Thursday, 6 November 2014
Does Bitcoin spell the end for big government and big business?
I have just read Bitcoin: The Future of Money by Dominic Frisby published by Unbound. I read it in one sitting. It is a fantastic and fascinating book.
Dominic makes a compelling case that Bitcoin, or more likely one of its cryptocurrency cousins, spells the end for big government.
He makes the point that the huge expansion of the state in the last century was funded through taxation, borrowing or printing of money. All of these things are much harder to do if a government does not issue and control it own currency. This is why cryptocurrencies are such a threat to the big state. They are issued not by governments or central banks but by computer code and the activities of a decentralised network of individuals and organisations.
But what made me really sit up was the discussion towards the end of the book about an initiative called Ethereum. It is slightly mind-boggling but, in essence, Ethereum is taking the highly secure, highly private and highly decentralised technology of Bitcoin and using it to enable a wide range of other activities on the web not just the production and use of currency. This could include the establishment of business partnerships, social networks, new apps and various other web platforms.
Bitcoin has proved that so-called Distributed Autonomous Organisations (DAOs) can work and work very well using a technology called 'block chain'. A DAO is simply a body with a certain goal that is driven by mutually agreed partnerships between the individuals in that organisation rather than by the plans of a select group of owners or managers at the top of the body.
This suggests that Bitcoin, or at least the technology behind it, could challenge not just the role of big government but also the hold that the large corporation has over the economy including the new internet behemoths such as Facebook, YouTube and Google.
We may genuinely be entering a new era in which our top down, big, rigid organisations built around high concentrations of power and wealth are challenged by a whole new species of flatter, smaller, fluid organisations in which power and wealth are distributed more evenly or, at least, in which established distributions are more ephemeral and easily challenged.
As Dominic says in the book, the Bitcoin phenomenon is about much, much more than Bitcoin. It seems to me it may also be a fundamental building block of the 'small revolution'.