We come to the last chapter and look at how early Bitcoin itself was understood as a utopian, speculative currency in the context of libertarian dreams: digital cash built for verifiably inflation-proof production, in anticipation of a redemptive economic emergency. Every digital cash project has been organized around a bigger agenda, from protecting privacy to ensuring posthumanity; early Bitcoin’s agenda was creating and securing scarcity in the context of crisis.
All money is an archive, but coins provide exceptionally vivid examples. Coins tell stories, right on the face: dates, images of divine beings and profiles of temporal powers, and languages and symbols documenting communities, trade networks, regions, and the persistence of common practice.1 The Gotland coin hoard, buried on an island off the coast of what is now Sweden, includes thousands of dirhams from mints across the Islamic caliphate—the mechanisms of trade, pricing, and negotiation along the Silk Road, as far away as Yemen and the Maghreb, a snapshot of human arrangements and connections across half the world.2 Even in their damage, coins carry histories of sovereignty, territory, and value. Surfaces were worn away through long handling, new values were set with figures hammered into old coins or deliberately scarred and effaced, mutilating the profile of a hated monarch or adding a message. English suffragettes stamped “VOTES FOR WOMEN” into the head of Edward VII on pennies.3 Coins were “clipped” to trim off a shaving of silver without changing the face value, or debased for political or military projects; they were cut up into small change, or made into “broken money” and valued by weight.4 Sometimes they persisted as anachronisms, living fossils: long after the monarchs died and borders shifted, coiners still minted Alexandrian tetradrachmas and Venetian sequins, bezants and Maria Theresa thalers. Thalers—the product of an outstanding silver mine in Bohemia—became standard trade coins in such demand that they continued to be issued with the year of Theresa’s death, 1780, for centuries.5 Thalers passed everywhere: from the territories, colonies, and frontiers of the American continent—thaler begat daalder begat daler begat dollar—to the trade networks of the Indian Ocean, where they circulated alongside East African shillings, promissory notes, salt bars, British pounds, measures of grain, and Indian rupees.
With these histories, coins document philosophies and structures of value. They speak of the legacies of ideology, religion, and imagined community—sometimes stories that are elsewhere neglected or never written down. (The writer and critic Joseph Addison said of his obsession with coin collecting that of each coin he cherished not “its metal but its erudition,” a “poetical cash” that itself remembers the history that people and cultures forget; he once wrote an autobiography from the perspective of a shilling.6) “Individuals might speak of a particular currency’s value,” Rebecca Spang wrote, “but what they are really doing is relying on their own, barely conscious, expectations of how other human beings will react when presented with bills, coins, and credit cards.”7 Coins document what will pass, who will accept it, and why—which constitutes a shared vocabulary of value. To rebase the currency works—at least in part—to rebase the society. It is to make an ontological statement about value itself, about what is most real and how we should therefore act. It lays down bedrock for a cosmogram and with it the arrangement of values within the society. This is therefore an epistemological act as well: an assertion about how the significant values can be known.
Lycurgus, the semimythical lawgiver of ancient Sparta, was reported by Plutarch to have based the currency on iron: heavy, symbolic, reasonably difficult to get without being appealingly precious to others, and wildly inconvenient. “When this money obtained currency,” Plutarch wrote, “many sorts of iniquity went into exile from Lacedaemon. For who would steal, or receive as a bribe, or rob, or plunder that which could neither be concealed, nor possessed with satisfaction, nay, nor even cut to pieces with any profit?” That Lycurgus did not, in fact, do exactly that does not detract from the point of Plutarch’s account. Plutarch’s Lycurgus used iron currency as a forcible leveler of social distinctions, a means to kill off “the unnecessary and superfluous arts,” and the motor of radical, autarkic self-reliance that effectively eliminated trade. The iron was a pedagogical tool as well as a social system, a kind of discourse both metaphorical (an expression of values and particular character) and literal—an object that pulled the society out of most markets entirely. Alexander Hamilton, reading Plutarch during the winter of 1777 at Valley Forge, in the midst of founding the new state for which he would serve as Secretary of the Treasury, made a note of this decision: a social model built into the ordinance of money.8
Hamilton’s colleague, Benjamin Franklin, successfully proposed land banks—“coined land”—for the paper money of the American colonies.9 The supply of gold and silver, he pointed out, had fluctuated wildly with new discoveries, and precious metals could be exported in trade, ending up in England and bringing business within the colonies to a standstill. Land, instead, would be pledged as collateral for paper money. When money grew scarce and the difficulty of barter grew, people would borrow more against their land to take advantage of the valuable money; when the system was flush with money and its value fell, people would trade to accumulate the cheaper notes with which to pay off their pledges. It would root the trade of the colonies within the colonies themselves, building their economic independence from the Empire and encouraging a form of import substitution (a subject of particular interest to Hamilton as well), and link the holders of currency to their terrain. The notes themselves were authenticated with the leaves of American trees—leaf casts, struck with a copper plate press, being relatively easy to produce and compare but very difficult to counterfeit freehand.10 (They became an accidental botanical archive as well: a circulating paper library of the forests of New England.) A social framework, a political mission, and a physical place were brought together into the banknotes.11
What kind of stories do bitcoins tell? What arguments do they make? What human beings do they assume? What is their cosmogram?
