The Centre for Digital Assets and Democracy has been built on the democratic principle that everybody should own and control their own assets, with the state and its agencies acting as enabling and directly accountable public servants. Bitcoin Policy UK are delighted to be working with the team and encourage you to check out their website above. This article is intended as an introduction to Bitcoin for the new and the curious, with a focus on its utility as a tool for freedom.
Following in the footsteps of eCash, B-money, BitGold and HashCash, Bitcoin is the first globally implemented and best-known cryptocurrency, emerging in 2009 as a new form of digital cash, born out of the cypherpunk movement and the turmoil of the global financial crisis.
This article explores what makes Bitcoin unique, its inclusive nature, the financial and social problems it addresses, and why it both allows and symbolises freedom in this digital era.
Bitcoin was created by an individual or group using the pseudonym Satoshi Nakamoto, whose true identity remains unknown. Unlike traditional fiat currencies, Bitcoin enables its users to transact in a peer-to-peer manner online, without a centralised authority in the way. It does this on a decentralised network using a blockchain – or, as Nakamoto described it, a ‘distributed timestamp server’, whereby network participants achieve consensus as to the sequence of transactions on the network without the imposition of any centralised control.
Bitcoin is unique both in the decentralisation of its ‘decision-making’ process, and in its distributed nature. Changes to its code or its monetary policy cannot be implemented without rough consensus from participants in the network, and updates to the code are both voluntary and must be backwards compatible, which means that no new version of the code is ever forcibly pushed to the computers that are running the Bitcoin software. The operators of those computers must voluntarily choose to install that new version, or may continue running an old version if they so wish. This is crucial to the game-theoretical nature of the Bitcoin network – at every step, the best interests of the participants (whether node-runners, miners, or users) are almost always served by honestly following the rules rather than by being dishonest and attempting to game the system. Any form of dishonesty will always be more costly than playing along.
At the hardware level, Bitcoin comprises a network of computers. Some are called nodes, and these maintain the constantly updating copies of the ledger of transactions. Others are called miners, which are responsible for determining the sequence of those transactions.
Nodes validate the transactions that are broadcast to the network. Crucially, when considering Bitcoin’s power as a tool for freedom, no person on earth can prevent the broadcast of a transaction to the network, or stop such a transaction being accepted as valid by the nodes if it is correctly signed and satisfies certain other criteria determined by the software.
These nodes maintain the distributed ledger that records all the transactions that have ever taken place, back to what is known as the Genesis Block. Nodes are located across every continent, in dozens of countries. This wide geographic distribution means that Bitcoin is not under the physical control of any single entity or government, and nor is its monetary policy at the software level. These characteristics set Bitcoin significantly apart from traditional currencies and, for that matter, other cryptocurrencies. Bitcoin’s technology ensures transparency and security, as the public ledger is immutable and every transaction is permanently visible to everyone on the network. Essentially, it is a global currency outside of governmental control. Wei Dai, with whom Satoshi corresponded before the initial launch of the network, famously said,
“there has never been a government that didn’t sooner or later try to reduce the freedom of its subjects and gain more control over them, and there probably will never be one…. Therefore, instead of trying to convince our current government not to try, we’ll develop the technology that will make it impossible for the government to succeed.”
In Bitcoin, Satoshi and the developers who have worked on the system since launch have done exactly this.
But the system is not simply about these more obvious freedoms. Traditional banking systems exclude a substantial portion of the global population due to stringent KYC requirements. For example, a fixed address is a prerequisite for an account and arbitrary geographical limitations can restrict the free flow of capital across borders. Bitcoin offers an alternative. By enabling transactions over the internet, which is agnostic to national borders or state lines, Bitcoin freely provides financial services to anyone with internet access and the ability to access a free and open-source global money that lives natively on the internet. Bitcoin is impervious to capital controls or government diktats. It will not judge you and is scrupulously fair: if your transaction is validly made according to the rules of the network, it doesn’t matter how rich or how poor you are, your transaction will be completed and secure. If you follow the rules, which were set by the Bitcoin architecture at the start and operated without intervention ever since, you have complete freedom to transact.
