On Libertarian Socialism and Bitcoin: an essay series — Part 2

Tom Maxwell
10 min readOct 8, 2022

On Libertarian Socialism and Bitcoin:

an essay series

Published at Bitcoin block height 757622

If you’ve not read Part 1 of this series, please do so to familiarize yourself with the purpose of these essays and several important definitions of terms I’ll be using throughout. Thank you.

Part 2: A Tool of Today — Why Anarchists Should Consider Using Bitcoin as a Liberatory Technology

Note/Disclaimer: I’m an anarchist/libertarian socialist. I also have some bitcoin and work in the Bitcoin space as an audio engineer/producer for two Bitcoin-focused podcasts. I also have some US dollars, an admission I have never seen ‘disclosed’ by the writer of an article about anything having to do with the global monetary and financial hegemony.

This essay will be aimed at anarchists/libertarian socialists who are skeptical or antagonistic toward Bitcoin as both a concept and working system in an attempt to argue why we should all consider its ability to act as a liberatory tool, and as a way to build mutual aid networks that don’t pass through the State and minimize the use of capitalist institutions (Bitcoin is not inherently capitalist but socialist, though the external manifestations of industrial-scale bitcoin mining infrastructure and for-profit, Bitcoin-centric companies operating in our global economy certainly are capitalist; more on this later). I will not be arguing that those who envision a stateless, classless, moneyless society (communism) are misguided or incorrect in their pursuit; on the contrary, I think they make strong arguments for living in a liberated community like that. Instead, I want to discuss the practicalities of building dual power in 2022 and offer an alternative to the US dollar as a way to establish circular economies that must acquire outside resources. I will address bitcoin mining and its ability to help us decarbonize and decentralize electricity generation in Part 3, focused on solutions that address energy needs and our ecological crisis today.

In our society, acquiring money is — unfortunately — a necessary step in obtaining the basic goods and services needed for survival. On top of that, those with the most money have the means to secure power over others and dictate conditions under which the rest of us must exist. The State and banks (which are extensions of the State, as are corporations), with their ability to generate more money at-will by literally just typing bigger numbers into a computer, use this power to their advantage. This system, in my opinion, is antithetical to the prosperity and security of humanity, and the primary means of state influence over — and domination of — both domestic and global affairs at this moment.

So, why do I identify as a Bitcoiner if I’m skeptical of money as the base layer of the exchange of value in society?

Because Bitcoin can help us sabotage the State while we help each other survive and thrive.

Bitcoin is a decentralized, censorship-resistant, peer-to-peer, open monetary solidarity network free from hierarchy that isn’t controlled by any state, corporate apparatus, or other private organization. Instead, it’s administered by those using and contributing to the quality of the network. Bitcoin was launched by an anonymous entity called Satoshi Nakamoto in 2009 in response to a likely second bailout package for big banks by the British government in the wake of the 2008 financial crisis (1)(2). The intention to separate money from state remains a shared core value among the Bitcoiners that I know.

I mentioned earlier that Bitcoin is an inherently socialist system. This is probably something of a hot take, but Bitcoin’s incentive structure and lack of centralized control or gatekeeping of any kind encourages the participation of all for the benefit of all and discourages monopoly formation. It is, in many ways, an enclosed commons, with the means of production (bitcoin mining), total auditability of the ledger, and process of reform (the Bitcoin Improvement Protocol (BIP) system) available to anyone. The network is secured by bitcoin miners (computers) running cryptography and being rewarded with bitcoin for doing so, both from the block subsidy and transaction fees paid by network users to miners to include their transaction in a block. Regardless of how individual actors may think of it, miner operators do not secure their bitcoin alone. They work to protect the network for all of us. They’re compensated by all of us. Individual freedom is made possible through collective security and solidarity, and Bitcoin is no different.

Additionally, having more bitcoin does not give one any more control over system rules like having more US dollars or dollar-denominated assets offers one more influence over the State or other corporate entity. Better put, wealth does not equal power and control over the Bitcoin network.