At the PorcFest gathering in the White Mountains of New Hampshire, silver, Bitcoin, and other cryptocurrencies traded alongside “FRNs,” the dismissive term for dollars as “Federal Reserve notes.” It was the summer of 2014, seventy years nearly to the day from the Bretton Woods Conference—the founding event of the postwar global monetary order—which took place about a half hour south, at the Mount Washington Hotel. PorcFest was named for porcupines, spiny creatures that want to be left alone; it was a gathering of libertarians and a recruitment venue for the Free State Project, an initiative to take over towns and counties by moving libertarians in to vote local government more or less out of existence. Vehicles parked around the campground had bumper stickers in support of Bitcoin, agorism, Ayn Rand, cryonics (“Dead? We Can Help!”)—even a Ludwig von Mises vanity plate. The silver pieces carried in velvet bags and pouches, the shirtlessness, braided beards, utilikilts, flags and banners, and plant tinctures and cooking smoke created an atmosphere akin to a heavily armed Renaissance fair. This was one of the first communities in the world trying to use cryptocurrencies for everyday, interpersonal transactions.
The merchants under the boughs of the maples and blue spruce had small scales and calculators and handwritten conversion charts for working out the effective payment value of different precious metals—and smartphones, too, for checking the bid-ask spread and doing transactions in Bitcoin. You could buy gumbo, dry socks, coffee, Wi-Fi access (over an antenna mounted on a trailer, connected to a mysterious 4G network on a VPN with an exit node somewhere in Indonesia), paleo cereal (almonds, pumpkin seeds, coconut flakes), and a book of essays by the American individualist anarchist Lysander Spooner. You could make donations and model an imagined condition that would follow the collapse of the state, the economy, and the world, showing your commitment to their particular future. I found the combination of utopian monies baffling: How could the same people so deeply committed to “hard money,” “honest money,” to barter and bullion and “intrinsic value,” decide to adopt cryptocurrencies—a system made of nothing but buggy software, theoretical abstractions, and complex, brittle shared infrastructure?
I kept asking the wrong question. I assumed the answer to this puzzle had to do with what backed the currency—since much of the contempt for FRNs and other state monies began with the idea that nothing backed them but promises. The notes were “nothing but paper,” warned men wearing END THE FED T-shirts, and the coinage had been debased. (Some transactions in that field were priced in “1964 or before” quarters or dimes—90/10 coins, 90 percent silver and 10 percent copper, as produced by the US Mint from 1932 to 1964, whose metallic value now significantly exceeds their face value.) Gold and silver were useful, even if only as ornament; people discussed other useful assets suited to payments and transactions, like ammunition, with which you could procure venison or maintain the balance of terror with your neighbors—magazines of bullets had the important commodity-money property, as did cigarettes, of being easily subdivided for small transactions, from cartons to packs, packs to loosies.
Cryptocurrencies here seemed like a paradox. I was expecting to find an ontological debate, an argument about what made money real, a penny-ante version of the argument between John Maynard Keynes and Harry Dexter White at Bretton Woods seventy years before. (Keynes presented a kind of global settlement money—the “bancor” or “unitas”—built on agreements and the utility of trade: “There should be a supply of the money proportioned to the scale of the international trade which it has to carry.” White argued for a “gold exchange standard,” with the US dollar as the world’s reserve currency. White won, until 1971.)12 What I actually found was an epistemological stance: the similar way these disparate forms of money could be known and verified.
