A recent diary did an interesting job mocking bitcoin, the digital currency favored by libertarians. Although bitcoin has serious flaws, liberals who make fun of it and fail to see the amazing potential of this innovation are missing the point and missing a big opportunity.
I'll get right to the point: Bitcoin is a legal and government-regulated alternative currency, based on open source code. Anyone in the world -- with any political ideology and specific ideas for a different kind of monetary system -- can take the bitcoin code and modify it to create a different digital currency with the features they prefer. Just because bitcoin is the first one that has achieved a multi-billion dollar market cap doesn't mean it will be the last, or necessarily the most successful in the long term.
Many alternative currencies based on the bitcoin code have already been created, ranging from serious ones to joke coins such as "dogecoin." Most of them are get-rich-quick schemes that concentrate wealth in the hands of the early adopters. But it doesn't have to be that way. The technology exists to create a different kind of digital currency based on different values.
The rise of bitcoin -- and the willingness of major governments such as the United States and Germany to consider private digital currencies as real monetary units and legal means of exchange -- has opened the door to the possibility for revolutionary change in the monetary system.
Liberals who mock bitcoin because it's a libertarian invention and currently has some security flaws may be unaware that liberals could create their own digital currencies to compete with bitcoin and the U.S. dollar, and that the security flaws of all digital currencies could be solved with further work by skilled software developers.
The invention of private forms of money may be a much-needed populist alternative to the mainstream, government-issued currency that is managed and distributed according to the interests of Wall Street. The monetary system that controls the U.S. dollar is corrupt, undemocratic and unaccountable, and funnels more and more money to the already rich. When the Federal Reserve creates new money, they do so by giving it to wealthy investment banks, which use it to buy stocks and risky financial instruments such as derivatives. Most of the new dollars being created by the Fed never "trickle down" to ordinary people who run small businesses on Main Street, or who are struggling to pay their bills because of unemployment, underemployment, and the lack of demand in the economy caused by the accumulation of wealth at the top.
The people who created bitcoin didn't like the idea of a centrally managed money supply -- in part because, as libertarians, they are against centralized authority as a matter of principle -- but also in part because everyone should be appalled by the way the mainstream global economic system is based on cronyism at the highest levels: bankers scratching each others backs, giving each other free money created out of thin air and accumulating more and more wealth and power for themselves.
We progressives justifiably believe that some kind of central banking is necessary to create a stable economy, but that doesn't mean we should embrace the Fed and reject the innovation of digital currency entirely. There are ways for digital currencies to include central banking. There are ways for digital currencies to avoid creating more economic inequality, and all the other philosophical and structural problems associated with bitcoin. Alternative cryptocurrencies that learn from the mistakes of bitcoin could make a positive difference! I myself have thought of some detailed ideas for how this could be done, technologically and organizationally. Anything is possible, if you understand the technology and have a creative mind and want to come up with potential solutions to reform the monetary system.
Anyone who wishes to discuss this subject with me in more detail, I invite you to message me. I look forward to a constructive discussion about the potential of digital currency to advance the cause of economic justice.