The 2020 Index of Economic Freedom, published by the Wall Street Journal and Heritage Foundation “measures the degree to which a country’s laws protect private property rights and the degree to which its government enforces those laws.” Countries like Singapore that score highly on the Property Rights Index have greater GDP per capita on average, and vice versa.
In practice, would you be motivated to work hard if your savings could be unjustly confiscated at any moment? In many developed countries like the United States, democratic rule of law protects against such scenarios. Yet for billions of people worldwide, this is a distressing possibility.
For billions, there is a similar force that is equally disheartening: What if your savings devalue by >3.5% each year due to a force known as inflation? Oxford defines inflation as a general increase in prices and fall in the purchasing value of money.
Bitcoin offers freedom from political repression—and that’s a key to its future
Governments cannot control or monitor the behavior of Bitcoin users as they can in the legacy financial world. That’s a huge advantage.
Demonstrators take part in a protest against police violence in Minsk, Belarus. Bitcoin donations have played a key role in funding the country’s protest movement. Stringer/AFP/Getty Images
Bitcoin is more than just the hot investment of the moment. It’s poised to become the central player in the future of money itself. Money, which has evolved through the millennia from cowrie shells to clay tablets to precious metals, bank notes, and bank balances, is taking another step into the future. Money is becoming digital.
Governments may be eager to defend the status quo where states and state-based institutions have a monopoly on money printing, and corporations also have their sights set on the reinvention of money. But there are a number of factors that over time will work in Bitcoin’s favor, including:
First, Bitcoin is censorship-resistant and offers freedom from financial repression.
Second, Bitcoin is emerging as the natural successor to gold as a store of value.
Third (and somewhat counterintuitively), Bitcoin is benefiting from the efforts of legacy financial technology and payments companies like PayPal, Square, and Visa that are making Bitcoin available to their hundreds of millions of users and millions of merchants.
Fourth, Bitcoin is being embraced by large public companies and other institutions as a viable alternative to cash and other assets on their balance sheets or in their portfolios.
Naturally, we must pay attention to the dark side of emerging technology. Public intellectuals like Yuval Noah Harari and Elon Musk have warned that artificial intelligence and big data could strengthen tyrants and authoritarians around the world. Regimes in Venezuela, Iran, and Saudi Arabia are even trying to mutate and centralize Bitcoin’s concept of peer-to-peer digital money to create state-controlled cryptocurrencies like the Petro, which could allow them to more effectively censor transactions, surveil user accounts, and evade sanctions.
But decentralizing technologies can provide a countering force. Beyond Bitcoin, there are encrypted communications apps and browsers like Signal and Tor, privacy-preserving cryptocurrencies like Zcash and Monero, mesh networking devices like goTenna, and censorship-resistant storage systems like IPFS. By building on and investing in tools like these, we can ensure that our cities, social networks, and financial systems don’t turn into tools of surveillance and control.
Cash remains one of the best ways to exercise free speech. Paper or metal money is virtually anonymous, and can be used without government surveillance. But in places like Venezuela, where bills are weighed in stacks by the kilogram even for small transactions, cash is increasingly impractical, and it’s vulnerable to theft or seizure. And from China to Sweden, governments and companies are driving us toward a cashless world. It’s essential that we explore electronic money that can preserve the peer-to-peer quality of cash for future generations. When you pay someone with software like Venmo, you might use three or four financial intermediaries, even though the recipient might be standing in front of you. Each intermediary can potentially censor, surveil, and profit. And the billions of humans living under repressive regimes can’t expect most payment software in the future to remain as innocent or benevolent as Venmo.