The Philosophy of Bitcoin

What is Bitcoin?

Bitcoin’s status as a currency or commodity may not yet be mainstream, but the social and political sentiment surrounding the cryptocurrency certainly is. At its core, Bitcoin is nothing but code. It was proposed as a system that uses a decentralised peer-to-peer network to produce and transfer value tokens. It includes a currency token (bitcoin), a payment infrastructure for exchanging tokens (Bitcoin) and a distributed ledger-keeping protocol (the blockchain). Yet, outside of its technical features, Bitcoin can also be viewed as a social movement, albeit one that is diffuse and difficult to pin down.

As Bitcoin occupies more space in our social imaginary — the shared values, beliefs and institutions that comprise society — it has become both a staging ground for debate around the cultural role of money and a disruptive technology intended to intervene on our existing power structures and monetary system.

Within Bitcoin’s information protocols is an attempt at designing a new social contract. This is because Bitcoin is not just any protocol for moving and storing value. Instead, Bitcoin has rules and values embedded in it that are often misunderstood and seldom acknowledged. To understand what Bitcoin is — and what it can be in the future — we need to consider its philosophical origins and the lineage of ideas that led to its creation.

What was Bitcoin?

Before the anonymous Satoshi Nakamoto first proposed Bitcoin in 2008, the idea of ‘digital cash’ first emerged within the cypherpunk and crypto-anarchist subcultures of the 1990s. These were largely online communities that were committed to upholding principles of freedom and individual autonomy. Both groups viewed cryptography and other related technologies as a social tool capable of enacting political reform. They believed that encrypted technologies that were outside of the purview of government and corporations were essential for achieving an open and free society.

The Cypherpunks viewed privacy as an indispensable right and believed that individuals should be able to freely conceal and reveal personal information. Foreshadowing a future where informational infrastructure and online data would be controlled by government and corporate entities, the Cypherpunks viewed themselves as a vanguard to protect privacy rights — their tagline being that no one could have privacy unless everyone did.

The only way to ensure privacy is to ‘write code’ (as Eric Hughes states in the Cypherpunk Manifesto) capable of making anonymous communicative systems a reality. Crypto-anarchism extends the Cypherpunk logic of privacy and free-expression to free-markets where contractual relationships and trade could be free from governmental regulation.

Digital Money

Both the Cypherpunk and crypto-anarchist ideology envisioned a cryptocurrency that would serve as the building blocks of a new society. For the Cypherpunks, selectively revealing one’s economic activity and transactional information was a cornerstone of privacy and for the crypto-anarchists having a monetary system that was disintermediated from the state and centralised banks was a necessity for freedom.

During the late 90s and early 2000s, there were several attempts at designing and implementing systems that followed a cryptographic governance structure. These attempts aimed at building decentralised infrastructures that would untether money issuance from government. One of Bitcoin’s predecessors was a concept called ‘bit-gold’ in which developer Nick Szabo proposed a system where computers mined for scarce digital commodities — a model that would be executed with Bitcoin.

Bitcoin as a Social Movement

The desire for non-state money in the form of cryptocurrency was driven by the need for an alternative to a monetary system that was producing recurring depressions and increasing inequality. The politics of Bitcoin resisted the centralised mediation of currencies and payment systems that were seen to be threatening user-privacy, eroding civil liberties and devaluing money through state and corporate mismanagement. In this sense, we can view Bitcoin as a social movement that responds to the political dimension of money: Who controls it? How much is produced? And to what ends?

Bitcoin is a response to corporate mismanagement and distrust in institutions

Early Bitcoin communities seemed to unite around the populist sentiment that is characterised by a distrust in institutions and surveillant business models. Accordingly, Bitcoin’s ideological roots posed a challenge to the alliance between the state, central banks and private financial institutions that form the basis of our modern capitalist system.

Bitcoin’s technical features encode this sentiment so that it is censorship resistant, radically inclusive and ensures transactional freedom. As a result, Bitcoin’s informational protocols are the encoding of specific social and political values that rely on algorithmic governance rather than trust in a centralised power.

What is the Future of Bitcoin?

Like any technology, Bitcoin does not remain at the whim of its creator. This is because technological artifacts cannot dictate social behaviour by themselves but are acted upon and directed by human forces. That is, Bitcoin both shapes and is shaped by its practical use.

The philosophical origins of Bitcoin were an amalgamation of new and technologically innovative ideas that were borne out of the intersection between Cypherpunk and crypto-anarchist elements. Through a decades-long conversation of words and code, a currency that is native to the internet and was created to safeguard the future had emerged.

Like its birth, the future of Bitcoin and its underlying technology of blockchain will be asynchronous and shaped by its users and developers. In this sense, the deliberate anonymity of Bitcoin’s creator is perhaps a statement about the technology itself, as an email address linked to Satoshi said in 2015, ‘We are all Satoshi’.