Bitcoin has always represented the irrepressibly optimistic side of libertarianism, the voice whispering in our ears that true freedom can be grasped simply by circumventing a few tenets of society with bold new ideas. And let’s be honest, the notion of unregulated currency created with nothing more than mathematics has the same appeal as does hacking in the old school sense of the word: turning the knobs, seeing what happens, and using the results to make the world a better place (or at least having a lot of fun trying).
Unfortunately, as with most grand ideas that were supposed to set us all free from governments and corporations and the 1% that don’t care about any of us beyond our role in fueling their increasing hoard of money, the reality of Bitcoin may turn out to be less that of miraculous savior and more of a double-edged sword along the lines of what has happened to the internet. The internet was to free us all — in reality, it’s become a tool of misinformation and surveillance, or in other words, a means of exerting control and keeping us ignorant and divided. Similarly, governments are already trying to figure out how to clamp down on Bitcoin and regulate it every which way. China may be leading the repressive effort, but don’t think that other governments won’t be right behind.
Bitcoin has another serious issue to overcome, one that I don’t think occurred to the more libertarian of geeks who were frothing at the mouth over the cryptocurrency early on: it has a serious global warming connection. Mining bitcoin takes some serious juice, and it’s getting worse by design.
Bitcoin’s strength, its distributed ledger design, is also its weakness. Energy consumption is a built-in feature of the cryptocurrency, because it requires people to volunteer to validate transactions that have taken place (and to then be rewarded with bitcoin for doing so if their validation is used to add those transactions to the ledger). Validating transactions takes hard math, and hard math takes computer hardware. Computer hardware takes electricity, and lots of purpose-tuned computer hardware takes more electricity. The NSA and Utah know something about this fun fact of physics, because the NSA’s top-secret-but-well-known datacenter there consumes an estimated eye-popping $40 million per year of energy.
Nevertheless, my old man grumpiness aside, Bitcoin-like cryptocurrencies do possess an endless source of fascinating potential known as the blockchain. The blockchain does a few different things that matter to cryptocurrencies but also to all sorts of transactions — it provides non-modifiable transaction history, transaction verification, and inherent perpetuity in that no one can get rid of it because copies of it live everywhere. Rob Reid, author of After On, has a great podcast about technologies discussed in the book, and he spoke with Fred Ehrsam, founder of CoinBase, about the blockchain and other technical and societal aspects of cryptocurrencies. It’s worth a listen if you’re even moderately interested in the topic.
It’s a fascinating topic, and oh, by the way, one that Peter and I plan to discuss in participatory fashion (creating a Bitcoin address and wallet and other fun stuff) on upcoming episodes of Not Speeding in Reverse, so keep your ears perked and your podcast app loaded.