‘Digital Cash’ Review: Bitcoin and Beyond

The philosopher Walter Benjamin endured Germany’s economy after World War I and observed that when financial disaster strikes and inflation runs rampant, “all close relationships are lit up by an almost intolerable, piercing clarity in which they are scarcely able to survive. . . . Money stands ruinously at the center of every vital interest.”

What was true for the Weimar Republic applies equally in our own day. Money has a lethal power to expose our transactional nature. It matters, then, how we understand money, because we are talking about not just the means to spend, save and invest but the very essence of human relationships, from the interactions of nations and banking systems to the pocket change we give to children.

The emergence of digital cash, including Bitcoin and Facebook’s recently announced cryptocurrency, Libra, is about more than security, privacy and making payments easier. As Finn Brunton writes in “Digital Cash,” these new forms of money challenge “an implicit set of assertions about value, time, history, and social structure.” The pioneers of digital cash didn’t start by simply considering the technical challenges of establishing currencies outside the established systems of government and banking. They were guided by “philosophical and social commitments on authority, sovereignty, and the nature of value.”

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WSJ

Digital Cash

By Finn Brunton
Princeton, 255 pages, $26.95

Mr. Brunton, a professor in the Department of Media, Culture and Communication at New York University, begins his story in the Great Depression, a time of scarce cash. Howard Scott, a Greenwich Village gasbag, seized the moment to push his philosophy of technocracy. Scott imagined the North American continent run as an industrial organization. All frivolities, such as politics and culture, would be deemed unessential, and life would be rationalized and run on principles of industrial efficiency. His slogan was “Governance by science—social control through the power of technique.” The currency of this grim system, a sort of primitive Bitcoin, would be certificates of energy representing units of work or heat, and they would be immune to distortions like inflation.

Mr. Brunton’s narrative takes off with the emergence of low-cost, powerful computers in the 1970s and the communities of academics and programmers who saw the possibility of new kinds of social organization. As data became digital and power over information changed hands, governments, companies and individuals would have the chance to renegotiate their terms of engagement. At the heart of this change would be money.

Much of Mr. Brunton’s book is a technical account of the problems facing the pioneers of digital cash. For digital cash to work, Mr. Brunton writes, it has to satisfy a “set of seemingly paradoxical and impossible demands: it must be available but scarce, unique and anonymous but identifiable and reliable, and easy to transmit but impossible to copy.”

One major influence were the “Extropians,” a loosely affiliated group of crackpot futurists. Their philosophy, which took shape in the late 1980s, was built on the belief that humans were on the cusp of technological and scientific advances that would make us immortal, in which case we would need stores of value that could outlive passing fads like banks and paper money. “The Extropian project drew conceptual strength from the counterintuitive marriage of the ‘Austrian school’ of Viennese economics with Silicon Valley futurism,” Mr. Brunton writes. Economists like Friedrich Hayek had believed in classical liberalism and the value of the individual over the collective. The Extropians adopted those ideas to bolster their own contempt for the boneheaded bureaucracy of governments and corporations. To achieve their wild ambitions would require liberation from established systems, including traditional money. They experimented with small-scale versions of digital cash that had names like GhostMarks and DigiFrancs.

You hear echoes of this way of thinking throughout the history of Silicon Valley. Peter Thiel, one of the founders of PayPal and later the first outside investor in Facebook, said of PayPal’s platform that it would enable “the creation of a new world currency, free from all government control and dilution—the end of…

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