What Bitcoin and silver shared was evaluative: you could, in the words of one minter, “trust in yourself” to verify what you held. Cryptocurrencies in circulation are nothing more or less than records of creation, ownership, and transaction in the blockchain ledger: their existence is constituted by the user-visible records of their existence. Silver is bodily: about palm-feel, biting, body heat, weight both on the scale and in the hand, about the look under different lights. Moneyers I spoke to were not even necessarily opposed to paper currency—no more than von NotHaus had been, with his paper warehouse receipts—as long as they felt they could evaluate precisely how much money was in circulation and have a say in its production (recall e-gold, with its ledger of numbered bars; recall b-money, with its protocol for voting on how expensive to make the production of new money; recall Finney’s “transparent server”). People argued against the use of security features on paper currency, because they serve as a “distraction”: they turn the verification of money into something someone else is in charge of, one more step toward an abstract-institutional world of bancors and international order.
During the Japanese occupation of Indonesia in the Second World War, the thaler—that beloved, persistent silver trade coin—was so widely employed that the Office of Strategic Services (OSS) minted their own for the underground resistance. (The OSS was the ancestor of the American Central Intelligence Agency, cousin of the Special Operations Executive.) Resident OSS mad scientist Stanley Lovell recalled that his crew of master forgers disliked making real money, but he insisted that the OSS’s counterfeit thalers be made with pure silver: “Indonesians would bite the coins and listen to their ring on a hard stone, so I insisted on absolute integrity.”13 Or, as a libertarian mintmaster put it to me in the summer of 2014, “Silver is silver, and the weight is the weight.”
Many of Bitcoin’s seemingly discouraging design choices make a different kind of sense in this light. The whole apparatus of Bitcoin enables verification of the currency, both in particular and in general: you can’t exchange “bitcoins” outside the network, or have them circulate freely—and therefore be obliged to test whether a given bitcoin is the real thing—since there are no bitcoins, only the rights to trade within the closed ledger. They cannot be destroyed (though they might belong to an address for which the private key has been lost, as James Howells’s was, so they can no longer be spent), and they are created at a fixed and finite rate. This verifiability demands an entirely public system—the books are open—and a form of “money” that exists as a record of itself: every notional bitcoin carries its every transaction, from its addition to the ledger onward. You can know what it is, where it’s been, and who owns what parts of it with a precision shared only by certain bars of gold with their assay stamps, four-decimal-place purity, serial numbers, and chain-of-custody documents that account for every shelf in every vault they’ve occupied. Most important, you can do this verification yourself—the responsibility lies with the individual to confirm that their money is real, and to commit to the money’s plan and ideas, and to pay the price if they decide poorly.
Bitcoin as it was built and adopted in the early years had what H. G. Wells said of the gold standard: a “magnificent stupid honesty.”14 The Rube Goldberg complexity of its operation concealed the simplicity of its act: to say, with unerring precision, exactly how much money there is, where it is, and how much more there will be. It is a built version of the fantasy of Mises’s “praxeological” doctrine: to put “at the disposal of acting man all the information he needs in order to make his choices in full awareness of their consequences.”15 Within Bitcoin’s closed universe, perfect verification was possible (at least in theory): hard-money Austrianism reinvented as a video game—SimGold, perhaps—with every rule explicit and specified.
One piece of information was missing, of course: how much a given bitcoin was actually worth. Money is only valuable because people and their institutions take it in payment or exchange, and they do so—if they do so—in the balance of experience and expectation, habit and hope. They believe it can be passed on in turn, redeemed, or settled, whether now or later; that process of thinking takes place in models of history and futurity. Bitcoin’s particular architecture had a story to tell about the future, too—one likewise initially suited to working as libertarian money.
Part of early Bitcoin’s promise of verifiability was set in the future. With the ledger, you know how many bitcoins exist and the addresses of their current owners; you also know how many bitcoins will ultimately exist (twenty-one million), the rate at which they will be introduced (originally fifty, currently twenty-five at a time), and the work it takes to produce them (growing ever more difficult). (As with many aspects of later Bitcoin, this became more complex with time and use: the code is maintained by a group of contributors who could make—and have made—significant changes, provoking much drama; but let us stay with the initial version and its ideas for now.) This produces a monetary system that enormously rewards its earliest users—who got in when the mining was easy, as James Howells did, idly accumulating thousands running the software on his laptop in 2009—and encourages the use of the money as reserve and collateral, or, seen differently, for hoarding and speculation.
