Free Markets Don't Create Free People: Bitcoin's Tech Success Masks Its Failure

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Encoded into the very first block on the Bitcoin chain is a timestamp, the kind of timestamp more familiar from ransom demands: a proof of life.

Satoshi Nakamoto appeared in the world, as far as anyone is aware, with the publication of the Bitcoin white paper.

In Section 10 of the Bitcoin white paper, Satoshi outlines the privacy model of the system.

' While the developers of bitcoin could test mining and transacting coins between them, the real 'product' of bitcoin - a decentralized, deniable identity - could only be tested by someone willing to build and sustain such an identity asset over a long period of time - and who better to perform that test than the creator of bitcoin themselves?

Regulatory institutions in the form of existing financial institutions, national governments and transnational laws regarding money-laundering and taxation form another barrier to adoption, meaning that to use bitcoin is either to step far outside the law, into the wild west of narcotics, credit card fraud and the oft-fabled assassination markets, or to participate legally, handing over one's actual ID to brokers and thus linking oneself to transactions in a way that undermines the entire point of an anonymous, cryptographically secure system.

The value of bitcoin supposedly comes from the computational work required to mine it, but it might more accurately be said that it derives from a more traditional type of mining: the vast consumption and combustion of cheap Chinese coal.

As the value of bitcoin rises, mining becomes more and more profitable, and the incentive to consume ever more energy increases.

These complaints, which are both uncomfortably true in the present and addressable in time by adjustments to the underlying system, mask the larger unsolved problem posed by the blockchain: what is it really for? Somewhere between the establishment of the Cypherpunk mailing list and the unveiling of the first bitcoin exchange, a strange shift, even a forgetting, occurred in the development of the technology.

Bitcoin, in the decade since Satoshi Nakamoto first announced it, has succeeded technologically but failed politically, because we have failed to understand a central tenet, long established in political theory, that free markets do not create free people - only, and only occasionally, the other way round.