No one person is in control of bitcoin. No central banker, no governing or regulatory bodies, and there is no mechanism to suddenly manipulate money supply. That’s the point, of course. Satoshi Nakamoto, its pseudonymous creator whose image is represented in the artwork above, called it a peer-to-peer electronic cash system designed “to allow online payments to be sent from one party to another without going though a financial institution.” Unlike American coins, which are forged at the US Mint, and dollar notes – they’re printed by the Bureau of Engraving and Printing – bitcoin creation is decidedly democratic and completely virtual: Anyone who has made the effort to learn can “mine” the currency, trading valuable labor and resources in the form of expertise, processing power, energy, and time. With bitcoin, Nakamoto, whoever he, she, or they are, has, in essence, disintermediated the banks and government.
As with all currencies, bitcoin relies on trust, the economic lubricant that makes transactions possible. To engender this trust, and tamp down the threat of counterfeiting, it relies on an ingenious combination of transparency and anonymity. Someone receiving a bitcoin as payment can see its entire transaction history; he just doesn’t know who’s given it to him. The underlying code is open source, so no proprietary systems were used in its creation. Peer-to-peer distribution means that everyone who uses it is both a user and a supplier of resources. With each peer added to this burgeoning collaborative network the bitcoin gospel spreads just a little further.
In some quarters an almost religious fervor accompanies bitcoin. One commentator/bitcoin enthusiast, Max Keiser, sermonized the “second coming” of “Cyber Christ,” bitcoin and its mysterious founder, Satoshi Nakamoto. While he may have been the first to draw a connection between bitcoin and the formation of Christianity more than two millennia ago, he wouldn’t be the first to apply religious terminology to bitcoin’s underlying philosophy and foundation. So do the techies closest to the open source code, as if they were protectors of the word of God. If Nakamoto is Jesus in this metaphor, the core group of developers working on bitcode’s code are his disciples.
There’s a revealing profile of the bitcoin development team in “Who’s Building Bitcoin? An Inside Look at Bitcoin’s Open Source Development,” recently published in Motherboard, a Vice publication. Satoshi Nakamoto’s handpicked successor, Gavin Andresen, is bitcoin’s lead developer and sits on the Bitcoin Foundation board. Bitcoin’s open source code is stored at Github, an open source repository. It is, in some respects, bitcoin’s bible, the purest expression of Satoshi Nakamoto, more important even than the influential treatise he wrote that explained bitcoin’s philosophy.
Anyone can look at the code and see the “integration/staging tree (how the code has evolved over the years), though only the bitcoin development team can make changes to it. While many may preach, only a select few have the authority to amend Nakamoto’s teachings. As the article reports, someone might submit a chunk of code and the developers seek a consensus on whether to add it or not. If it is, after testing the new application it is merged with what they call “the Satoshi client,” which is the source code. “Controversial” changes, one of the bitcoin programmers told Motherboard, take the longest, while “minor adjustments, such as copy changes or transposing the system into other languages happen quickly.”
Even the way the team interacts has a religious tint. As the article notes, developers communicate one of two ways: via IRC chat and an official mailing list. IRC, says one developer, is “mostly petty stuff, bickering,” the “daily back and forth.” The mailing list, however, “is more formal, the equivalent of nailing something to the door of a church.”
Like the onset of Christianity more than 2,000 years ago, bitcoin is subversive to the entrenched central powers that be. Many early adopters have gravitated to bitcoin to protest what they view as the corruption of the state and central banking authorities and their manipulation of currencies and money supply. It is a sop against governmental overreach, the possibility of a true global currency unencumbered by national boundaries and laws. And it’s spreading fast. Today, there’s more than $1 billion worth of bitcoins in circulation (depending on the exchange rate), which was first described just five years ago in Nakamoto’s paper. Contrast that with the $829 billion of currency in circulation, according to the New York Federal Reserve Bank.
Yesterday, though, the US government took a first step into the wild and wooly world of bitcoin by serving the Dwolla mobile payment service with a court order requiring it to immediately cease account activities with the Mt. Gox bitcoin exchange. Is this the beginning of a government crackdown? No one knows.
In the past, though, the government has made heretics of those who dared to introduce alternative currencies. It charged one virtual currency creator with “conspiracy against the United States,” and after his trial (he was found guilty), the FBI remarked that it is illegal “to create private coin or currency systems to compete with the official coinage and currency of the United States.” In another the government shut down an online business in 2007. It charged its operator with operating an unlicensed money-transmitting business after it had released virtual currency redeemable for gold. Prosecutors focused on the fact that transactions were anonymous and accused the site of abetting money laundering and child pornography.
Clearly bitcoin competes with the official coinage and currency of the US, and none of the exchanges are licensed. It appears likely the government will act against the threat at some point. Indeed, almost two years ago Senators Charles Schumer (D-NY) and Joe Manchin (D-W. Va) sent a letter to Attorney General Eric Holder urging the Department of Justice to take action against Silk Road, an underground website where drugs, weapons, and other contraband are sold and paid for with untraceable bitcoins. At the same time Reuters reported that the Drug Enforcement Agency was “absolutely” concerned about bitcoins, or, for that matter, any anonymous digital currency.
It’s possible a government crackdown could hobble bitcoin in the way that U.S. authorities prevented Americans from gambling online by targeting the central nodes – the Internet Service Providers, which largely block Americans from getting to overseas gaming sites. Bitcoin exchanges can be served from outside the US. Mt. Gox, for instance, is based in Japan. So it’d have to bomb the roads that lead to the exchanges.
But faith can be stubborn, and there’s a long history of governments failing to stamp out citizens’ deeply held convictions and beliefs, which spread person to person on its own terms. If bitcoin is like a religion and unbound by borders, repression may only serve to make its adherents more resolute.