Why Bitcoin Needs Philosophy

It’s unsurprising when computer scientists research Bitcoin. Bitcoin is software, after all. And because Bitcoin uses incentives to shape human behavior, it also makes sense that economists study it, too. As a novel and provably scarce asset that can be transmitted across the globe without intermediaries – and one that has exhibited explosive price behavior – academics are bound to be interested in Bitcoin.

Yet, few philosophers have written anything about Bitcoin. One might wonder why they’d even try, or whether anyone would care if they did. But Bitcoiners should care. 

Here’s why: Bitcoin has a lot of moving parts, none of which are particularly novel in themselves. The cryptography is off-the-shelf. Peer-to-peer protocols arrived years before the white paper emerged in 2008. And so had the notion of proof-of-work. Incentives? Scarcity? Welcome to Econ 101. But nothing before Bitcoin had combined these ingredients ​like this​. Bitcoin uniquely bundles from across traditional boundaries.

Philosophy is similar. Whereas some disciplines focus on particular subjects or deploy only certain kinds of data – lab or experimental results, survey findings, formal or intuitive models – philosophy has no boundaries at all in either subject matter or underlying data. Philosophers ask questions about everything, and use any evidence they can find to assess answers. Philosophy is all-inclusive,​ the ultimate bundled interdiscipline.

Bitcoin pairs well with philosophy because every one of its ingredients falls within the purview of philosophical research. Philosophers draw from whatever evidence is relevant – and evidence relevant to Bitcoin spans psychology, economics, cryptography and more. But neither psychology, nor economics, nor cryptography, nor computer science alone provides a deep understanding of the system as a whole. A bird’s eye view of Bitcoin is necessarily a philosophical one.

In short: Philosophy bundles, and so does Bitcoin. They’re natural partners, and philosophy is well-suited for Bitcoin. But what can it do for the Bitcoin community?

Speculators need to understand what Bitcoin ​is before plowing money into a BTC position.

Well, philosophy often deals with ​normative questions – questions not just about what ​is​, but also questions about what ​should or ​ought to be, what is ​good or ​bad​, ​just or ​unjust​. If you want to understand SHA-256 or UTXOs, ask a cryptographer or software engineer. If you want to understand how monetary supply relates to velocity and real buying power, ask an economist. 

But if you want to know whether the financial privacy that Bitcoin can provide is ​good​, or whether its disinflationary monetary policy promotes ​justice or ​ought to command your support – ask philosophers. Even when a philosopher doesn’t answer your questions decisively, they can help you find and weigh diverse factors.

You might worry that philosophy is more about questions than answers. And we did just concede that philosophers might not answer questions conclusively. But to bypass philosophy for that reason is to misunderstand what it offers. Philosophers don’t just pose questions, smirk and then go on their merry way. We try to answer them. Sometimes we succeed. But even when we don’t, we outline what good answers should look like, give reasons to prefer some answers over others, outline criteria by which to judge answers, and so on. Philosophy isn’t just about the questions or the answers. It’s about the ​reasons​. And reasons deepen understanding, even when they’re not conclusive.

When done well, philosophy takes us beyond slogans and into the hard work of figuring things out – without any topical or evidential limits.

Normative reasoning isn’t idle. It’s the beating heart of the Bitcoin community. Here is an optimistic hypothesis: Bitcoiners want more than to just get rich; they also want to make the world better. But is the world better off without centralized financial institutions? Questions like this are complicated, discipline-spanning, and normative – they are, in other words, philosophical. And we need the disciplinary tools of philosophy to understand Bitcoin and assess its promise.

Into the mixer

Let’s look at an example in more detail. 

If you’ve thought about Bitcoin’s architecture, you know that it uses UTXOs and not accounts, and you may have heard about mixers, CoinJoin, CoinSwap and other privacy-enhancing techniques. Bitcoin can promote financial privacy. But what’s the value of financial privacy? How can you be better off just because someone doesn’t know how you use your money? Philosophical reasoning here can help us move beyond easy slogans and into genuine inquiry. Consider the following (​inspired by a classic article on privacy​):

Conclusion: It’s good to CoinJoin because it secures your financial privacy, and financial privacy is good.

How so?

First: There are some things you’d tell your doctor that you’d not tell your friends, and vice versa. And rightly so; a friendship is a different kind of relationship than a doctor-patient one.

Second: It is healthy to relate to different people differently. Why? Variety in relationships – friends, lovers, compatriots, colleagues – is a delight and one of the things that makes life worth living. It is good that different people know different things about you and thus relate to you in fundamentally divergent ways. Your relationships with your bosses and co-workers and other acquaintances would likely falter if they knew everything about you that your best friend does.

Bitcoiners want more than to just get rich, they also want to make the world better.

Third: What you do with money shows who you are at heart. To know what you do with your money – which organizations and political causes you donate to and how much you donate to them, or what flavor and size of condoms you buy, for example – is to know you. What you’re willing to give up in exchange for something shows what you really value in ways that mere words cannot.

Fourth: Though Bitcoin has a public blockchain, it can be used in ways that protect financial privacy. To use CoinJoin is to join a monetary crowd and obscure the details of your buying, selling, and saving from prying eyes – friendly or otherwise.

We can put these steps together to conclude that using CoinJoin is good. It allows you to filter who knows what about your money and, hence, your heart. It preserves the valuable ability to keep separate relationships separate.

An intriguing line of reasoning! There might be something to it, even if it’s not airtight. But notice two things. First, thinking like this takes us beyond obvious questions and catchphrases. It gives us ​reasons​. 

Second, we drew on a theory about human relationships and their differentiation (psychology), a hypothesis about how behavior reveals character (an application of the theory of revealed preferences from economics and a theory about what those revealed preferences say about us), and an observation about CoinJoin (applied computer science). It’s only in pulling all of these together that we can make progress in our thinking. That’s philosophy. That’s just one illustration of how philosophy can help sharpen an important question and use various kinds of evidence in addressing it. Here are some more, along with the area of philosophy that covers them:

In each of these cases, computer science or economics alone won’t address our most pressing questions about Bitcoin. We need to bring together all that we know about those disciplines as well as metaphysics, philosophy of law, ethics and so on. We need to bundle. We need philosophy.
Some think of philosophy as idle navel-gazing. And some philosophical questions fit that mold. But the questions above? Anyone reading this article has a stake in them. Speculators need to understand what Bitcoin ​is before plowing money into a BTC position. Advocates need arguments with greater depth than “Number Go Up” and “Printer Go Brrr” if they’re to genuinely persuade their audience of a long term value thesis. Regulators (and ordinary voters who put them into office) need practical wisdom in assessing Bitcoin’s growing relevance and the underlying motivations of its users. And conscientious users need to assess how to best join a monetary revolution without unnecessarily harming others – or themselves.