Bitcoin is the first virtual currency of its kind: completely conducted through the Internet and transacted anonymously with the use of a peer-to-peer network. But who controls bitcoin? What central authority regulates its value and production? The unique thing about bitcoin is that it lacks a governing body. Without a company to oversee it, bitcoin operates solely through users and their computers, and value is based on demand and how often bitcoins are being “mined.” The question which arises with this system is whether or not bitcoin will be sustainable without a central organization to monitor and guide it. Langdon Winner, in his work The Whale and the Reactor: A Search for Limits in an Age of High Technology, offers insight into the political aspects of such advanced technologies, and the necessity for either an authoritative power or government regulation.
In Winner’s writing, he analyzes how new forms of technology serve as “political artifacts.” Many advanced technological forms serve as a way to build order in our current society.1 Winner explains that “Consciously or unconsciously . . . societies choose structures for technologies that influence how people are going to work, communicate . . . and so forth over a very long time.” Bitcoin as a virtual currency can similarly be analyzed. Because currency is traditionally maintained by the government in order to ensure security and stability, there is debate over whether bitcoin should be federally regulated. In fact, some users have confidence in bitcoin specifically for its separation from the government. It offers an alternative for those who mistrust the money supply stability and fear an abrupt and purposeful inflationary period. If bitcoin continues to grow in popularity, it could signal general dissatisfaction with the management of U.S. currency.
The social form of many technological systems can be a major determinant in its effective function. In The Whale and the Reactor, Winner discusses a specific study in which it was found that routine operation of many systems requires “a large-scale centralized, hierarchical organization administered by highly skilled managers.”1 This hierarchy specifically relies on executives to keep track of and coordinate responsibilities. Bitcoin, however, does not have a central authority and is therefore run by no single person or organization. This also means that there is not a “contractual relationship” between the people mining bitcoins and the initial creator of the system. 2 According to the previously stated theory, bitcoin would consequently not serve as an efficiently-working system with a proper social organization.
Some may argue that the solution to this lack of central authority is simply government regulation. The anonymity of bitcoin transactions creates an additional fear of its use for illegal activity and money laundering. However, some inherent characteristics of bitcoin make regulation difficult. Primarily, its existence as a virtual currency, rather than a physical coin or paper, prevent it from regulation as a “community currency,” or any medium of exchange that is not the national currency.2 Additionally, an injunction or other action to terminate the use of bitcoin is impossible, given bitcoin’s lack of a central company against which to act. According to Winner’s The Whale and the Reactor, bitcoin’s nonexistent principal authority and resistance to government regulation classifies it outside of the structure of traditional technological advancements.
1Langdon, Winner. The Whale and the Reactor: A Search for Limits in an Age of High Technology. Chicago: The University of Chicago Press, 1986.
2Kaplanov, Nikolei M. “Nerdy Money: Bitcoin, the Private Digital Currency, and the Case Against its Regulation.” Loyola Consumer Law Review 25:1 (2013). Web.