I’m happy to have a piece up at the Harvard University Press blog, entitled “Bitcoin: The Cryptopolitics of Cryptocurrencies.” It was written as a bit of an introductory piece for readers who don’t know much about Bitcoin and may have heard the news from Mt. Gox this week, so it will probably be old news to people who have read my earlier posts on Bitcoin (Bitcoinsanity 1: The (Ir)relevance of Finance, or, It’s (Not) Different This Time and Bitcoin Will Eat Itself: More Contradictions of (Digital) Libertarianism). Here’s a short excerpt:
“Money” names the instrument in which official transactions in that nation-state are conducted: all other things being equal, US Government bonds have a value in US dollars, and taxes in the US must be paid in dollars. As another economist puts it, “In post-Keynesian monetary theory money is anything that will settle a legal contractual obligation. And by the civil law of contracts, the government determines what settles a legal monetary contractual obligation.” This is the fundamental point, critical to all monetary theory, that Bitcoin advocates seem unable or unwilling to recognize (and admittedly it is what was until now a fairly arcane point of economic theory): the State decides what money is, and no assertion otherwise by individuals or groups can change that—only the law can.
The complete post is available here.
