BEGINNER

Alternative Currency

Digital Currency for a Digital Age



  • Money is a medium of exchange, unit of account, and store of value that helps people trade for goods and services.
  • Throughout history, governments have claimed a monopoly on money through exclusive rights to print currency and through central banks.
  • New digital "cryptocurrencies" meet all the standards of money, but are decentralized, taking money out of the realm of public policy and central planning and placing it in the hands of the people actually using it.
  • Digital cryptocurrencies allow for quick monetary exhange between any two people anywhere on the planet, regardless of whether they have a bank account or credit card. 
  • When currencies are allowed to compete, individuals are no longer locked into saving their earnings in a single government-run currency whose value can be diminished through inflation.
  • Many sellers currently accept digital cryptocurrencies, such as bitcoin, for all manner of products and services, including food, clothing, and software. 
 
Alternative currencies like bitcoin have shown us that money can be improved by the application of the same human energy, creativity, and crowdsourced, real-time information that has made everything else better. This is an epic insight, one that fundamentally shakes up monetary economics, payment systems, and even the involvement of all peoples of the world in the global division of labor.
 
In the last 100 years, nearly everything in our economic lives has improved in ways no one imagined possible. Mass distribution of books, medicine, indoor heating, food, cars, flight, refrigeration, clothing—and that digital technology put progress on fast forward is by now a cliché.
 
But there is one good that has not improved but rather has gotten worse and worse: money itself. It used to be defined by something real—gold—but governments gradually redefined money as paper, precisely so they could fund wars and welfare and run up debt without limit. Collaborating with an industrial cartel called the banking industry, money’s value fell for a hundred years to carry only 5 percent of the purchasing power it once had.
 
Also in the course of time, the central management of money has become ever less transparent, less stable, and riskier. Vast resources today are expended (and extracted from the people) just to make sense of the system and keep it from breaking down. This is the underlying reason for the trillions in bailouts, the manipulations and corruptions, and the political depredations of the government-financial complex. When the money goes bad, nothing else in economic life really works the way it should.
 
It’s true that payment systems today have adapted brilliantly, given that the unit of account is of such poor quality. But even so, the credit card system built on top of the government paper-money system is a patch in the age of the Internet. Every digital transaction with government money opens up dangers of identity theft, fraud, and resource misallocation. The costs are egregious and anti-competitive.
Alternative currencies like bitcoin takes dramatic steps in two directions. On the one hand, they restore money as a form of property with the assignment of ownership titles. What’s being traded is not a trust relationship but an owned resource. In this respect, alternative currencies recall the honesty and integrity of the gold-coin standard.
 
On the other hand, they hurl us forward in time by making geographically non-contingent monetary exchange possible between any two individuals on the planet, irrespective of whether they have a bank account or credit card. This is the feature that makes a crypto-standard much improved over any proposed gold standard.
 
The emerging cryptographic monetary standard entirely bypasses the age of fiat money and the age of central banking. It takes money out of the realm of public policy and central planning and places it in the hands of the people actually using it. Of all the features of Bitcoin, this one is perhaps the most beautiful. It has emerged from within the social order and was not imposed from above.
 

Related Freeman Articles

INTERVIEW

A Bitcoin for Your Thoughts

An interview with a full-time Bitcoin trader

NOVEMBER 11, 2013 by THE FREEMAN

What's it really like to live with BTC? We decided to ask a BTC trader, who wishes to remain anonymous, for some commentary from the inside of the BTC community.

ANYTHING PEACEFUL

Free Money for Everyone

Radical entrepreneurship in Bitcoin makes it the exemplar

NOVEMBER 11, 2013 by MALAVIKA NAIR

The surge of entrepreneurship around Bitcoin includes solutions to asymmetrical information problems that might hold back its acceptance.

THE PURSUIT OF HAPPINESS

Fifty Ways to Leave Leviathan

OCTOBER 02, 2013 by MAX BORDERS, JEFFREY A. TUCKER

State management doesn't work. Fortunately, innovation does. Here are just 50 ways that people are figuring out how to work around government obstacles, hastening the State's obsolescence.

ANYTHING PEACEFUL

Fun and Fascinating Bitcoin

SEPTEMBER 26, 2013 by JEFFREY A. TUCKER

Bitcoin has shown us that money can be improved by the application of the same human energy, creativity, and crowdsourced, real-time information that has made everything else better.

PERSPECTIVE

Hacking Leviathan

SEPTEMBER 03, 2013 by THE FREEMAN

The same system that saddled us with Leviathan is unlikely to liberate us from it any time soon. We have to come up with workarounds on our own. Hacking Leviathan--that is, coming up with clever, peaceful, voluntary ways around the State's roadblocks--constricts the State's predations in actual fact while the Beltway types bloviate and cut back-room deals.

ONLINE EVENTS

FEE offers live online events for people new to the economic, ethical, and legal principles of a free society.

CURRENT ISSUE

April 2014

Around the world, people are struggling to throw off authoritarianism, with deeply mixed results. From Egypt to Venezuela, determined people build networks to overthrow their regimes, but as yet we have not learned to live without Leviathan. In this issue, Michael Malice and Gary Dudney discuss their glimpses inside totalitarian regimes, while Sarah Skwire and Michael Nolan look at how totalitarian regimes grind down the individual--and how individuals fight back. Plus, Jeffrey Tucker identifies a strain in libertarianism that, left unchecked, could reduce even our vibrant movement to something that is analogous to the grim aesthetic of architectural brutalism. The struggle for our lives and freedom is a struggle for beauty; it begins inside each of us.
Download Free PDF

PAST ISSUES

SUBSCRIBE

RENEW YOUR SUBSCRIPTION

img E-mail Subscription

VIEW PRIVACY POLICY