Smart Money, Essay Example

The development as well as success of the Bitcoin currency clearly alters our fundamental relationship with money. Bitcoin as an entirely electronic currency is a historical novelty that is made possible by the new technologies, as money is no longer tied to a material form. Furthermore, arguably what is even more revolutionary is that Bitcoin is not controlled or regulated by a central authority, which essentially means that it is a currency that is not subject to decisions that are made by social, political and financial elites. It appears, from this perspective, that Bitcoin is a truly democratic currency that has emerged because of technological developments.

However, this optimistic view of the phenomenon of Bitcoin is perhaps too haste in its assessment. For example, from one perspective, the phenomenon of electronic money is not entirely reducible to Bitcoin: many transactions, from credit card use to Paypal and bank accounts means that physical money is no longer dominant in our economy. From yet another perspective, in so far as this currency has no intrinsic value and is entirely electronic, this perhaps makes it subject to manipulation. Certainly, this problem of manipulation is also extant in paper monies, which are normally regulated by a political authority in collusion with various economic sectors of the society, such as in the United States. However, the democratic potential of Bitcoin does not mean that this potential could be realized: there is nothing to prevent others from manipulating the system in a manner that is detrimental, since the currency has no intrinsic value. It is very possible, for example, that suddenly one’s entire Bitcoin account will be erased; it is possible, because of legal apparatuses, that the currency is made illegal. It is furthermore possible that the currency is manipulated so as to make its value worthless. Despite the democratic potential of Bitcoin, there are still concerns which need to be clarified, concerns that are largely tied to the problem of relying on a currency that does not itself possess any intrinsic value.