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The Bitcoin Threat

Unless a currency has been authenticated by a government, it is unlikely to be fully trusted. But that does not mean that it cannot become a plaything for the naïve and gullible, or a weapon of financial mass destruction for political belligerents around the world.

LONDON – The extraordinary volatility of Bitcoin and other cryptocurrencies has become a threat not just to the international financial system, but also to political order. The blockchain technology upon which cryptocurrencies are based promises a better and more secure payment method than anything seen before, and some believe that cryptocurrencies will replace electronic currency in traditional bank accounts, just as electronic transfers replaced paper money, which succeeded gold and silver.

But others are rightly suspicious that this new technology might be manipulated or abused. Money is part of the social fabric. For most of the history of human civilization, it has provided a basis for trust between people and governments, and between individuals through exchange. It has almost always been an expression of sovereignty as well, and private currencies have been very rare.

In the case of metallic money, coins typically bore emblems of state identity, one of the earliest examples being the owl symbolizing the city of Athens. Usually, however, there was some confusion about whether the emblems on coins represented sovereignty or divinity. Whose head is on this coin? Is it Philip of Macedon or Alexander the Great, or is it Hercules? Later, Roman emperors would exploit this ambiguity, by stamping coins with their own “divine” visage. And even today, British coins have embossed words linking the monarchy to God.

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