Digital Cash: The Unknown History of the Anarchists, Utopians, and Technologists Who Created Cryptocurrency, by Finn Brunton, Princeton University Press, 272 pages, $26.95
As bitcoin turns 10, a new book aims to chronicle the digital currency's ideological origins. "The technology alone is not enough," Finn Brunton writes in Digital Cash: The Unknown History of the Anarchists, Utopians, and Technologists Who Created Cryptocurrency. "Even with good math, scientific discoveries, the free circulation of ideas, reliable hardware and running code, you need a desire, a vision, a dissatisfaction, a fantasy, a story." The source of that story was a movement called the cypherpunks, which started to coalesce in the late 1980s. In turn, the cypherpunks did not appear sui generis but were the culmination of decades—centuries, really—of broadly libertarian thought and activism.
Brunton, who teaches in New York University's media department, first offers an overview of the history of monetary authentication, then traces cryptocurrencies' roots to several offbeat subcultures. He finds precursors ranging from the Great Depression–era group Technocracy Inc. to the Extropians, a band of trailblazing transhumanists and accelerationists that flared up in the '80s. (The Extropians' plans included cryonic timeouts: If their preferred future didn't come fast enough, they planned to freeze themselves and wake up later.) Another chapter examines gold bugs and devotees of Austrian economics, who took the 2008 recession as a vindication of their contempt for central banking. Digital Cash even voyages into the niche waters of seasteading, an old idea that has garnered new interest since the early 2000s.
Brunton argues that "early Bitcoin itself was understood as a utopian, speculative currency in the context of libertarian dreams: digital cash built for verifiably inflation-proof production, in anticipation of a redemptive economic emergency." Cryptocurrencies appeal to fringe optimists and fringe pessimists alike, with tenets encompassing both monetary romanticism and economic eschatology.
Brunton argues that these subcultures' clustered worldviews laid the groundwork for Satoshi Nakamoto's synthesis of cryptography and Austrian economics—that is, for bitcoin. This observation is at once banal and profound.
On the banal side: Of course people's intellectual fascinations lead them to corresponding social milieus. And when you're dealing with people who have been striving for years to extricate money from state control, of course those social milieus are often on the fringes. "You can't really work in cryptocurrency without an openness to weird ideas," Neeraj Agrawal of the cryptocurrency think tank Coin Center told me in 2017.
On the profound side: As with any historical development, the creation of bitcoin was situated, both temporally and conceptually. Nakamoto, the technology's pseudonymous inventor, was indisputably brilliant. But he drew on copious prior art and collaborated with like-minded software iconoclasts. Brunton shows the social context that allowed Nakamoto's idea to appear.
He also notes another important piece of social context: Bitcoin "could not have existed without markets for digital moving images, especially video games, driving down the price of microchips," or without readily available electricity. And then there's the trial-and-error process that involved several other attempts to create an electronic currency, such as DigiCash, Hashcash, and b-money. "This," Brunton writes, "was not a technology that fell out of the cargo bay of a UFO."
The cypherpunk subculture that Nakamoto frequented had its own complex trajectory, branching off from nexus points shared with adjacent social clumps. Cryptocurrency enthusiasts are a fragmented and contentious group, but Digital Cash attributes their ardor for the technology to a common set of assumptions about the world.
In brief, the cypherpunks believed that individual freedom is paramount, that any centralized system with no right of exit will inevitably abridge your liberty, and that technology can obviate concentrations of nonconsensual power, reconfiguring society so that people can be left alone unless they welcome interference.
Brunton believes that the cypherpunks' activities, and those of the other subcultures he explores, are best understood as expressions of longing for particular far-term outcomes, undertaken with varying levels of pragmatism. He argues that any form of money "acts as a model of the future—but always the future within a particular time."
