of every existing government: a “seastead” before the term was coined—a sovereign platform in international waters where new social systems and their new money could be based. The motel rooms would function as stand-ins for the staterooms of the eventual ship—the Atlantis II—that would operate on the high seas, bringing in supplies and income for Atlantis III, an island, purchased or made, to act as the free port, redoubt, and bank of his future market-driven society. It would be an outpost in what historian Raymond Craib calls the “escape geography” of libertarian fantasy—the space that would later adopt Bitcoin.16
In his hotel, the alpha-version testbed for Atlantis, Stiefel planned the coins and had them struck before that society came through.17 He struck them before the string of disasters that accompanied Operation Atlantis—the derelict oil rig destroyed by a hurricane, the citizens being mistaken for pirates and driven off by a Haitian vessel at gunpoint, the reinforced concrete barge Atlantis II (built under a geodesic dome licensed from Buckminster Fuller) foundering on the Hudson, breaking an axle, and ultimately sinking near the Bahamas. The Atlantean “decas” were ten grams of sterling silver, carrying a ship’s wheel on the face and a setting sun at sea on the reverse, with the inscriptions REASON, FREEDOM, and TEN GRAMS SILVER 97.5 FINE on the facing sides. The two sides were guarantors of each other: reason and silver. You could hold a deca and fantasize about holding “money of intrinsic value” from a hurricane-lashed rational society built on a sandbar.
Or, rather, you could fantasize about the fantasy of holding such a coin. The run of decas was actually very small, as were those of all libertarian enclave coin issues. (The decas were stamped out using a hydraulic soap press.) Photographs of the coins were run alongside pictures of islands, reefs, and cays in Operation Atlantis publications: coins and islands were symbols of territory in which you could imagine a utopian project. In the absence of actual country, the coins stood in—pieces of terrain you could hold in your hand and carry in your pocket.
“A more serious effort was done in the early 70s by the Minerva folks,” wrote a contributor to the cypherpunk mailing list, “who built up an island out of coral reefs in the South Pacific”—prior to, as a contributor to Extropy put it, “the unfortunate ending of the lamented Minervan Republic.” Minerva was a particularly audacious attempt to claim a new country and a new currency, one cypherpunks and Extropians alike hoped would prefigure new geographic zones for prototyping various fantasies of the future. The bizarre story of Minerva and the related Phoenix Foundation has been told elsewhere: It entangled tax-dodging investment advisers and entrepreneurs inspired by the work of Mises and other Austrian economists with aristocrats, offshore bankers and land speculators, gold dealers, and the assassin, mercenary, and weapons magnate Mitchell Livingston WerBell III. (WerBell’s side projects included designing the world’s best firearm suppressor and acting as the go-between for Bobby Vesco, that colossus of financial crime, and President Nixon). Minerva was an attempt to produce a libertarian political and financial geography through the production of new territory (a sandbar) and a convoluted land deal—which was also an armed insurrection and a religious movement and a bizarre neocolonial power grab—in the New Hebrides (now Vanuatu) in 1977.18
Of course the Minervans too issued coins, during their attempt to flee “aspects” of the state (as Craib puts it). Minted in Lanchester, California, the coins carried the head of Vanuatan independence movement leader Jimmy Stevens over the motto “Individual Rights for All,” again serving as tokens of place and promise. “The sudden appearance of gold and silver coins bearing Jimmy Stevens’ likeness must have been a convincing argument for Phoenix’s power” among the country’s notional future citizens, wrote anthropologist Monty Lindstrom in his study of the hybrid libertarian-messianic project.19 For the other Minervan attempt at creating an offshore libertarian paradise—the artificial sandbar—their coins featured the goddess Minerva herself with the latitude and longitude coordinates of their country-to-be: another metallic proof of a thing that did not yet exist (and indeed never would). The coins were minted to be circulated among believers, part of the existence proof for a libertarian enclave in the emergency to come.
The various flavors of libertarianism that converged on digital cash were built on the two outsides that met in the icon of the coin: a territorial outside—from the networked agora to the high seas—from which the coin is issued and where it can be transacted, and a temporal outside, a future of crisis and collapse in which libertarian beliefs would be validated and the money that embodies them would be redeemed. The “escape geography” of libertarian fantasy was intertwined with the “escape temporality” of libertarian currency; the future in which their money could pass would be situated in some contemporary territory.
In 1997, Ryan Lackey was at MIT, in the running for an entrepreneurship prize for “a distributed data store, using strong cryptographic protocols to provide privacy, authentication, and protection from censorship, in a market-based scheme.”20 On the cypherpunks list, he asked, “What would it take to start an anonymous, private, secure, etc. etc. bank issuing e-cash, located in a country without taxes/etc.?”21 He discussed guns at length with May, prompting Wei Dai’s puzzled question (previously mentioned in the context of his b-money proposal): “If we can defend ourselves with guns, why would we need crypto?” Lackey’s signature block on his posts was a quote from Atlas Shrugged, when Dagny Taggart “calmly and impersonally” shoots a guard “who had wanted to exist without the responsibility of consciousness.”
