Investing in bitcoin is the act of staking your claim in a newly emerging digital economy. This type of economic model is in itself a hedge against economic uncertainty because it is a different form of law which governs its use.

Characterizing this shift in the form of law governing money, is what Friedrich Hayek would describe as the ‘denationalization‘ of money. More specifically, Hayek stated that ‘the normal provision of money would be entirely a function of private enterprise, the chief danger to its smooth working would still be interference by the state’ in his Analysis of the Theory and Practice of Concurrent Currencies. With bitcoin, this denationalization of provision over money has never been more apparent.

“The chief danger, however, would threaten from renewed attempts by governments to control the international movements of currency and capital. It is a power which at present is the most serious threat not only to a working international economy but also to personal freedom; and it will remain a threat so long as governments have the physical power to enforce such controls.”

– Friedrich Hayek, Analysis of the Theory and Practice of Concurrent Currencies

Those ‘physical powers to enforce’ have now been lifted. Instead, we have in their place, enforcement powers which are defined by the laws of digital cyberspace. Geographical boundaries no longer exist, and therefore analog-money is a non-player, as are analog-actors who would attempt to control this ‘movement of currency and capital’.

As a store of wealth, bitcoin may be volatile, but in an age where we involving ourselves in the denationalization of money, it is not only a store of wealth, but a necessary consideration. Bitcoin as a hedge against legacy finance can exist simultaneously even if the long term implications of it are not yet clear.

Even if bitcoin were to fizzle out spectacularly, the idea that it encompasses a radically new form of law which governs its use, is enough to consider a stake in it.


Travis Patron

Travis Patron is the curator of Diginomics and the author of The Bitcoin Revolution: An Internet Of Money. He was an early adopter of both bitcoin and ethereum technology, and continues to educate audiences on emerging opportunities in the digital economy.

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