It wasn’t so long ago that only the most committed bores spoke of money in abstract terms: money as a mere ‘concept’ (the rest of us got on with earning it). Today, that’s not the case. Thanks to bitcoin, everybody seems to have accepted money really is just an idea, one that in its current, government-controlled form might be due an upgrade.
Last year, bitcoin came — seemingly out of nowhere — to dominate financial news for what felt like months, forcing a re-evaluation of traditional notions of value and currency. The world watched as the price of a single bitcoin tore ever upwards, hitting a peak in December of £14,354. Since then it’s returned to hover around £5,000, where, depending on how you feel about cryptos, it either lurks ahead of another manic lurch upwards, or rests briefly on its inexorable march toward irrelevancy.
Should we fear bitcoin? Certainly, there are people who do. Thanks to the qualities that make it attractive (it’s hard to trace and the transactions made using it are even harder to stop) it’s obviously handy for the criminal class. But in a globalised, digital world, it also offers considerable benefits for law-abiding citizens.
In this supplement, we take a look at what the success of bitcoin would really mean. Matthew Lynn describes the huge challenges that cryptocurrencies present to governments and central banks, while Patri Friedman argues that bitcoin and the blockchain technology that underpins it will have fundamental consequences for democracy. Arthur Hayes, the man who set up the world’s largest bitcoin exchange BitMEX, challenges the received wisdom that bitcoin makes money laundering easy, while Dr Saifedean Ammous, author of The Bitcoin Standard, takes up Professor Paul Krugman’s famous challenge to define the problem bitcoin solves.
Will we still be talking about bitcoin this time next year? The fact that no one really knows is surely part of its allure. Gold rush or the start of a massive structural change? Hopefully this supplement will help you to decide.
Damian Reilly, Editor