The Morality of Bitcoin
(Originally published by Looking Glass on the 14th of April, 2022)
We often get caught up in stories such as:
- Bitcoin is assisting Russia to escape sanctions
- Bitcoin is helping hackers to evade law enforcement
- Bitcoin is destroying the planet due to its energy consumption
In all of these examples, what we often forget is:
- Bitcoin is amoral. It does not know what is right or wrong. Just like a brick can be used to build a homeless shelter, it can be used to build a terrorist encampment. Should we ban bricks?
- There are two sides to every story. For every not-so-healthy use of Bitcoin, there are countless productive and constructive uses for Bitcoin.
With this in mind, throughout this article, we will explore points 1. and 2. in an attempt to try to understand what it means for Bitcoin to be amoral and how our initial perspectives when judging a situation may not be totally accurate.
Bitcoin and Amorality
Let’s start by defining amoral. The Merriam-Webster dictionary defines amoral as “being neither moral nor immoral, specifically lying outside the sphere to which moral judgments apply. Example: Science as such is completely amoral.”
With this understanding of the basis for what it means to be amoral, let’s look into what is needed in order to have morals. If we ask ourselves the question, “what is needed to have a sense of morality?” most of us would come up with something along the lines of:
- The ability to choose
- The capacity to judge
If these were the first things that came to mind, you are spot on. To have a sense of morality, we must have consciousness, and it is through consciousness that we define what we believe to be right or wrong. With this insight, we can now determine what does and doesn’t have morals. Why don’t we fittingly start… and end with Bitcoin? Bitcoin can’t choose, it does not have consciousness, and it cannot judge. Therefore, we can conclude that Bitcoin would fit under this classification of amoral as Bitcoin is simply a tool that provides utility.
Now that we grasp Bitcoin’s amorality, we can look at the three examples of news stories often seen attacking Bitcoin (mentioned above), but from a different perspective.
Under first inspection, we can garner from these headlines that Bitcoin is being portrayed as an entity with morals, as you wouldn’t say, “A Toyota Yaris is helping hackers evade law enforcement.” A Yaris is simply a tool.
This is not by mistake. Implying Bitcoin is an entity is a way to elicit a negative emotional response against Bitcoin, triggering us to look upon Bitcoin unfavourably and judgementally. Why? Because Bitcoin goes against the agenda of whoever wrote the article. But, as we have mentioned, Bitcoin is simply a tool that offers utility, and therefore it cannot be morally right or wrong in and of itself.
The Lens of Value
One key trait of the free-market, capitalist environment* is its ability to look at tools, such as Bitcoin, through the lens of value rather than morality. Free market capitalism doesn’t decide if something is right or wrong. Instead, it channels energy towards anything that provides value or utility in any capacity, and if so, that value would propagate until it either no longer offers value or something of greater value comes along.
This brings us to the next point, “there are two sides to every story.”
*If you do not support free-market capitalism, then that’s a whole other discussion for which you can check out this article.
There are two sides to every story
Not everything is black or white, and as the previous section illuminated, if something provides value and utility, then the free market will help channel energy towards this value creation, regardless of whether you believe it is morally right or wrong. Circling back to Bitcoin, there are multiple sides to each of the stories given above. We must therefore ask the questions:
- From a free-market perspective, what value might Bitcoin be offering?
- What other alternative viewpoints can we look at to garner a more holistic viewpoint?
With this in mind, let’s think about these questions as we explore each of the news headlines:
Important Note: This is not an article on whether Russia should or should not be sanctioned, whether enabling hackers is a positive or negative or if Bitcoin energy consumption is justified. Instead, it’s an article attempting to shift our perspective by looking at these headlines and events through the eyes of the free market and how morality is both subjective and cannot be applied to tools, such as Bitcoin.
Bitcoin is helping Russia to escape sanctions
We tend to get caught up in pointing fingers at what is right or wrong, often forgetting the many perspectives of each situation. For example, as the conflict between Ukraine and Russia persists, the US has issued sanctions “targeting Russia’s financial system, the wealth of powerful individuals, and Russian fossil fuels,” which “are designed to punish Vladimir Putin and the oligarchs who support and depend on him, and hobble the Russian economy.”1
As it stands, Russia is considering accepting Bitcoin for oil and gas trade2. This has spurred on a whole wave of critics stating Bitcoin is helping Russia to escape sanctions. However, that is only one perspective.
Another perspective, under the free market lens, is that Bitcoin offers nations reliant on Russian imports a way to circumvent these sanctions. If you are one of the MANY countries reliant on Russian exports, do you choose to follow sanctions at the expense of your country’s population or find a way around the sanctions?
Another, Bitcoin allows Ukraine access to capital to continue operations as their traditional banking infrastructure has failed them during this conflict. It should be evident that it’s not always, if ever, black and white. In this situation, Bitcoin is being used on all sides for all different reasons. That’s the beauty of the free market in action.
Bitcoin is helping hackers to evade law enforcement
Similar to the Russian example above, there are many ways to look at this statement. But, first, let’s just clarify something. One study by the ex-deputy director of the CIA concluded3 that “the broad generalizations about the use of Bitcoin in illicit finance are significantly overstated”. Since 2016, only around 0.5% of Bitcoin’s total transaction volume has been used for illicit activity. In comparison, illicit activity makes up between 2 to 4% of traditional finance. With this in mind, I would argue that most news articles stating Bitcoin is being used as a method to evade law enforcement are more of a hit piece than factual, informative articles.
