Bitcoin: The Political Virtual of an Intangible Material Currency

By Mark A. Jansen
Utrecht University, New Media and Digital Culture, MA Thesis
August 2012

Bitcoin: the Political Virtual of an Intangible Material Currency

Abstract

This paper concerns the open source software project Bitcoin. Bitcoin is
often described as virtual cash and this paper asks what the term
‘virtual’ signifies when applied to ‘cash’ and in turn what ‘virtual
cash’ says about Bitcoin. Bitcoin is related to the 1990s activist
movement of libertarian cryptographers known as ‘cypherpunks’ and to the
cyber-libertarian political philosophy, demonstrating the historical
intertwining of cryptography and politics. Cypherpunks argued that
privacy is a prerequisite for an open society and that cryptography and
anonymous transaction systems were needed as assurance. Bitcoin is the
latest effort by cryptographers to create digital tokens similar to
cash, where Bitcoin’s designer Nakamoto argues that with Bitcoin users
no longer have to trust a third party, traditionally the bank. Bitcoin
does not fulfill this promise as trust remains to be established, albeit
in a different manner. Power is not destroyed, but transferred from
banks to Bitcoin’s protocol. The paper concludes that ‘virtual’ refers
to Bitcoin’s model of how cash appears to function in everyday exchange,
allowing user privacy. Bitcoin does not model another aspect of cash,
namely that it is a credential referring to debt. Bitcoin discontinues
the concept of debt.