Bitcoin and ethics

Recently I have been following and participating in some political discussions on IRC and the Bitcoin forums. What has impressed me is the diversity of political opinions expressed in relation to Bitcoin. In one discussion you can find a person defending libertarian islands, while in another someone else is espousing the virtues of socialism. Although it would be fair to say that the majority of those who express their opinions on these fora are skeptical of the state and critical of the status quo, you also find quite a few who support traditional parties, their platforms, and representational politics as conducted in North America and Europe.

What seems abundantly clear to me is that Bitcoin is not a political movement. Oh, I already hear my critics raising their voices at me! People are accustomed to think these days that everything is political. If the feminist movement of the late 1960s taught that “the personal is political”, then the culture wars of the 1980s, and the environmental movement have just reinforced the idea that whatever you do not only reflects on your political commitments but itself has political repercussions. Unfortunately, however, this is a false view of things.

Long ago anthropologists noticed that there was a big difference between what people say about what they do and what people actually do (the classic reference here is Malinowski, but I would also cite a much more recent discussion in Ferguson). If there is such a thing as a human universal, this might be one of them. I want to elaborate on this observation by distinguishing between politics and ethics. Politics, in this case, is how people frame some of their actions. Ethics refers to the actual codes of conduct and infrastructure that structure relationships between people. What might throw some people off is that I am including infrastructure in my definition of ethics. The infrastructure that I am referring to is that which determines or shapes social relationships. Since the type of buildings, neighborhoods, the type of transportation systems we choose to build, the technologies we use, all impact the relationships that we have with others, then in as much as we choose these things, these choices are ethical.

When you ask someone why they use Bitcoin, for example, they will likely give you an explanation that will tell you about their political views or personal values. The fact that two separate people, an anarcho-capitalist and a socialist, will give you two very different arguments for using Bitcoins suggests that you are learning more about their political beliefs than about Bitcoin itself. Bitcoin is in fact enabling new types of exchange and human relationships that have never been seen before. The political discussions, however, don’t tell us much about these in concrete terms because they are subsuming the novelty of Bitcoin to a political framework that was elaborated before Bitcoin came into existence.

By simply using Bitcoins in a way that conforms to the standards and technologies of the Bitcoin community and market, a person implicitly buys into a new way of interacting with others. This way of interacting couldn’t have been described in detail before the technology was invented and adopted. This is what I am calling the new ethics of Bitcoin. An anarchist and a socialist may vehemently disagree about the role of the state, for example, but in as much as they both use Bitcoin they implicitly subscribe to the same ethic. By using Bitcoin they are choosing for themselves specific technologies (infrastructure) and certain codes of conduct that shape their interactions with others in similar ways. They may disagree politically, but agree ethically.

So what is the Bitcoin ethic? Bitcoin structures relationships between individuals and computers by putting them into a relatively distributed network. Bitcoin is the most successful attempt to date of a peer-to-peer currency. The ethic of Bitcoin: 1) is universalist (potentially everyone with an Internet-enabled computer or handheld digital device could use Bitcoins); 2) diminishes the need for mediation (one individual can send another person on the other side of the globe Bitcoins without the mediation of a bank, a middle-person, or institution); 3) privileges transparency (the code is open-source and the process and rate of minting coins is known in advance); and 4) is immanent (the value of Bitcoin is restricted to the actions of those who participate directly in the market and does not depend on a central bank, government, or other external institution). These are the basic features that structure relationships between Bitcoin users no matter what their political persuasion might be.

