This thesis explores bitcoin, an emerging digital alternative currency and transaction technology, in international monetary relations. Three arguments are made:
Firstly, it is claimed that the evolution of the currency space towards the emergence of digital alternative currencies was a well anticipated phenomenon by the academic literature of International Political Economy. The thesis traces the evolution of international monetary relations back to Friedrich von Hayek’s vision of competing private currencies, and particularly to contributions by IPE scholar Benjamin Cohen.
Secondly, centralization is claimed to be the main reason for failures of previous digital currencies while bitcoin’s decentralized technology is seen as fulfilling all those long anticipated but never accomplished prerequisites. It is argued that bitcoin is a new innovative transaction technology providing an economic utility for businesses and consumers by reducing transaction costs. The predominantly negative media coverage of bitcoin as a Ponzi scheme or fraud is addressed as a misunderstanding of the necessary prerequisites anticipated in the literature for the evolution of digital currencies.
Finally, bitcoin’s transaction technology is looked at from a critical geography perspective emphasizing how it enables capital to flow in currently impenetrable spaces. This dynamic is understood as a continuation of the old imperialist expansion of capital by innovative technological means. In supporting this process, the United States is seen as acting as a hegemony providing a public good by facilitating capital flows.
Table of Contents
1 Introduction
2 Bitcoin – an Anticipated Evolution of the Currency Space
2.1 Hayek’s Vision of Currency Competition and Bitcoin’s Technology
2.2 Evolution of Currency Space: from Deterritorialisation to Denationalisation
2.3 Anticipated Prerequisites for the Evolution of Digital Alternative Currencies
3 Bitcoin – a New Technological Innovation
3.1 Centralisation as the Failure of Historic Digital Alternative Currencies
3.2 Bitcoin’s Innovation: Cryptography, Open Source, and Decentralisation
3.2.1 Security
3.2.2 Anonymity
3.2.3 Portability
3.2.4 Reliability
3.2.5 Trust
3.2.6 Value
3.2.7 Transactors
3.3 Bitcoin as Largest Digital Currency and Growing Number of Transactors
3.4 Disruptive Market Potential vs. Notions of Ponzi Scheme and Fraud
4 Bitcoin – an Old Imperialist Dynamic of Capital Expansion
4.1 Capital’s Need for Worldwide Expansion
4.2 Bitcoin and Imperialist Capital Flows
4.3 U.S. as a Hegemon for Capital Expansion Technology
5 Conclusion
Research Objectives and Themes
This thesis investigates the role of Bitcoin within international monetary relations, arguing that its emergence represents both a predicted technological evolution and a mechanism for the continuation of imperialist capital expansion. The work examines how Bitcoin fulfills theoretical prerequisites for successful digital currencies while simultaneously functioning as a disruptive technological tool that facilitates the flow of capital into previously inaccessible regions.
- The historical anticipation of digital currency evolution within International Political Economy (IPE) literature.
- Bitcoin's technological superiority over failed predecessors due to its decentralized, open-source architecture.
- The economic utility of Bitcoin in lowering transaction costs and bypassing capital controls in global markets.
- The critical geography perspective regarding how Bitcoin promotes the imperialist expansion of capital.
Excerpt from the Book
3.1 Centralisation as the Failure of Historic Digital Alternative Currencies
Bitcoin was the first decentralised open source implementation of cryptography applied on digital currencies – it is both a decentralised technical transaction protocol and a digital currency. This particular combination is unique to bitcoin – among the now emerging altcoins modelled after bitcoin – as historical attempts in the digital alternative currency space were based on a central trusted third-party institution such as a particular private company.
For example, two open but centralised digital payment projects were Beenz.com and Flooz.com in the late 1990s (Hileman 2014) representing the infamous dotcom bubble. Even already in the 1980-90s a larger number of similar U.S. companies emerged, such as CheckFree (’81) or CyberCash (’94), which all tried to establish new kinds of “digital money architectures” focusing on enabling basic internet commerce in form of bill payments or bank transactions online (Lynch and Lundquist 1996, 23).
While these forms of digital currencies were all clearly centralised in design, one company called DigiCash, founded in 1990 by U.S. cryptologist David Chaum based on his scholarly work, tried to market a more decentralised system of cryptographically based anonymous peer-to-peer transactions for the consumer, similar to bitcoin in its technical features emphasising anonymous transactions. In contrast, however, DigiCash still operated a centralised private company structure around it organising the exchange of fiat currency through bank transfers into their digital currency (Levy 1994). Seigniorage in that sense was based on a centralised company ultimately aiming for private profit while user-to-user transactions were already decentralised.
Summary of Chapters
1 Introduction: Provides an overview of the thesis, presenting the arguments that Bitcoin was an anticipated phenomenon, a technological innovation, and a facilitator of imperialist capital expansion.
2 Bitcoin – an Anticipated Evolution of the Currency Space: Traces the theoretical foundations of digital currencies back to Hayek and Cohen, highlighting the anticipated transition toward decentralized private monies.
3 Bitcoin – a New Technological Innovation: Analyzes how Bitcoin's decentralized ledger and cryptographic foundation overcome the centralization failures of historical digital currency projects.
4 Bitcoin – an Old Imperialist Dynamic of Capital Expansion: Examines Bitcoin through a critical geography lens, arguing it enables the expansion of capital into new global spaces under the influence of the U.S. as a hegemon.
5 Conclusion: Summarizes the thesis findings, concluding that Bitcoin represents a synthesis of modern technological innovation and traditional imperialist dynamics.
Keywords
Bitcoin, International Political Economy, Currency Competition, Decentralization, Cryptography, Seigniorage, Capital Expansion, Imperialism, Digital Currency, Financial Innovation, Blockchain, Monetary Relations, Hegemony, Transaction Costs, Open Source.
Frequently Asked Questions
What is the fundamental focus of this research?
The research explores the emergence of Bitcoin within the context of international monetary relations, positioning it as both a technological innovation and a facilitator of capital expansion.
What are the primary thematic areas covered?
The core themes include the theoretical anticipation of digital currencies in IPE literature, the technological differences between Bitcoin and historical predecessors, and the critical geography perspective on capital flow.
What is the central research objective?
The main objective is to analyze why Bitcoin succeeded where previous digital currencies failed and how its adoption relates to long-standing patterns of imperialist capital expansion.
Which methodology does the author employ?
The author uses a qualitative approach, synthesizing IPE theoretical frameworks (notably those of Benjamin Cohen and Friedrich von Hayek) with current market data and a critical geography analysis of capital flows.
What aspects are addressed in the main body of the work?
The work moves from theoretical foundations of currency competition to a technical evaluation of Bitcoin's innovations, followed by an analysis of its disruptive market potential and its role in global capital movements.
Which keywords best characterize the thesis?
The work is characterized by terms such as Bitcoin, Decentralization, IPE, Seigniorage, Capital Expansion, Imperialism, and Cryptography.
How does the author explain the failure of historical digital currencies like DigiCash?
The author argues that these projects failed due to their centralized corporate structures, which necessitated closed-source systems to protect private profits, thereby failing to establish the trust and value required for a successful alternative currency.
How is the role of the United States interpreted in this context?
The author interprets the U.S. as a hegemon, suggesting that it facilitates the technological foundations of Bitcoin—either through direct support or infrastructure development—to enable the global expansion of capital.
- Quote paper
- Carl Philipp Trump (Author), 2014, Bitcoin in International Monetary Relations. New Innovation or Old Imperialism?, Munich, GRIN Verlag, https://www.grin.com/document/899632
