The political problem of Bitcoin

For a criptocoin succeed, its proponents must recognize that it is difficult to divorce money from politics



Money is always a political issue. Something that becomes apparent when we discuss the policy of the Federal Reserve of the United States, or who should lead the institution responsible for setting interest rates . For over a thousand years, we have discussed the nature of our monetary system and have gone through different ways to make payments. Seen in this historical context, Bitcoin and other criptomonedas are just the latest in a long list of challenges to the prevailing technology, and existing political arrangements.

The dominant design of the current monetary system is based on a western tradition that can be traced to the silver denarii of the emperor Charlemagne and before the organization of the Roman Empire . This design bases the amount and nature of money in the economy in an interaction between government policies and private individuals who wish to have. Continued political pressure and repeated technological opportunities have been numerous changes in the model over the years. The rise of Bitcoin may be one more round of that process.

Enthusiasm for criptomonedas is based , in part, at a very reasonable frustration with our existing agreements. The leftists who distrusts power accumulated by global megabanks in recent decades has joined the right-wing people who believe that the government takes too much space. But history suggests that building a system of national and international payments entirely outside the control of governments will not be easy .

For starters, the money has value only to the extent that can be converted into goods and services . And at the time of conversion , governments will have much say in the matter , for example if you paid taxes, or if the transaction is legal.

Secondly , it is very difficult to create a technology that hides transactions governments altogether. The movement of goods, people and information can always be traced , as shown by the case Silk Road.

Third, there will be a political backlash led by the powerful interests of the banks. Highlight any illegality in the Bitcoin system and make political pressure for restrictive legislation .

Enter this battle will be very difficult . It would be much more reasonable than the Bitcoin community and its allies launched a proactive political strategy. Could focus on the fact that currently illegal payments already made ​​worldwide using hundred dollar bills and you need to reduce transaction costs in countries where the legal power is weak and there is a high risk of theft . One could argue that Bitcoin to operate more transparently not destabilize the credit system and undermine the ability of small banks to get a reasonable profit.

The monetary system of the United States and the world has changed many times and will definitely do it again. In the late nineteenth century, for example , was a general push to reform the monetary system and credit of the United States . Ideas that was initially rejected by populist , and away from a very strictly defined gold standard , became commonly accepted ideas in just one generation .

Certainly new technologies can provide better ways of organizing transactions . But it is unlikely that simply assume that you can move from state to function . Bitcoin needs a political strategy must evolve to meet the legitimate criticisms that poured against him.