These features, and others that I have not mentioned, form the ethics of Bitcoin. They are the codes of trade and human interaction built into the Bitcoin software system and supported by the network and community of Bitcoin users. It does not matter how conscious a Bitcoin user is of the fact, but by merely participating in the Bitcoin market he or she is implicitly subscribing to a Bitcoin ethic, that is a Bitcoin way of exchanging value and relating to others. If you ask users why they use Bitcoins, you could really get as many answers as people you ask. But if you pay attention instead to what people are actually doing with Bitcoins, whether mining, exchanging, making payments, or speculating with them, they are engaged in a distributed (relatively non-hierarchical) network of individuals unlike any that we have seen before. They are participating in a new mode of transacting. I call this new mode of transacting an ethic. And even though many Bitcoin users would be able to tell you why the Bitcoin ethic fits well into this or that political ideology, the ethic is something that we should understand as being common to all Bitcoin users no matter how they choose to frame their actions.

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4 responses to “Bitcoin and ethics

  1. julz August 20, 2011 at 11:43 PM

    +1
    I think this is one of the reasons the bitcointalk forums were detached somewhat from bitcoin.org
    Too many people seemed to assume a particular political agenda was the ‘right’ one for bitcoin – and trumpet it obnoxiously. Spending time on the forums, you do see that there is a diversity – but casual browsers could mistake certain ideas being floated around as somehow ‘mainstream’ in the bitcoin community.

  2. Jeff August 21, 2011 at 1:18 PM

    Using economic and historical reasoning, what will be the long-term political ramifications of such a Bitcoin ethic? “Political” used in the sense of how it impacts personal framing of concepts such as “state”, “citizen”, and “legitimate authority.”

    Agorists might argue for example that Bitcoin ethics ultimately undermines traditional concepts of state power. It would matter not if other individuals desired this outcome or not, or indeed if this result was contrary to their political idealizations. The result would simply be a consequence of a generalized preference for Bitcoin ethics as you have described it. An answer based not so much on “what is right,” but rather on “what can we expect given sustained subscription to Bitcoin ethics.”

  3. presentcynosure August 21, 2011 at 5:26 PM

    @julz, yes, it seems very probable to me that you are right about this.

    @Jeff, as you say, the more people subscribe to the Bitcoin ethic the greater the chances that Bitcoin will end up changing the political system. Whether or not Bitcoin will grow to a level to significantly impact the political system, depends on contingencies whose outcome I believe would be impossible to predict at this point. If the block chain cryptographic model that Bitcoin implements proves to be secure in the long term, and people grow to trust it, one direct way that this technology could impact politics is that it could transform the voting process. Bitcoin could just be the beginning of entrusting a whole series of social processes to open-source peer-to-peer technologies. But, again, whether or not that comes to pass has to do with many contingencies that would be impossible to even know about at this point.

  4. Aaron Whittington February 7, 2014 at 2:07 PM

    Many ethical questions arise from the invention of Bitcoins and digital currencies in general. Digital currencies found in games are limited in scope because the items you can purchase are only found in the game store and most of the time are not physical items. Bitcoins can be used for physical items and may, eventually, compete with other national and international currencies.
    One thing to consider is the ability for people to manipulate or hack the system and increase their Bitcoins exponentially. This can cause a severe economic imbalance almost akin to legal theft. This is a larger concern when Bitcoins do compete with other currencies because if something like this occurs it could destabilize another currency in a matter of seconds.
    Secondly we must think if Bitcoins are in the benefit of the overall benefit of the international community. “We are now starting to see how this emphasis on community well-being has crucial consequences for our notions of property and thereby such common acts as copying and distributing via digital media.” (Ess, 2009) Certainly, from the example above it is easy to see that a system such as Bitcoins does not benefit the well-being of the international community. This issue increases if we look at the possibility of money laundering using Bitcoins. Any organization could accept Bitcoins in exchange for weapons, narcotics or other illicit services and the merchant could turn around and use the Bitcoins for legitimate purchases.
    Digital currencies do have a place in society. But because of their ability to be abused should be limited to purchasing immaterial items or individualized for each merchant similar to reward points that can be earned and used only to purchase certain items in a limited digital store.

    Bibliography
    Ess, C. (2009). Digital Media Ethics. Malden, MA: Polity Press.

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