However, all Bitcoin supporting arguments aside, if you believe in the free market, you most likely understand that you can’t prevent all illicit activity. And, if banning was the answer, why not ban all knives and cars while we are at it to deter criminals from stabbings and hit and runs? Wouldn’t life be great with only forks, spoons and public transit? Instead, we should accept that all tools will have unintended uses. In saying this, let’s focus on the countless positive use cases for tools such as Bitcoin:
- Banking the unbanked
- Promoting financial inclusivity
- Allowing oppressed populations access to capital to help raise their voice
- Giving people access to an asset that so far has outpaced inflation… significantly
- Financial privacy for people under overbearing government regimes
Additionally, building on this idea of banning, your government may seem to have your best interests at heart when they claim to be stepping in attempting to mitigate illicit activity through a currency they cannot control. However, giving them the control to take whatever measures they feel are necessary puts us in a tricky position. When the next political party in power does not have your interests at heart, you want to ensure you have a voice. In such instances, having access to an uncensorable, immutable and decentralized medium of exchange is one of the most effective methods of ensuring freedom of expression (e.g. recently the Canadian Prime Minister, Justin Trudeau, froze the bank accounts of individuals who financially supported protestors. At the same time, Bitcoin offered a way for people to financially support the protestors and free speech without succumbing to overbearing government control).
With this in mind, rather than blaming, our governments should use this situation constructively to ask themselves, what are we missing from our current system for people to resort to using Bitcoin?
Bitcoin is destroying the planet due to its energy consumption
- For our legs to offer value and allow us to walk, we have to consume energy in the form of food.
- For our car to be of value to us and assist us in getting from point A to B, it must consume energy.
- For our bank to unveil a new platinum credit card, it has to rely on immense traditional infrastructure already in place, which consumed energy to build and will continue to consume energy to operate.
My point is, for anything to offer value, energy has to be consumed! But, this raises the question: who should dictate what an acceptable vs unacceptable form of energy consumption is?
In a free-market capitalist economy, the free market decides what offers value and, therefore, what is an acceptable means of energy expenditure. If Tesla car sales continue to climb, it is a sign that people value the product Tesla is offering. Along the same vein, if Bitcoin’s energy consumption continues to grow, it shows that people value financial inclusivity through a permissionless, decentralized medium of exchange.
Some would argue this energy was wasted or had other potential uses. However, from a free-market perspective, this energy has not been wasted. It is exactly where it needs to be as people have consciously chosen to direct their resources towards Bitcoin because, at this moment in time, it offers the most value based on their needs. Therefore, there was no better way for them to direct their energy. How do we know that? Because if there was, that energy would be directed elsewhere.
When we stop to think about it, an unimpaired free market allows energy to flow uninterrupted to wherever people feel value is being offered. Stepping in and dictating what is and isn’t acceptable starts to distort supply and demand, which impacts major economic indicators. And it is through these economic indicators we monitor whether our economy is functioning effectively. By trying to play god, by saying what is right or wrong, you end up with a much bigger can of worms and create a bunch of byproducts and side effects, which no one wants!
Just to recap, it is important to recognize:
- There are many ways to look at every situation. Just because you may believe something is right or wrong doesn’t mean someone else agrees with you. Try to look at each situation from a few perspectives.
- Bitcoin is simply a tool. It may have certain illicit use cases, but so do most tools around us. Russia may be using it to circumvent sanctions, but Ukraine is also using it to obtain funding and Russian-reliant countries to continue trading with Russia. It may consume energy, but its users have chosen Bitcoin to be the best use of energy.
Bitcoin has no morality. Bitcoin doesn’t judge, and Bitcoin doesn’t choose what is right or wrong. Bitcoin is purely a tool that offers utility. Therefore, rather than immediately attacking the use case behind these tools, we should shift our perspective by trying to understand their value proposition, as, under the lens of the free market, they have clearly proven themselves to be of value. Until the point where Bitcoin, or any other tool for that matter, no longer offers utility under a free-market environment, we should embrace what the free market deems to be of value.
In saying this, people who support Bitcoin are choosing to express themselves through the use of a non-censorable, permissionless, pseudonymous piece of code that they believe offers value and utility. And with code being simply words, by implying Bitcoin is bad and should be banned, what you are really saying is you are not in favour of free speech or the free market.
To end, next time you read an article with some headline that insinuates how evil Bitcoin is, just remember that:
- there are multiple perspectives
- Bitcoin is simply a tool
“If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter.” – George Washington
1 Walsh, Ben. “The American sanctions on Russia’s economy, explained.” Vox, 9 March 2022, https://www.vox.com/22968949/russia-sanctions-swift-economy-mcdonalds. Accessed 14 April 2022.
2Liang, Annabelle. “Russia considers accepting Bitcoin for oil and gas.” BBC, 25 March 2022, https://www.bbc.com/news/business-60870100. Accessed 14 April 2022.
3Morell, Michael. “An Analysis of Bitcoin’s Use in Illicit Finance.” Crypto Council for Innovation, 6 April 2021, https://cryptoforinnovation.org/resources/Analysis_of_Bitcoin_in_Illicit_Finance.pdf. Accessed 14 April 2022.