This weekend Russia became the latest country to crack down on Bitcoin. China has already banned its citizens from buying the “cryptocurrency”, which functions like cash in that it can be transferred anonymously from one person to another without the involvement of a central clearing house. Western regulators are also watching nervously.
The role that Bitcoin can play in facilitating illicit trade has so far attracted most comment. Silk Road, a secret website where contraband was bought and sold, showed that a virtual currency can be more useful to a drug dealer than cash, which must be carried, or bank transfers that leave an electronic trail.
Real though these concerns are, they miss the far more serious threat from the economic ideas behind Bitcoin. An individual or group using the pseudonym Satoshi Nakamoto first described the workings of the virtual currency in 2008. The following year they released the first version of the software that issues Bitcoins and keeps track when of they are spent. By then, many had come to doubt whether dollars, euros and other government-issued currencies would hold their worth – and whether orthodox monetary institutions were the best way to promote prosperity. Bitcoin has gained a following partly because it seems to show us how we can do without money issued by the state. Currency could be nationless.