This inclusivity is crucial for narrowing the divide between the banked and unbanked communities, particularly in remote or underserved regions, and for individuals who have been marginalised whether owing to state action, discrimination, or their unconventional views. In this sense, Bitcoin frees its users from the restrictions and control both of international borders and authoritarians within nation states who seek to restrict or control the transactional capabilities and freedoms of their citizens.
Bitcoin also eliminates the need for centralised intermediaries such as banks when involved in transactions, leading to lower fees and faster transaction times. To give an example, in 2021, a Bitcoin transaction worth USD 2 billion incurred a fee of only 78 cents and was confirmed in roughly ten minutes. This would be unheard of in the traditional financial system. This efficiency is especially beneficial for international transfers, where conventional methods are often costly and time-consuming, with any number of rent-seekers intervening between the two transacting parties and seeking their slice of fees. And while Bitcoin, being a pseudonymous system, does provide a degree of financial privacy that traditional banking systems cannot offer, at the same time each transaction is public and stored forever on chain. This makes Bitcoin a particularly poor tool for crime and wrong-doing. Only the most foolish of criminals would create a public, permanent record of their misdeeds on the blockchain that they can never hide or alter, and which can be admitted as evidence in court as soon as addresses are linked to real world individuals; as it is increasingly easy to do.
Beyond its financial benefits, Bitcoin fosters a sense of empowerment and community among its users. It enables individuals to have complete control over their assets without reliance on third parties, which autonomy is a significant step towards financial self-sufficiency. The Bitcoin community, which spans the globe, is a testament to the currency’s ability to unify people, joined by a shared belief in the potential of decentralised finance outside of manipulation by governments or central banks.
In jurisdictions such as Lebanon, sub-Saharan Africa and South America, plagued by inflation and unstable currencies, or where the domestic money is volatile, Bitcoin has emerged as a solution, offering an alternative source of value. Its limited supply — capped at 21 million coins — contrasts with fiat currencies that can be printed indefinitely, making Bitcoin a hedge against inflation and monetary debasement. In some parts of the world, it’s a lifeline.
The concept of freedom is deeply ingrained in Bitcoin’s philosophy, true to its cypherpunk roots. By providing an alternative to government-controlled currencies, Bitcoin represents a shift towards a more open and accessible financial system. It gives individuals the power to transact on their own terms, free from the constraints of traditional banking systems, and enables people to make independent choices about their financial well-being, whether governments like it or not. As Eric Hughes wrote in the Cypherpunk’s Manifesto,
“Our code is free for all to use, worldwide. We don’t much care if you don’t approve of the software we write. We know that software can’t be destroyed and that a widely dispersed system can’t be shut down.”
But despite its potential Bitcoin faces challenges, including price volatility, regulatory scrutiny, and environmental concerns due to the energy-intensive mining process. With respect to the latter, it is crucial to remember that Bitcoin uses energy; it does not waste it. As far as we know, proof of work is the only incorruptible way of creating a non-government form of digital cash that cannot be gamed or manipulated by powerful individuals to their benefit and to the detriment of everyone else.
Furthermore, the ongoing evolution of this new asset and increasing mainstream acceptance are paving the way for a more sustainable and stable future for Bitcoin.
Bitcoin is not just a global currency. It is a movement towards a more inclusive, efficient, and liberating financial system. Its ability to address critical financial and social issues while providing freedom and control over one’s personal wealth marks it as a remarkable innovation in the financial world. As we advance into the digital age, Bitcoin’s role in shaping the future of finance continues to evolve, promising an alternative to tyranny where financial freedom and inclusion are not just ideals but realities.
Aldous Huxley wrote in 1958 that, “perhaps the forces that now menace freedom are too strong to be resisted for very long. It is still our duty to do whatever we can to resist them”.
And Bitcoin is a tool for doing just that.