Depending on that perspective, Bitcoin may, then, look like either a realistic alternative asset to state-issued monies, which tend toward mild inflation to boost economic growth (with occasional extreme and disastrous exceptions, like Venezuela), or a curious variant of a deflationary currency experiment, or a bubble-generating pyramid scheme whose value is driven by waves of late-adopting suckers trying to buy their way in. Either way, it poses a question for anyone making a payment with bitcoins: Why would you spend or invest a currency that might increase in value beyond anything you might invest it in or purchase with it? Better to squirrel it away, like gold—except that even gold has its uncertainties, from strikes and rushes (California, Australia, South Africa, Tierra del Fuego) to new markets for it as a commodity. Bitcoin’s future is known: decided in advance.
This is a particularly seductive notion for people already prepared for the collapse of the current monetary order. As things go to pieces due to—well, choose your libertarian poison—an idle population addicted to unearned entitlements, the expenditure of blood and treasure on useless wars, the aggrandizement of the state, the death throes of overly regulated capitalism, Bitcoin’s schedule will not vary. (Of course, this assumes a lot of messy real-world contingencies, like continued access to effectively unlimited dirt-cheap electricity, microchip fabrication, and reliable global Internet access.) You can’t lose your bitcoins in a bank run or have them seized from your safe-deposit box. The right to trade them remains assigned on the ledger. All you have to do is wait.
To hold speculative libertarian money is to anticipate a threshold in time, but not the threshold of the Extropian breakthrough on the far side of which lay runaway prosperity, abundance, and hedonistic space cities. The threshold is the imminent emergency, a crisis eagerly anticipated for decades by the political models of this loose community. The speculative money is not helping to bring that future about, as the Extropian projects were. It is not an investment in transformation. Rather, the coins and cryptocurrency units are retrospective artifacts. In the present, the accumulation and storage of apocalyptic goods and currencies in extraterritorial and alternative zones—the caches of fish antibiotics, the repainted and greased AK-47 magazines, the batteries and gas masks—make it possible to imagine the future disaster when this new society would be validated and come into its own. Early Bitcoin businesses sprang up to exploit this shared set of beliefs, offering seeds, survival kits, movement literature, and fund-raising for a 3-D-printed component of an assault rifle, all priced in bitcoins. A T-shirt company that accepted the currency stocked shirts extolling home schooling, raw milk, the threat of gun control, and the prospect of the next financial crisis—with a promise: “Bitcoin Users Not Affected.”16
The most telling of these marketing strategies was the “Passports for Bitcoin” business. It was an extension of an existing scheme to sell fast-track citizenships through the islands of St. Kitts and Nevis (the smallest sovereign country in the Western Hemisphere), involving the citizenship retailer and Bitcoin investor Roger Ver.17 Their advertising copy: “Today’s news headlines are filled with stories from around the globe about upheaval, increased taxes, and governments exerting more and more control over citizens’ freedoms and privacy. The world is rapidly changing and destabilizing, creating more and more risk for people everywhere.”18 This was accompanied by a collage of headlines: “NSA Surveillance,” “Terrorism,” and so on. (After they went bust under murky circumstances, Ver went on to act as a funder and ongoing patron of the Free Republic of Liberland, a project to claim and inhabit a disputed island in the Danube, between Croatia and Serbia, in partnership with blockchain governance projects, using Bitcoin as its national currency.) Bitcoin was an offshore account for a new offshore life—“Swiss bank accounts for the millions,” as StJude put it in 1992—in a currency whose central bankers and economists had been replaced with a scheduled and unvarying payout, shelter from the awaited storm.19
It plugged neatly into the long-standing desire chronicled in the previous chapter for a place outside the existing state apparatus, from which you could cozily observe the inevitable collapse—Galt’s Gulch realized—and emerge to buy up the world at fire-sale prices with your stable money. The libertarian venture capitalist and investor Peter Thiel cofounded PayPal as a platform for, in his words, “the creation of a new world currency, free from all government control and dilution—the end of monetary sovereignty, as it were,” enabling the rapid movement of your money when things went bad. He went on to be a significant funder of a seasteading venture with Patri Friedman, previously seen in this book with the ex-Sealand crew.20 (Thiel later resigned from the board of the Seasteading Institute: “They’re not quite feasible from an engineering perspective.”21 Friedman stepped down to pursue creating a self-governing “charter city” in Honduras.)
