Disclaimer: This author’s opinions do not reflect the opinions of Coin Brief.
Recent controversy over a newly elected member of the Bitcoin Foundation’s board of directors has stirred up a great deal of animosity and bitterness in the Bitcoin community. Brock Pierce was one of two people elected to TBF’s board of directors as replacements for Mark Karpeles and Charlie Schrem. Many people in the Bitcoin community are furious over Pierce’s election—so much so that several people within the Bitcoin Foundation have resigned.
This sort of reaction is completely reasonable; Brock Pierce has a very dark history. Pierce has been accused of everything from fraud to being connected to child pornography and the sexual abuse of children. It is clear why people would not want this man being in a leadership position for the largest Bitcoin organization in the world. However, we do not need such an organization in order for Bitcoin to be a success; in fact, Bitcoin needs no “organization,” in any sense of the word.
Bitcoin Was Founded Upon Decentralization
Why do we need a centralized organization to promote a monetary system that draws people in mainly due to its decentralized nature? That seems like kind of a self-contradictory statement. Bitcoin was founded upon the principles of sound, decentralized money and respect for privacy and anonymity. These qualities are all Bitcoin needs to become successful in the future as a replacement for central banking and the overall centralized control of the global monetary system.
Cryptocurrency is a private, grassroots experiment in liberty and freedom from state control. Some would even dare to say that cryptocurrency is an experiment in applied anarchy. Remove the power of monetary control from the clutches of the State and give it to no one—subject it to the market and the phenomenon of spontaneous order. We know this can work; it has worked with Bitcoin for the last few years. Satoshi Nakamoto, whoever this person is, created this wonderful technology and just put it on the internet and left it at that. Satoshi subjected the blockchain technology to the whims of the concerted actions of individuals — the market — and they loved it.
In a few short years the blockchain has turned into a completely anarchic monetary system that has produced a medium of exchange that is valued much higher than the US Dollar, or any other government fiat money. Its acceptance by merchants is increasing each day; there is always some news about a company that has decided to accept Bitcoin as a means of payment. It is truly amazing. This small experiment in liberty, in applied anarchy, that started on an online forum in 2009 has turned into this massive, international phenomenon.
All of these things have happened not because of governments, the Bitcoin Foundation, or any other centralized entity. The idea of crypto-currency has flourished because of individuals. We are tired of governments and of the very idea of centralization itself and we are looking for solutions based in liberty. That is why Bitcoin has been so successful, not because of the Bitcoin Foundation. If anything, TBF has gotten so successful because of Bitcoin. We are so fed up with our current monetary system that we are interested in listening to any alternatives presented by anyone. That is why TBF has grown so large. The Foundation is purely dependent on Bitcoin, and Bitcoin does not care in the slightest about what happens to the Foundation.
Bitcoin Centralization is Dangerous
If we allow Bitcoin to be represented in a centralized fashion—that is, to allow its reputation or value to be dependent on one or a few organizations—then the chances for its long term success will be drastically reduced. We saw what happened when we allowed for a single organization, Mt. Gox, to serve as a significant determinant of Bitcoin’s fiat money price. The collapse of Mt. Gox made the price of Bitcoin plummet; it’s a miracle that the digital currency even survived. However, the Mt. Gox collapse also showcased the resiliency of a decentralized monetary system. A large part of Bitcoin’s value was dependent on Gox, but the exchange was by no means a monolithic entity that controlled Bitcoin completely. Bitcoin survived and now it appears that the fiat money price has found a floor between $430 and $450. Yes, exchanges like Mt. Gox do help a great deal in expanding the scope of cryptocurrency, and I am in no way condemning them. It is, however, worth noting how dangerous these exchanges can be.
We know the possible implications of even partially centralizing the determinants of Bitcoin’s money price, so just think about how catastrophic it would be if Bitcoin’s reputation was based on the reputation of a single organization. That is what could happen with the Bitcoin Foundation. What if it becomes so big that it is the sole representative of Bitcoin? It is already the single largest public mouthpiece for Bitcoin in general, so it isn’t a stretch to imagine a point where the entire reputation of Bitcoin depends on the public’s perception of the Foundation. What would happen if the Foundation had already reached that state, a state in which the Foundation was constantly under the scrutiny of the mainstream media, when it elected Brock Pierce? Bitcoin would have died overnight. We have seen the controversy it has sparked in small social circles on the internet; imagine the magnitude of that controversy multiplied tenfold as a result of mainstream media coverage. What would a member of the general public, someone who has never heard of Bitcoin, think if their favorite news channel broadcasted a story about a sexual predator being elected to the largest Bitcoin organization in the world? That person would likely denounce Bitcoin and anything related to it as a vehicle for crime and immorality. It is doubtful as to whether or not crypto-currency could survive such a scandal, so why are we allowing this to happen in the first place?
Bitcoin is not an organization; it needs no control or direction. We know what happens when we subject money to organized direction and manipulation. Doing so with our current monetary system has set us up for disaster, escapable only by leaving that system altogether and replacing it with a new one. Bitcoin is that new system. Attempting to build giant organizations around Bitcoin will only lead to a mass abandonment of the digital currency, especially if a scandal such as the Pierce controversy were to ever make its way into the mainstream media. We want Bitcoin, and all crypto-currencies, to thrive; Bitcoin was created as a solution to centralization and government economic planning. Centralizing Bitcoin, even in the form of a private representative organization, is a bad idea. We need no such organization for our new monetary system of liberty. Let the Bitcoin Foundation go ahead and ruin its reputation by electing someone like Brock Pierce, but let’s not allow the mistakes of the Bitcoin Foundation to ruin the beautiful experiment in liberty that is Bitcoin.