Bitcoin – The Future Of Money?

I have begun work on a new book.

It is called Bitcoin – The Future Of Money? Once again I am funding it with Unbound.

As the more observant will deduce, it is about the new form of digital money known as Bitcoin.

You might of the view that Bitcoin is up there with tulips and South Sea companies in the greatest-ever-bubbles parade.

Alternatively, you might feel that this new digital cash technology is going to change the way we transact. Not only that, it will alter the very nature of money with huge social, political and economic ramifications.

There is also the third possibility – which cannot be ignored – that you couldn’t give a flying #$@*%! either way.

The story of Bitcoin is an amazing one – from its birth amongst the ‘cypherpunk’ revolutionaries, who believed they could change the world through computer hacking and cryptography, to its million-fold rise in price to the mystery surrounding its creator, who may as well have be aboard the Mary Rose for all we know about him.

I’ll tell this story, I’ll take you on a walk along the Silk Road (the Amazon-like website where you can buy what we’ll call ‘black market goods’), I’ll consider how Bitcoin might change the world, if at all, whether you should buy some and how to, and, most of all, I explain what the bloody thing is and how it works.

Unlike Life After The State, I am not planning to solve all the world’s problems this time around, so you should see a comparatively quick return on your money in the form of a book.

Please help make it happen by pledging here.

We only launched last week and we already over 70% funded, thanks to people’s excitement and generosity. It is happening in record time.

Both fame and glory await you when you pledge and get your name in the back of this seminal work*.

The link is here in case you missed it.

With fond regards wherever you are in the world,


* Most of the statements in the sentence are almost certainly not true


The way we help people does not help people

The highest form of charity, argued the 12th-century Jewish philosopher Maimonides, is when the help given enables the receiver to become self-sufficient.

But our systems of state charity – aka welfare – have too frequently had the opposite effect: they have actually created dependency. It is time to re-think the way we help people.

I’m going to suggest something that many might find upsetting and outlandish – that welfare would be more effective, more varied, more widespread and affordable if there were no state involvement.

People instinctively think that without a welfare state, the poor and needy would not be looked after. At such an unacceptable prospect, people then become fervent in their defence of state welfare systems. You can see the passion people feel about this erupting all over the Twitter and the blogosphere.

Before we start, I want you to get your head around one thought – suggesting that the welfare system is not working and that we should do away with it is not the same as suggesting the poor and needy should not be looked after. Not at all – in fact, quite the opposite.

Care is complicated – and it’s not just the recipient who matters

The provision of care is a delicate, complicated and unpredictable process. Sometimes money might help the recipient towards self-sufficiency, but sometimes not. Giving money might lead to a temporary lessening of suffering, but often it can lead to greater dependency and less self-reliance. Sometimes something local is required, sometimes something practical, sometimes something psychological or emotional, sometimes something specific to the individual’s circumstances – sometimes what’s needed is a proverbial kick up the backside. Different circumstances require different forms of care.

The dignity of the recipient also needs to be considered. It can be demeaning to receive charity. On occasion anonymity might be required – but on other occasions it might not be.

How on earth can anyone hope to design a top-down, one-size-fits-all, system of state welfare that can meet all these varying needs consistently over time?

Then there is the matter of the giver. He or she must also be considered.

Compassion, care and the giving of charity and care are essential human functions – they are a part of human nature. People need to give as much as they need to receive. You just need to see the pleasure children get from giving as evidence of this. Even perhaps the most ruthless, murderous drug-trafficker that ever drew breath, Pablo Escobar, was a prolific giver. He built houses, churches and schools in his native city of Medellin on a scale unmatched by the Colombian government.

In the charitable process, the giver has needs too. Sometimes the giver wants to be anonymous – sometimes they want recognition. Sometimes he or she likes to be involved with the recipient in some way, sometimes not.

But, in the process of state care, the giver’s needs are not even considered. Taxes are taken and that is it. We are given no real say in how the money we have earned is spent, bar a vote of dubious effect every five years. Often the giver is morally opposed to what his taxes are being spent on!

The forced giving that is taxation actually destroys the altruistic satisfaction that people get from giving voluntarily. To help others and to share with them is part of humanity. But, in a world in which government is responsible for the care of the poor and needy, that compassion is removed from life. As a result, the state now has a near monopoly on compassion!

In fact it is even more bizarrely specific than that: the pro-large-welfare-state left wing has the monopoly on compassion. Anyone who doesn’t agree with the concept of a large, generous welfare state is deemed heartless and selfish.

How the state destroys people’s ability to give

While you have to pay the government through tax to provide welfare (or heathcare or education) your ability to provide any of these things for yourself or your family is reduced, because you have less money. After taxes are taken from you, you often can’t then afford to pay for your children’s school, your doctor, your hospital, your home, or your charity to others – so you find yourself depending on state help in some way. And so more and more people, in some way or other, are caught in the ever-growing dependency net.

What’s more, if the state is providing care to the needy, you are then absolved of the responsibility to do so.

Meanwhile, government welfare, as well as being inflexible, is expensive. The large organisations, such as the NHS or the DWP, through which care is administered can be inefficient and wasteful. Worse yet, they are be prone to corruption and rent-seeking (people gaming the system in some way).

