Bitcoin as Monetary Protest: The Democratic Challenge to Fiat Money

• In Event: Capitalism in Flux: Flexible Work and Digitalization

Abstract

In 31st October, 2008, in the aftermath of the collapse of the US financial system that would result in the Great Financial Crisis, an anonymous group or person called Satoshi Nakamoto published the Bitcoin white paper, claiming that Bitcoin network “allow[s] any two willing parties to transact directly with each other without the need for a trusted third party” (Nakamoto 2008, 1). Bitcoin’s code, which is a form of digital constitution (Campbell-Verduyn and Goguen 2017; Rajagopalan 2019), verifies and stores transactions with its native currency Bitcoin on a digital public ledger that is verified by nodes (computing power) that participate in the network. To change the network’s rules and its transaction history, 51% of all participating computer power should agree on a new code, hence altering the “constitution” of the network. In the decade that followed its launch, Bitcoin, along with other cryptocurrencies, underwent drastic price fluctuations, became subject to financial speculation, and used by many ordinary citizens all around the world. As of today, there are over 2 million daily active users on various blockchains (as digital constitutions and nations [De Filippi 2018]) who participate in those rule-based networks.
This paper investigates the normative and practical consequences of cryptocurrencies vis-a-vis the political power, whose sovereignty hinges on large part on its control of legal tender (Eich 2022). By focusing on the grassroots, bottom-up challenge of cryptographic technologies to the perceived failures of central banks and financial policies of the elected governments, this paper argues that the new cryptographic technologies enables citizens to resist monetary policy (Malabou 2018) and claim an alternative monetary sovereignty, thereby forcing their governments to follow financial integrity and sound monetary policy (Feinig 2020; Zimmermann 2013). Further, cryptocurrencies offer an interesting challenge to the global hegemony of the US dollar, which threatens the monetary sovereignty of nation states (Pistor 2017). Perhaps with the consciousness of this fact, countries like El Salvador and Central African Republic declared Bitcoin to be their official legal tender, thus adopting this grassroots monetary constitution as their official currency. Given all these features, this paper explores the potential of cryptocurrencies like Bitcoin to challenge the sovereign states’ arbitrary and undemocratic monetary decisions. In that sense, the paper approaches the monetary resistance posed by the emerging cryptographic technologies from a neo-republican perspective: In The Social Contract, Rousseau notes that in a republican government, “each, by giving himself to all, gives himself to no one, and since there is no associate over whom one does not acquire the same right as one grants him over oneself, one gains the equival­ent of all one loses, and more force to preserve what one has” (Ch. 6, 8). I suspect that a digital constitution like Bitcoin enables such participation. One tangential aim of my research is to challenge the techno-skepticism of the Left and demonstrate that seemingly speculative and “eccentric” digital counter-publics can function as legitimate ways of challenging unaccountable government policies.
The aim hereby is to sketch out the philosophical and political challenge posed by new monetary technologies against the unelected financial authorities such as central banks. While such challenges and protest-like adoptions of these new monetary experiments contain libertarian and anarcho-capitalist tendencies, they seem to converge with left-wing critiques of financial capital and capitalist, privatized money (Eich 2022).

Author

• Utku Cansu, Princeton University