Jean-Jacques Rousseau and Adam Smith have long been powerful symbols of two very different approaches to the 18th century Enlightenment: the one liberal, the other democratic; the one for individual rights, the other collective sovereignty; the one focused on the economic, the other on the political; at bottom, the one for Enlightenment, the other mainly against it. In some versions of this story, such as the one articulated by F.A. Hayek, the two authors represent not just two different paths to modernity but two different national styles: Smith is not just the emblematic liberal, but the archetypal Anglo-Scot, with Rousseau…
Nathaniel Popper’s Digital Gold is a wonderfully researched, fast paced narrative of the beginnings of Bitcoin. As its subtitle, The Inside Story of the Misfits and Millionaires Trying to Reinvent Money, suggests, its emphasis is on the colorful cast of characters who got Bitcoin off the ground. In my last post, I described the mechanics of Bitcoin—a potential instrument of freedom from the state. In this post, I describe how the development of Bitcoin itself exemplifies another aspect of liberty– spontaneous order. Different individuals with different interests combine in ways no central planner could direct to transform an idea into a valuable commodity that may someday represent a sufficiently stable source of value to become a currency. It is the story of a Platonic form becoming a reality in the messy cave that is our world.
Bitcoin has no intrinsic value whatsoever. It began as an algorithm that generates tokens in cyberspace. Popper shows that in 2009 and 2010 computer geeks were the first group to take an interest. They mined coins and provided the computer power to verify transactions because they admired the algorithm not because they want to make money. It is an appreciation of beauty that gives Bitcoin its start,
These transactions remained more akin to a game with monopoly money. But another group—people who wanted to engage in illicit transactions– did find an actual value, exploiting the anonymity of Bitcoin.
When I was a student, my friends and I would stay up all night to discuss such questions as the truth or otherwise of determinism. Was the entire future of the universe immanent in its past, indeed had everything been determined from the very foundation of the universe (if it had one)? If so, what of our supposed freedom?