When F. A. Hayek wrote his work Denationalisation of Money, few expected that there would come a time in which transactions could be carried out without the need of a bank-created currency. In Denationalisation of Money, Hayek argues that state monopoly of money must be eliminated to stop recurring periods of inflation and deflation. Instead of one currency run by the state, there should be free market competition, and it should be the consumer who determines the best possible option.
Many experts, including free market libertarian Milton Friedman, were skeptical whether Hayek’s vision would ever become reality. Little did they know that Hayek‘s idea would become reality; not based on the restrictive views of the past, but based on the technologies that arose after his passing.
With the emergence of the Bitcoin in 2009, the theoretical aspects of Hayek’s vision finally became reality, despite him never having experienced the internet in his life. You could argue that the year 2017 has been a pivotal year for cryptocurrencies, or at least their most famous one; Bitcoin has played host to a seismic shift.
The value of Bitcoin has risen by more than 700%, up from just $968.23 earlier this year to well over $7,300 on November 15, 2017. The market capitalization of the currency, as you would expect, also skyrocketed to $121 billion. In the wake of the dramatic turn of fortunes, a lot of Bitcoin enthusiasts and holders became millionaires overnight. More interestingly, however, the currency has evolved from a simple placeholder of value (or investment opportunity) to a thoroughly universal store of value, currently championing the cause of many and helping a whole bunch of others the world over.
When it debuted, one of the major talking points of cryptocurrencies was that they rendered traditional barriers to transactions, such as third-party mediation and currency exchange, more or less obsolete. Today, this beneficial trait of Bitcoin is being exploited to the fullest. The de facto solution for most businesses in such countries has been Bitcoin, which is not only easier to purchase or mine but also is devoid of transaction and remittance fees usually associated with traditional methods of processing transactions.
The transactional fluidity and ease of remittances associated with cryptocurrencies have allowed for easier and more robust funding of humanitarian drives. Individuals from the world over who would have been otherwise dissociated or discouraged from participating are now captured in such funding rounds – all thanks to Bitcoin.
A sterling example of Bitcoin championing humanitarian efforts is Sean’s Outpost – a Pensacola, Florida-based organization that provides food and essential amenities like shelter and water to homeless individuals in the city. Sean’s Outpost was named after the founder’s late friend, Sean Dugas. It derives its funding from random users in over 43 countries on a Bitcoin forum. This group donates Bitcoins to promote the organization’s cause. In just one year, Sean’s Outpost had provided Pensacola’s teaming homeless population with over 30,000 meals.
In Zimbabwe, a loaf of bread costs ten million Zimbabwean dollars, and on a typical market day, you’d have to literally carry a bucket-load of money if you were looking to return home with a bag of groceries. The country’s currency has been run ragged by staggering inflation in the last decade. For individuals looking for a store of value that’s readily available and immune to the ongoing inflationary nightmare, the only suitable option is Bitcoin. Despite the relatively low ICT penetration, Zimbabwe hosts a thriving Bitcoin community and local Bitcoin exchanges like Bitmari and Bitfinance are currently provisioning the needed infrastructure to sustain this Bitcoin ecosystem.
Today, the vision of Hayek has not only made the world a better place, but it has also systematically made people realize that currencies can be decentralized, secret and without regulation of the government. In many developing countries where the central banking system has failed its citizens, and people’s wealth diminished in a matter of days, bitcoin and other cryptocurrencies have become a tool which enables many to survive the difficulties they face each coming day. These new payment systems will open the eyes of these people to the ideas of Hayek pronounced in Denationalization of Money and will hopefully make them open to read his other works which could convert many people towards Austrian economics and free-market liberalism.
Mohammad J. Malayeri is an entrepreneur and informatics professional based in Vienna. He got his Bachelor’s and Master’s degree in Business Informatics from the Vienna University of Technology.