While you may see the US dollar-denominated price of one bitcoin hovering around $20,000 at the time of publication of this essay, this does not mean that it costs $20,000 to acquire some bitcoin. Yes, there is a total supply cap of 21 million bitcoin (about 19.2 million currently exist), but each bitcoin is divisible into 100 million satoshis (sats), the smallest unit of account used today (3). Each satoshi is currently valued at a fraction of a penny, with $1 translating to roughly 5,000 sats. The easiest ways to access Bitcoin that I’m aware of in the so-called United States today are through Cash App (4) (a service that I know many anarchists already utilize) and a platform called Strike (5), which I use and recommend to others. A decentralized exchange like Bisq (6) is also an option if you want to avoid the ‘know your customer’ (KYC) regulations that pertain to Cash App and Strike.

Once you’ve traded dollars for bitcoin, I suggest setting up a dedicated bitcoin wallet app such as Muun (7) or BlueWallet (8) and transferring ownership there to take greater control over your funds. BlueWallet has a neat feature to help you protect yourself called “Plausible Deniability” that allows users to create a “false” wallet in case an authority figure, abuser, or other nefarious actor wants to see how much bitcoin you have or force you to transfer money to their wallet. It also supports more than 30 languages.

Another key feature of Bitcoin is that it’s jurisdiction-agnostic, allowing cross-border payments as easily as fulfilling a mutual aid request from your neighbor. I see this as the premier use case insofar as what obviously sets Bitcoin apart in its functionality from the current system. For example, the Autonomous Administration of North and East Syria — better known as Rojava — needs money to realize their implementation of social ecological practices, transform their community infrastructure, and continue to effectively combat their many enemies (9). Receiving and using bitcoin would allow them to avoid anti-money laundering and other jurisdictional issues imposed by authorities and directly receive the money they need to acquire resources and build proper water treatment processes and other important infrastructure without interference by banks.

Anarchist and coder Amir Taaki, one of Bitcoin’s earliest and most significant contributors, traveled to Rojava in 2015 and joined the YPG in their fight against the Islamic State before working with the PKK’s economic committee for about a year (10). In a 2018 Quartz interview, Taaki said, “Bitcoin as the currency of a revolutionary project, of a revolutionary nation, following an anarchist ideology. I can’t think of a more perfect fit for bitcoin.” (11)

How wallets work and more details on how Bitcoin functions are beyond the scope of this essay and better explained by the following resources:

But how does using Bitcoin help sabotage the State?

Modern Capitalism Would Implode Without Fiat Money

Note: When I refer to the State here, I’m referring to the so-called United States government unless otherwise noted, as it’s undoubtedly the preeminent world power, regularly suggesting, commanding, or coercing the courses of action taken by — or forced upon — other nation-states and the peoples whom reside within them.

While it could be argued that the force of law and monopoly on violence backing capitalism are its greatest assets, I believe that the institutionalization of credit creation, the functionally unlimited amount of credit money being created, and the use of that money to acquire more real resources (and therefore more power) is its most potent weapon today (12)(13). Yes, banks, as extensions of the State, have their credit recognized as part of the force of law, but with the US dollar as the global reserve currency, its connection to oil, and its status as legal tender of the US and dollarized nations — and with unlimited credit creation driving wealth inequality to levels up to and beyond the worst excesses of the Ancien regime and the Gilded Age, and overproduction causing ecological and existential disasters — money is not an accessory but the tip of the spear.

In his work State Socialism and Anarchism: How Far They Agree, and Wherein They Differ (1888) featured in his periodical Liberty, libertarian socialist Benjamin R. Tucker reflects on the immense harm caused by four class monopolies (the money monopoly, the land monopoly, the tariff monopoly, and the patent monopoly) as recognized by Pierre-Joseph Proudhon and Josiah Warren, the principal problem being the money monopoly: “First in the importance of its evil influence [Proudhon and Warren] considered the money monopoly, which consists of the privilege given by the government to certain individuals, or to individuals holding certain kinds of property, of issuing the circulating medium…It is claimed that the holders of this privilege control the rate of interest, the rate of rent of houses and buildings, and the prices of goods, — the first directly, and the second and third indirectly.” (14)

