“… they laugh at those […] who hold that nothing can be made of nothing and of that which has no existence; but with them usury is made and engendered of that which neither is nor ever was.”

Plutarch, circa 100 CE

“Bitcoin has no intrinsic value.”

Business Insider, 2013

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The modern monetary system and its coinage is the product of alchemy.

It is the creation of centralized power in general, and the ongoing attempt to monopolize violence in particular. It produces and relies on social stratification as rigid as an archetypal caste system.

In this way, it extracts value without assuming risk, offloads cost, and exempts itself from accountability.

Poverty, inequality and debt servitude aren’t just unfortunate by-products. They look like managed components of the business model.

With such pervasive influence, it is not surprising that the existing monetary system dominates every aspect of social, economic and political life.

It is so ubiquitous that it has become a part of the cultural fabric, hidden behind the transactions that make up our daily lives. Yet it shapes who we are, wherever we are, how we think, and how we behave.

It enlists armies of hirelings and advocates who extol its virtues and who cast a skeptical eye on alternatives.

This system of control is not new. David Graeber described it as a “military-coinage-slavery complex” while accounting for Alexander the Great’s forays into west Asia in the 4th century BCE.

It deserves respect. The triangular lock of organized violence, coinage and slavery has successfully reinvented itself over millennia.

We can trace its recurrence through centuries of state formation across geographies right into the 20th Century. Today it is the base upon which a corporatist superstructure grows within and between governments, international organizations and society, and in both the physical and digital worlds.

The Hobbesian social contract, through which peoples give up their rights in return for protection, is the basis on which it extends its reach.

It is iniquitous and unstable. Its failings are numerous and it has become wholly unsustainable.

We know that that two billion people still have no access to financial services.

In development circles, this is called “the unfinished business of development” and the response is “to leave no-one behind.” This ignores the fact that under-development and exclusion are manufactured.

In a growing number of jurisdictions, sovereign, corporate and consumer debt are at all-time highs and growing. Meanwhile the price of assets held by the wealthiest among us continue to grow. This is also manufactured.

The list goes on. Aggregate demand for goods and services is struggling, including in the world’s largest economies.

Cycles of boom and bust undermine the ability of entire countries to plan and prosper.

Patented technological change and the erosion of labor rights leads to the export of middle- and working-class jobs from countries that we describe, without irony, as “developed.”

Currency volatility in emerging markets and developing countries plunges households and individuals into penury.

The surveillance and commodification of our private communications — without our consent — threatens open civic space and the right to the Self.

War underwritten by money printing and the dislocation it causes give rise to nativist political reaction.

De-globalization and attempts to restore economic autarky might produce short-term economic benefits. This restoration comes at a high cost with a fall off in international cooperation on climate change, loss of ecosystem services, illicit financial flows, and unregulated capital movements.

We should not be satisfied with these outcomes of the military-coinage-slavery complex and its modern equivalents.

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If the existing monetary system and its coinage is a product of alchemy and coercion, and if its purpose is to grow or manage poverty, inequality and environmental degradation, what about Bitcoin?

Is it any different? If it is, can it do any better as a tool for sustainable development?

The time has come for a serious, detailed and ongoing interrogation of its potential.

For much of its eight years to date, Bitcoin has been a play thing of technologists. Debate among early adopters was, and continues to be, rancorous.

Speculators trade its token. Some have done well. Others have crashed and burned, providing a low-hanging fruit for newspaper headlines that continue to feed popular misconception.

In the last 2–3 years Bitcoin has attracted attention from financial institutions who are interested in its underlying protocol. 2016 became the year of the blockchain.

Somewhat predictably, these efforts have foundered on the rocks of proprietary interest.

Gated blockchains are like intranets. Intranets might help to improve processes within your own space. They don’t transform society.

The latter is a big claim, so what indications are there that Bitcoin can help to achieve this?

Well, less apparent than the role of speculators or of the activities of the financial services industry is the rising tide of interest in Bitcoin expressed by entrepreneurs, the service industry, international organizations, and academic researchers.

This interest is based on an acceptance of Bitcoin as an open-source protocol on which innovators can build new institutions, relationships and processes. The motivations are various: market-making, profit and the public good.

This suggests that a process of maturation is taking place.

At this point, it bears repeating what many inside “the Bitcoin space” already know. Bitcoin’s design allows it to be three things at the same time — a financial rail to move money, a store of value, and a ledger to record and store ownership information. The first two are represented by Bitcoin’s token. The third by its underlying technology.

So, how is it doing across each of these three tracks? And what does this mean for sustainable development in the context of the 2030 Agenda for Sustainable Development?

First, Bitcoin as a token is already contributing to financial inclusion. This is because it provides a low-cost and speedy fix to a high-cost and slow experience.

One of the most cited use case for Bitcoin relates to remittances. This market exceeds US$550 billion a year and is buoyed by large and growing expatriate and migrant communities.

Here, there are a large and growing number of instances of adoption. For example, a reported 20 per cent of US$230 million worth of remittances from South Korea to the Philippines now occurs via Bitcoin.

This is far from a quirk, as examples from around the world testify. In the present case, the volumes involved has prompted the central banks in Seoul and Manila to explore regulatory options that can both support and protect consumers using Bitcoin.

Why is this important?

Migrant workers and expatriates are the most mobile among us. They understand and live for the transfer of money. Families back home sometimes do not have bank accounts and have to resort to high-cost intermediaries such as Western Union and MoneyGram.

