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     Mar 5, '14

Bitcoins and Bakunin
By Martin Hutchinson

The disappearance of the Bitcoin trading website Mt. Gox caused consternation among younger libertarians, who had seen cryptocurrencies like Bitcoin as a vital weapon in the struggle against Big Government. For those like myself with almost as much suspicion of the tech sector as I have of Washington, it

caused a smile of grim satisfaction. In reality, Bitcoin represents the world of Mikhail Bakunin more than that of Adam Smith; for true libertarians, it fails on a number of criteria that sound money must fulfill.

I wrote about Bitcoin in December in a piece "Mississippi Bitcoin" comparing it to John Law's 1718 Mississippi Scheme (another radical new monetary invention). An open source "crypto-currency" devised in 2009, Bitcoins are created by solving algorithmic problems that get progressively more difficult, with a finite overall all-time limit of 21 million. This restricts the overall Bitcoin money supply and is supposed to ensure that their value will over time increase, since their creation cost also increases.

The a priori attraction of Bitcoin to libertarians was obvious, as was its attraction to speculators. If the supply is limited and the price has a strong upward trend as its finite supply attracts new users, libertarians see Bitcoin as an exciting technological equivalent of gold. Speculators such as the Winkelvoss brothers see it as an investment asset with the odds stacked heavily in the investor's favor.

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Martin Hutchinson is the author of Great Conservatives (Academica Press, 2005) - details can be found on the website www.greatconservatives.com - and co-author with Professor Kevin Dowd of Alchemists of Loss (Wiley, 2010). Both are now available on Amazon.com, Great Conservatives only in a Kindle edition, Alchemists of Loss in both Kindle and print editions.

(Republished with permission from PrudentBear.com. Copyright 2005-14 David W Tice & Associates.)




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