When Tucker (really Proudhon and Warren) uses the term “money monopoly”, he is describing fiat money. ‘Fiat’ means ‘a decree’, and in this context, ‘fiat money’ refers to money decreed by the State to be the legal and accepted medium of exchange within its dominion. The generally accepted definition of ‘fiat money’ (15) typically includes the stipulation that it is not backed by a commodity such as gold, silver, or bitcoin, and has no ‘intrinsic value’ (a problematic term, as a society without the need or desire for gold, silver, or bitcoin may not find intrinsic value in them). But, in my opinion, if ‘by fiat’ means ‘by decree’ and the State for some reason decreed that we must use gold to pay taxes, then gold would become the base layer of money ‘by fiat’. The fact that the US dollar system originates from the State, is ultimately controlled by the State, and is forced upon society by fiat is the primary issue here.

Anything done by fiat is a problem. And when the fuel of economic interrelations is imposed from the top and controlled (horrifically mismanaged and taken advantage of) by a handful of unelected profiteers, we’re functionally bound to it unless we pursue an alternative, better means to take stolen power back and use it to achieve our broader goals. Why, as anarchists, should we use state money when there’s a system that allows us to send and spend without an intermediary?

I want to live in a society based on solidarity, mutual aid, and cooperation. But how can we establish and maintain a sustainable society like that at this moment when we know the result will be violent reaction through the totalitarian might of the State in its need for monopoly power?

How can we effectively challenge the State unless we find ways to undermine its strongest assets and weapons?

How do we maintain maximum means-ends alignment in our lives and praxis while existing under a statist, capitalist system with perverse incentives and extreme concentration of power, and where access to money is an absolute necessity for survival?

Bitcoin is a tool available right now that can help.

Bitcoin is not and does not have to be a panacea, simply a tool of the revolution.

Using Bitcoin as the means to transfer value and organize and fund mutual aid networks is not recreating capitalism or twisting anarchism into some kind of false, “anarcho-capitalist” abomination, but utilizing a non-state, decentralized tool to undermine capitalist and statist monopolization of the medium of exchange and facilitate survival while staying financially connected with movements and groups around the globe fighting for the same cause.

Just because Bitcoin is a tool of the revolution doesn’t necessarily mean that it’s a tool of post-revolution society. There will no doubt be countless anarchist communities organizing around and within innumerably different frameworks, so, of course, a federation of mutualist societies using Bitcoin could (and very possibly will) coexist alongside communes and collectives that prefer to use a completely different system or reject money altogether. Therein lies the beauty of anarchism: dissolution of entrenched hierarchies and authority allows for functionally-infinite complexity and expression to manifest through both tangible action and unstifled imagination, so that initial experiments in anarchism yield possibilities not yet considered.

Thank you for reading Part 2 of On Libertarian Socialism and Bitcoin. Please stay tuned for future essays in this series, including Part 3, where I will provide examples of how Bitcoin can help us decarbonize and decentralize electricity production, forcefully pushing back on assertions from corporate media and central bank-stooges that bitcoin mining is boiling the oceans and contributing to the destruction of our ecology (spoiler alert: it isn’t).

Also, please feel free to email me at tomjmaxwell@proton.me with any questions or comments you may have. It’s hopefully evident at this point that I am extremely passionate and determined to help anarchists/libertarian socialists understand Bitcoin and its role in undermining — and ultimately, overcoming — state power.

(1) https://en.wikipedia.org/wiki/2009_United_Kingdom_bank_rescue_package

(2) https://twitter.com/bitcoin/status/1164145123434758147

(3) https://river.com/learn/terms/s/satoshi/

(4) https://cash.app/

(5) https://strike.me/

(6) https://bisq.network/

(7) https://muun.com/

(8) https://bluewallet.io/

(9) https://makerojavagreenagain.org/

(10) https://www.wired.com/2017/03/anarchist-bitcoin-coder-found-fighting-isis-syria/

(11) https://qz.com/1192640/anarchist-cryptocurrency-hacker-amir-taaki-says-bitcoin-is-in-a-speculative-bubble/

(12) https://bitcoinmagazine.com/markets/understanding-monetary-system-and-bitcoin

(13) https://files.libcom.org/files/__Debt__The_First_5_000_Years.pdf

(14) https://praxeology.net/BT-SSA.htm

(15) https://www.investopedia.com/terms/f/fiatmoney.asp