If you look at food, clothing or technology – essential human needs that, largely, are not supplied by the state – we have, over the last thirty of forty years, seen dramatic falls in price and dramatic improvement in quality. Competition has driven costs lower. Yet welfare has not experienced the same improvements. Why not? Because, thanks to the state’s near monopoly, there is no competition.

The idea of competition in welfare is offensive to many. But we need it if we are to improve quality and lower costs.

The greatest expense in our lives is not, as many believe, your house or your children’s education, it is in fact government. But imagine a world with minimal state. Suddenly that expense is removed. Without the cost of the state, we have more capital to spend and invest. People are empowered. Our ability to help others is increased.

In a world with no state, what’s more, suddenly our responsibility to help others is also increased. If the state is not helping people, you must. Simultaneously, thanks to competition, the help we want to offer is cheaper, more varied and better in quality – organisations are competing with each other to offer better help at a lower price.

The result will be more affordable welfare, more widespread and diverse welfare, more flexible welfare that can provide for specific needs, more effective welfare, more onus to provide welfare – ultimately, better welfare.

Without a welfare state the poor and needy won’t be looked after, you say? I suggest they will be – to a much higher standard than they are today.


What’s killing our economy? Money.

A version of this article was previously published in The Independent.  We publish it here with the author’s permission.

I subscribe to George Orwell’s view that “On the whole human beings want to be good, but not too good, and not quite all the time.” But if man is “mostly good”, I ask myself, why is it so easy to look around at the world and find so much to be troubled by?

Wars, waste, famine in one part of the world, obesity in another, excess consumption, a financial system that’s out of control – and so on.

My particular bête noire is the unequal distribution of wealth. There are all sorts of manifestations.

Across generations – for the first time in history my and the next generation is poorer than its parents. Yet, with man advancing, surely this shouldn’t be so? Most people in London under the age of 30 don’t believe they’ll ever own a house – that’s awful.

We see it across nations. The richest 400 people in the world have assets equivalent to the poorest 140 million, runs one statistic. In fact, it’s worse than that as, thanks to their debt, many in the West now have a negative net worth.

We see it within nations. The wealthiest one per cent of Americans pocket one-quarter of the country’s income. Through property, bank accounts, investments and art, they control as much as half of total US wealth. That share of wealth has doubled in the past four decades.

We even see it within institutions with the high-flying City boss who earns 1,000 times more than some lowly cashier in the same bank.

If man is, as Orwell says, “mostly good” how has the distribution of wealth become so skewed?

In my book, I argue that it’s our systems that are at fault. Yet they are so big and entrenched, there’s nothing much anyone can do to change them, beyond superficial reform. The biggest villain of all is our system of money.

Many people spend a lot of time thinking about how to make more money. But not many people think about how our system money actually works.

It’s a system that has been in operation globally for just 40 years – since the US finally departed the gold standard in 1971. The Bank Of England calls it “fiduciary money”, others “fiat currency”. Under this system, money is the issuance of governments. It’s not backed by anything tangible except the law. Banks have the power to create money through lending.

In 1971, I could have taken my son to the FA Cup Final for £2 (now over £100). The Mars Bar I bought him at half-time would be 2p (now 60p). The beer I bought myself would be 11p (now £5 a pint at Wembley). The gallon of petrol I needed to get me there and back would be 33p (now £7). And the house we went home to would be something like 2% of the price it is now.

Average earnings have increased too, but not by the same multiples. They have risen from around £1,500-2,000 per annum to about £25,000 today. The differential has been covered up by more debt, longer working hours, more women in the workplace and so on.

Yet through the 100 years of economic growth of the 19th century, prices actually fell according the wholesale price index, and wages rose.

Why does everything – except mass-produced goods – relentlessly rise in price? It’s this system of fiduciary money. There is almost no limit to how much can be created. And the more money there is, the more diluted its purchasing power becomes, and the higher prices will rise.

Some benefit hugely from this system: those who control it, and those who are at or near its point of issuance. Governments and banks, in other words. As well as enjoying a monopoly, they have the power to create money (whether by printing or through lending) and to charge interest on it. They also get to buy assets with their share of the newly minted money, before prices rise to reflect the new money in circulation.

Meanwhile the rest of us find that our savings or wages buy less and less, so we have to take on debt, and then pay interest on that debt, to be able to buy the things that we, or our parents, were once able to afford to buy outright.

There is a constant transfer of wealth and it compounds over time. The few benefit at the expense of the many. This is why the state and financial sectors have grown so disproportionately large.

It’s led to the horrendous gap between the so-called 1% (the super-rich) and everyone else. It’s responsible for this gap in the wealth between generations. It’s why we have a culture based on debt and spending, rather than saving and investment.

And it will only get worse as this transfer-of-wealth cycle repeats and repeats.

My book is called Life After The State. In it you’ll discover:

  • How this system of money came about
  • Case studies – the hidden, destructive effects of the system.
  • How government spending and subsidy actually cause poverty, rather than prevent it.
  • How to reform it

As my book is about change, I’ve decided to publish it with Unbound, which is changing the traditional publishing model. You can find out more and pre-order my book here.

Changing the way money works is simple. It’s not electorally unpalatable. And it would make a huge, dramatic improvement in all of our lives. Read Life After The State and you’ll see why.