Over the last couple of years there has been a lot of criticism over the crypto-currency Bitcoin—some of which I’ve made myself (I think it is doomed as a currency but would be a great “alternative to Western Union”). But Neil Stevens at RedState recently made one of the most intriguing criticism’s I’ve heard so far: Bitcoin, if adopted widely, would be a grave threat to property rights.
There may be another cryptocurrency that isn’t hostile to our liberties, but Bitcoin is incompatible with freedom under the rule of law.
If our nation’s founders are to be believed, our government exists to protect life, liberty, and property. The reason it exists, and the way it has legitimacy, is that it serves the people to protect our fundamental rights. That’s how the rule of law is better than anarchy, because we can have laws against murder, slavery, and theft.
Recently in Virginia, a man was caught after stealing $2 million worth of gold. One of the jobs of police in this matter is to recover the stolen property, including through a pawn shop where the thief ran $340,000 worth of the precious metals.
If the man had stolen Bitcoin instead of gold, that would be out of the question. Money in the form of cash or a bank account, or tangible goods like gold or silver, can always have unlawful transactions reversed. Money can be sent back to the person it was stolen from. Property can be taken and returned to its rightful owner. But Bitcoin? Bitcoin advocates brag about how Bitcoin payments are irreversible. Anything the thief spent is gone forever, and anything the thief didn’t yet spend is meant to be gone forever.
Perhaps I’m missing something but I think there is a key flaw in Stevens’ argument: being foolish with one’s property is not a violation of property rights.