Bitcoin has been a very interesting development in both the liberty movement as well as the monetary world. You might think of it as the economic version of libertarianism in that it is very much fighting the status quo and presents a radically different way of thinking about things.
But like libertarianism, bitcoin has the same threshold problem. It needs to be accepted by a critical mass of the population in order for its values to be shown and its tenets to be tested. Until then it is just an interesting experiment, but not world-changing. For libertarians, being widely dispersed among mostly non-libertarians has meant that our ideas never reach the critical mass needed. As loud as widely distributed protesters may shout, they never seem to be able to grow anywhere near the tipping point. One strong attempt to work around this problem has been the Free State Project, in which liberty activists are moving to New Hampshire in order to build the critical mass that is needed. We (I am a participant, having moved in 2005) are making great strides towards that goal.
By having over a thousand active liberty people working in a state that is more accepting of our ideas in the first place, we have changed laws, educated many people, and built some very cool communities. After seeing the activity and successes of the early movers, the project's founder even suggested that the original goal of 20,000 movers is far more than is needed to reach the tipping point.
So far the Free State Project seems to be destined to succeeed. So can this same strategy be used for bitcoin?
A few months ago, someone calling himself Baldur Friggjar Odinsson created Auroracoin. The basic idea is a clone of bitcoin, with half of all the coins being pre-generated and given away to the people of Iceland. (I think they deserve it, being the only country so far to stand up to the big bankers.) By "airdropping" the coins equally to all the citizens of the country, it will create the critical mass of users. IMHO, the airdrop is the only interesting distinction between it, bitcoin, and all the other clones.
Will it work? Is it real and not a scam? So far its still too early to tell, but at this point it looks like its real and it could work. The developers have distributed over 7% of the pre-mined coins, meaning around 7 percent of the population of Iceland either owns or has used the coins. That's pretty close to what scientists expect is the tipping point needed for it to become an accepted part of their society.
At this point I'm guessing this experiment will end in one of three ways:
- It could be a scam or fail due to some technical fault (not very likely IMHO - so far the airdrop has been working well, with a few minor hiccups).
- It could succeed on its own, becoming an alternative and complementary currency for the people of Iceland.
- It could be a "gateway drug", leading the population there to bitcoin.
Since the airdrop is proceeding better and faster than expected, merchants are coming on board, an Android wallet is just about ready for public use, and other people are working on additional infrastructure, things are looking somewhat positive. The price isn't showing that, however, leading to some moaning on the forums. But even the price slump was predicted, as people unfamiliar with crypto-currencies cash out their windfall. But when someone is selling, someone is also buying. And while the airdrop naturally slows down, the rush to sell will also slow; and the expected use of the AUR as a currency will grow. That will cause the price decline to slow and eventually reverse, making those who hold onto their coins that much richer.
I hope this experiment succeeds. If it does, everyone except the entrenched banking industry (and die-hard statists) will win. And we'll have two recent successes to show people how to effect change.