This is why working migrants and expatriates will likely lead the way in becoming mass adopters of Bitcoin as a low-cost alternative to legacy providers.

Businesses are taking notice. Seoul-based KakaoTalk has more than 170 million registered users on its chat app. The company made its first-ever overseas investment in 2016, a 40 per cent stake in Satoshi Citadel Industries, a Manila-based Bitcoin startup that doesn’t have a connection to messaging. Yet.

In the last two months, we have seen the launch of at least two multi-currency mobile applications based on Bitcoin: Abra and Mobi.

Second, Bitcoin, also as a token, is beginning to show signs of its potential as a store of value. This is happening even as the debate on whether it is a currency or a commodity continues.

Its volatility over the medium-term continues to decline. Set against a backdrop of negative interest rates, the decline in Bitcoin’s volatility is attracting individuals concerned with the erosion in value of their savings.

Then there is inflation. If you are worried about the short- and medium-term purchasing power of your national currency, Bitcoin already offers a viable alternative.

The US dollar is not immune from the erosion of purchasing power. You would need approximately US$117 in 2017 to buy the groceries that cost US$100 ten years ago, in 2007.

Again, there are services growing around this use case. Global providers such as Uphold provide full-reserve services for Bitcoin together with a larger number of currencies and commodities. There are no wire transfer fees and transactions are as instantaneous as email.

Employers with international payroll stand to benefit through services such as BitWage. Instant convertibility removes the risk of loss through exchange rate fluctuation.

For people in the investment category, keeping some Bitcoin in your portfolio is beginning to look like holding of stock in an asset that is demonstrating growing industry-level value.

If you want to hold Bitcoin in your pension, you can now do so through a Bitcoin IRA.

If you are interested in investing in the green economy, Bitcoin-based solar energy certificate trading is already a thing in the United States.

It might also be a matter of time before you are able to invest in a Bitcoin-based exchange-traded fund.

Perhaps most tantalizing is the prospect that governments themselves could begin to take up positions in Bitcoin.

Three years ago, this seemed fanciful. Today, the idea is becoming plausible. At the moment Bitcoin might at best be considered a hedge against market volatility. As governments become familiar with its functions and invest in them on multiple fronts, expect that perception to evolve.

This brings us to the third area of potential. What about the use of Bitcoin as a ledger to record and store ownership information?

There are many.

The government of Georgia became the first to secure land titles on the Bitcoin network, and expanded the project earlier this year.

Pakistan, with the support of the World Food Programme, has begun to authenticate, record, and reconcile cash and food assistance transactions.

In Germany, customers can pay energy bills using Bitcoin.

Bitcoin’s resistance to tampering and censorship opens up the prospect of its use for birth registration, as an asset register, for educational certificates, and in the conduct of elections and referenda.

Because it is open-source and cannot be hacked, it provides a secure, public space for innovation and immunity from hostile intervention that legacy systems cannot match.

For countries in the developed and developing world struggling for legitimacy because they cannot meet the needs and aspirations of their peoples, Bitcoin provides a creative outlet.

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The main charge against Bitcoin in its early years is that it is pure alchemy, or voodoo Internet money. Because of this, and nothing else, the argument goes that it has no intrinsic value.

Nothing comparable, however, has intrinsic value either.

Government-issued notes and the monetary system they represent rely on the power of the issuer. That power imposes usage, and discourages divestment.

When power is abused, the lack of trust becomes apparent.

The position of the US dollar as a reserve currency of choice has shrunk from approximately 70 per cent to about 60 per cent in the last 15 years. This is a significant sell-off, and reflects a decline in faith in the system that this currency represents.

Gold is aesthetically pleasing; it is rare and universally recognized. In the past it was used as a ledger. Even so, it does not have intrinsic value either.

What we have is imputed value. This comes from present utility and future potential to a community. This utility generates an intangible asset — social capital — that is reflected in mass acceptance.

Bitcoin does not yet have the widespread utility or social capital enjoyed by legacy monetary systems. Its multiple properties do, however, hold the potential that current offerings cannot emulate.

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The woes of the current monetary system and its coinage are in stark contrast to the innovation now taking place with Bitcoin.

Legacy systems face a crisis of legimacy: they breed instability that ripples across the globe and into every household, and then feed off it. They struggle with modernization.

They fail us as consumers, employees, producers and shareholders. They face a deficit of trust.

United Nations Secretary-General António Guterres had this to say about trust at the World Government Summit in Dubai on 13 February 2017:

“If one looks at today’s governance problems at the country level, between countries or at multilateral governance in the world, we face a terrible lack of trust. Lack of trust between peoples, between governments and political establishment. Lack of trust between countries and lack of trust in relation to governance in global multilateral institutions.”

So can Bitcoin prove itself to be more than a token? A token gesture? Is it more than an alchemist’s dream? Can it help countries and cities and communities and markets deliver with speed, economy, transparency and impact?

Can it give identity and voice to people excluded by today’s institutions? Can it foster innovation, entrepreneurship and productive capacity? Can it connect families? Can it provide proper accounting of ecosystem services? Can it empower? Can it contribute to sustainable development?

The evidence suggests that it is already beginning to do so. And yes it can.

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In the third article in this series, I will look at the emerging policy issues for Bitcoin and Sustainable Development at global, regional and national levels.

Note: I am a member of Uphold, which I cite as one vehicle through which Bitcoin can be used as a store of value.