Digital cash is an elegant engineering solution, a social and communal phenomenon, and the instantiation of particular philosophical assumptions. "The people this book studies organize themselves and their speculative monies in terms of powerful fantasies of the future," Brunton writes. Their vision, as he describes it, is that "society might be irretrievably and utterly disrupted, with money as the mechanism of transformation and the escape route out of the present into the future."
Bitcoin routes around state control of money. The endgame for many crypto-currency enthusiasts is a complete replacement of traditional finance and a move toward market anarchism. Current "bitcoin maximalists" exemplify this attitude; newer communities like the one around Ethereum tend to diverge in messy and idiosyncratic ways.
To my mind, Brunton is correct. We who are invested in digital cash—financially, ideologically, or otherwise—tend to be dreamers. We are cynical about incumbent systems but starry-eyed enough to hope that remaking the world's economic foundations will fix everything else too. It may be grandiose to imagine that this is possible, but the imagining is what fuels efforts toward concrete progress.
For example, an open-source project called BTCPay Server recently launched a self-hosted, uncensorable alternative to Kickstarter. The team opened its announcement with a statement of lofty ideals: "Our core belief is that everyone deserves the right to have total control over their finances and that trusted third-parties are security holes." (The latter phrase is a direct reference to a seminal essay by the cypherpunk luminary Nick Szabo.)
When it comes to cryptocurrency projects, disentangling the sci-fi mission from practical execution is impossible. Cypherpunks are applied futurists: It's fun to sit around workshopping ideas, but it's much more effective to write code that increases the probability of your preferred end state.
Generally speaking, Brunton's sociological treatment of cryptocurrency enthusiasts holds up. I might quibble about some of the inclusions—I'm skeptical that seasteaders were especially important to either bitcoin or the cypherpunks, for example—but the overall narrative is convincing.
And to his credit, Brunton explains the relevant technologies lucidly. "What secures the scarcity of this kind of digital cash is the transformation of energy into heat by friction; it is a currency whose production and transaction are constrained by expenditure, by waste," he writes, distilling the concept known as proof of work. "Bitcoin wasn't magic but a technology in context, and part of that context was the power grid, the business of microchip fabrication, and the planet's atmosphere."
Yet Digital Cash has a couple of baffling oversights. Later in the book, Brunton tries to figure out why the gold bugs at the libertarian gathering PorcFest are attracted to bitcoin, "since much of the contempt for [fiat bank notes] began with the idea that nothing backed them but promises." He appears to have forgotten how he himself described proof of work; his puzzlement implies that bitcoin, like fiat currencies, is backed by nothing.
On the contrary: While there is no centrally controlled reserve a la Fort Knox, cryptocurrencies are backed by the energy expenditure necessary for computation—the marginal cost of each newly "minted" coin or transaction, on top of the capital required to amass mining hardware in the first place.
On the next page, Brunton writes, "Cryptocurrencies in circulation are nothing more or less than records of creation, ownership, and transaction in the blockchain ledger: their existence is constituted by the user-visible records of their existence." While technically correct, this sentence elides the continual investment that sustains the system.
Brunton is also surprisingly blasé about the decentralization built into cryptocurrencies. Bitcoin is structured to allow disparate people and groups to collaborate based on the profit motive, without any single entity being able to seize control. He describes technologists' fears in the late 20th century: "Electronic money could serve as a control apparatus for making the marketplace into a rapid response system for the police, a location log, and a Skinner box for rewarding and denying citizens into doing what corporations or governments wanted." All of the above has happened under traditional payment systems: It is extraordinarily difficult, perhaps impossible, for controversial businesses like the alt-right social media site Gab to retain credit-card processing services—not to mention the numerous difficulties that sex workers (including legal ones) have faced transacting with customers and securing their personal finances. Yet Brunton devotes surprisingly little space to discussing censorship and its chilling effects.
Despite such lapses, Digital Cash is a good book. Even experienced denizens of the cryptocurrency space are likely to learn something from it. Brunton comes across as a thoughtful outsider, one who takes bitcoin and the ideas embraced by its users quite seriously.