Two years later, he’d dropped out of MIT, worked on an e-payments start-up in Anguilla, and found his way to Sealand as a member of HavenCo’s board of directors, offering data storage and management not just offshore but “off-government,” in the words of a hyperbolic and credulous Wired cover story in 2000.22 HavenCo’s chair was Sameer Parekh, who previously appeared in this book transcribing Thoreau’s Civil Disobedience to share online and hanging out with the cypherpunks. The CEO of HavenCo was Sean Hastings—also of that Anguillan start-up—who had been a lively contributor to philosophical debates on the Extropian mailing list, especially around artificial intelligence, and developed the “Value and Obligation eXchange Protocol,” a contract-barter transaction platform. (Hastings would go on to work on seasteading projects with Patri Friedman, the grandson of Milton Friedman.)
Sealand’s legal status was a vexed issue.23 It was an anti-aircraft artillery platform built off the coast of Essex in the North Sea, abandoned by the government after the war and claimed as sovereign territory by the family that hoisted themselves aboard in 1967. They were part of a larger history of ships, forts, and offshore platforms around the UK repurposed for renegade radio, as recounted in Adrian Johns’s Death of a Pirate—a strange mix of DJs, gangsters, bohemians, and proto-Thatcherite disciples of free market discipline.24 Sealand pushed their assertion of sovereignty farther than most, albeit with tongue mostly in cheek. (Their case was not helped by the many forged Sealand passports in circulation—one was found in possession of serial killer Andrew Cunanan after he shot Gianni Versace—including thousands allegedly sold by a Spanish document-forging ring to Hong Kong citizens in advance of the country’s handoff.) This playful-serious sovereignty suggested, in Wired’s phrase, “a tantalizing gray zone” where a truly offshore jurisdiction could effectively become a six-thousand-square-foot physical instantiation of the fantasy of cyberspace—a concrete utopia and the perfect place for “untraceable bank accounts.” As Lackey later recalled, “The biggest inspiration was Vernor Vinge, ‘True Names.’ ”25 The Other Plane would finally have a footprint; digital cash would have an appropriate zone, nowhere@cyberspace.nil, a node on the network now with latitude and longitude coordinates.
In theory, this would be a proper fortress for anonymous payments, digital banking, and many other offshore services, provisioned with high-bandwidth connectivity, generators, batteries, and telecommunications gear. In a perfect techno-thriller detail, the machine rooms would have atmospheres of pure nitrogen, to protect from rust and fire—a technique called inerting used on oil rigs—which would also suffocate anyone without a breathing apparatus.
In practice, Lackey lived on canned food in the dark—keeping San Francisco hours on Greenwich time, for business reasons and to avoid constant proximity to other people on the platform—pushing bits over a slow Internet connection that got slower when their telecom provider went bankrupt and they fell back on a satellite link, frustrating their ten or twelve customers (mostly casinos). Little was installed, the racks stayed largely empty, and “critical components of technical infrastructure,” he said in his bridge-burning presentation at the hacker conference DEF CON after leaving Sealand, “were not deployed due to lack of funding.”26 Ironically, payment itself was a constant problem. HavenCo had reincorporated in Cyprus from Anguilla, and paying them as a service provider was a difficult process, with investor funds coming in through Western Union and credit cards; the security team was paid in cash. As Lackey ruefully put it afterward, “Sovereignty alone has little value without commercial support from banks.”
Lackey had planned to launch his own gold-backed currency, using anonymous digital cash protocols, from this extranational haven—like von NotHaus’s “warehouse receipts,” combined with Chaum’s transactional secrecy, based not in Idaho but in a sandbox monarchy the size of an office park. In the end, he left $40,000 in debt and was owed much more. As the legal scholar James Grimmelmann pointed out, by putting themselves outside other legal systems the HavenCo team was, in fact, a subject of Sealand and its prince and prince regent. If Lackey sued them in court and won, he would undercut the pretense of Sealand’s sovereignty that he was trying to defend.
In November 2008, a participant in a cryptography mailing list interrupted the discussion about a new proposal for an electronic cash called “Bitcoin” with an announcement: “HavenCo, which ran a datacenter on the ‘nation’ of Sealand, is no longer operating there.” In fact, they had been long gone; shutting down their website in 2008 came years after Sealand’s hosting had moved to a data center in London. The facts were wrong, but the timing could not have been more perfect. The fantasy was migrating back from a literal platform in the ocean to a metaphorical one on the network.