Others, discounting the option of a physical exit, envisioned the libertarian outside embedded in ordinary life. In 1936, the libertarian theorist Albert Jay Nock—deeply antidemocratic, like both Thiel and Friedman, as well as an anti-Semite—proposed a movement called “the Remnant.” This secretive community, “building a substratum like coral insects,” would operate in historical and social ignorance of the redemptive disaster; they would hold to the ideals, practice the rituals, keep the money, and wait. “The prophet of the present,” Nock wrote, “knows precisely as much and as little as the historian of the future.” All they can do is prepare for the breakdown, speculating (in both senses) on the ruin and its aftermath.22 The libertarian coin persists, as the Remnant does, as a reservoir of “objective value” in a deluded world, to become current—to be redeemed—once the existing society has been destroyed. In the last sentence of Atlas Shrugged, John Galt makes “the sign of the dollar” over “the desolate earth,” inaugurating the new age.
As emergency money, released in the middle of a banking crisis, Bitcoin was suited to such fantasies, and some of them played a role in its adoption. This was a by-product of the technology’s design choices and the Austrian and libertarian commitments they reflected. The transparency of the ledger and the verification of ownership, the proof-of-work process, the foreknowledge of the introduction of the remaining quantity of new money—everything, the whole apparatus—was designed to produce a single thing: predictable scarcity.
That is what Bitcoin generates. Abstractly, that is all it generates, aside from enormous quantities of heat: verifiable, distributed, trustless scarcity. It provides the certitude that no one else has the right to trade any particular bitcoin, that no copies are being produced, and that the overall number is fixed and will remain so, becoming steadily harder to create. It puts this scarce object into an infrastructure of ownership: the distributed irrefutable ledger of the blockchain—the blockchain that turned out to have so many more interesting and potentially valuable applications, from establishing the ownership of digital artworks to enabling property sharing and access schemes.23
This book opened with the challenge of creating digital cash, data that could pass as money, given that digital technology produces, transmits, and verifies perfect copies. The solution in early Bitcoin was a stroke of perverse genius: to build, inside a global technology of informational abundance, a mechanism that makes one particular kind of data provably scarce and impossible to copy. It should not surprise us that a system designed to create a scarce resource would subsequently, in Nigel Dodd’s words, “appear not only to replicate but exacerbate the self-same inequities of wealth and power that can be found in the existing financial system”—complete with centralized “mining pools,” speculative cartels, and major shares of the total currency held by a small group.24
This book holds many visions: Phillip Salin’s financial system for his own revivification; Tim May’s state-smashing secrets bazaar; Xanadu, a framework for all human knowledge for all time; idea coupons to simultaneously predict and influence the future; a storm-lashed platform notionally offshore of all governments; a dewar transporting its cargo of frozen heads into a hoped-for future. Most of these visions remained sketches, proposals, the occasional prototype, a small company, or a single instance. Not Bitcoin. Bitcoin got built: the infrastructure necessary to produce the permanently scarce digital object really exists, and at a vast scale—the cosmogram in poured concrete, backup generators, QR codes, smartphone apps, and microchip fabrication.
The blockchain is 145 gigabytes at this writing, and being added to by Bitcoin mining facilities that burn, in Nakamoto’s words, “CPU time and electricity”—those racks and racks of boards of chips, putting in quantities of computational work that demand the big Greek prefixes that lie beyond giga-: tera-, peta-, exa-. The miners need electricity: how much precisely is difficult to say, but building in places with inexpensive hydropower or Chinese coal-fired plants is very attractive. All of this goes to solving arbitrary challenges that reveal nothing and produce nothing but difficulty itself in quantifiable form. This ceaseless expenditure, every second of every hour of every day, secures the shared consensus among the nodes that nothing in the ledger has been altered.
Seen from a sufficient distance, the Bitcoin machine is revealed as the built-out version of one of the most abstract fantasies of value ever conceived. It does not make data valuable—only humans and their institutions, accepting payment, thinking of past and future, can do that—but it does make a certain kind of data verifiably rare, and therefore suitable for hoarding, display, begging, conspicuous waste, and status competition. It may well be the purest and most honest expression of a society that could not figure out what to do with its technological inventiveness—its energy, innovation, and abundance—except to squander it in creating new kinds of artificial scarcity: the monumental folly of our age.