Bitcoin Dreams

Kevin Werbach considers the pitfalls and the potential of Bitcoin and blockchain, explored in three recent publications.

Bitcoin Dreams

Bitcoin Billionaires by Ben Mezrich. Flatiron Books. 288 pages.Digital Cash by Finn Brunton. Princeton University Press. 272 pages.The White Paper by Ben Vickers, James Bridle, Jaya Klara Brekke, and Satoshi Nakamoto. Ignota Books. 144 pages.

IN HIS 1780 Constitution for the State of Massachusetts, John Adams ended a long list of enumerated rights with the promise of “a government of laws and not of men.” This stirring phrase encapsulated the whole project of America, and more broadly the Enlightenment. Humans are inconstant and corruptible; laws are durable and objective. For millennia, civilizations were directed by rulers. Henceforth the rulers would rule, and be ruled, by formally specified enactments and procedures.

Adams’s eight words correspond to what modern cryptographers call a hash function, which is a kind of digital fingerprint. They immediately identify the much larger document. Yet to go backward, to build a workable and fully specified system of government from a terse aphorism, is almost impossibly challenging. There is a reason why few attempts, before or since, have been as successful as the American constitutional experiment.

Translating simple ideals into an effective machinery of governance is so difficult because of a paradox hidden within Adams’s dictum. Who makes the laws, if not women and men? Even more important, who implements and enforces them? The universe may be an apparatus of pure laws, many of which we still fail to comprehend, yet anything humans touch — even the machines we create — is imbued with the blessings and curses of humanity. This has not stopped centuries of dreamers and scientists and revolutionaries from seeking to organize communities around mechanistic principles, even after the catastrophic failure of “scientific socialism” in the Soviet Union, to name one of many examples.

Again, American history is illustrative. Governments of laws can only thrive in tandem with the good governance of men and women. When asked what sort of system the Constitutional Convention of 1787 settled upon, Benjamin Franklin responded that the framers had constructed a republic, “if you can keep it.”


On Halloween 2008, someone posted a short technical paper to an internet mailing list dedicated to cryptography, the science of secure communications. In the spirit of laws, not men, the author’s name is a still-mysterious pseudonym, Satoshi Nakamoto. Whoever wrote “Bitcoin: A Peer-to-Peer Electronic Cash System” believed that a bedrock institution of any society — its money, or system of value exchange — could be insulated from human foibles. All it took was some clever applications of computer science and game theory, iterating on two decades of digital currency schemes: a government of code and not of men. Improbably, Bitcoin spectacularly boomed where all its predecessors convincingly failed

By now you’re probably aware of Bitcoin as the progenitor of speculative investment in cryptocurrencies and the broader blockchain phenomenon. But there is far more to the story. Who would be so daft as to suggest that an innovation as important as Bitcoin is all about the money?

We can now reflect on Satoshi Nakamoto’s invention with the benefit of a decade of hindsight. (Those seeking a more in situ account of the early days of Bitcoin should read New York Times journalist Nathaniel Popper’s excellent 2015 account, Digital Gold.) Three new books, in very different ways, tell the tale of what Bitcoin wrought. Each documents the significance of a functioning system of decentralized digital value exchange. Below the surface, though, they all highlight the greater challenges in realizing that potential. Echoing Franklin, we now have a blockchain, if we can keep it.


The Bitcoin white paper is only nine pages. It is mostly in English, not equations or code. But it is still quite challenging for most readers to digest, not least because its basic ideas are so counterintuitive. An annotated guidebook for the perplexed now exists, appropriately issued by a tiny publisher focused on “the intersection of technology, myth-making and magic.” The White Paper, which offers an explanatory essay about Bitcoin and a paragraph-by-paragraph exposition of the holy text, is designed to convert skeptics to the wisdom of Satoshi. Its modest goal is to “make legible, in simple terms, a system of knowledge that, in its current form or another, has profound implications for how human beings might choose to organise their societies over the course of the next century.”

Clearly, the creators of The White Paper have drunk the Kool-Aid. And as with any religion, the account of revelation quickly segues to a denunciation of apostates who threaten its fulfillment:

What had started out as a wild experiment in autonomous self-government became an exercise in wealth creation for a small coterie of tech-savvy enthusiasts and those insightful early adopters willing to take a risk on an entirely untested new technology.

The fact that most people today know Bitcoin as a dodgy investment vehicle is the biggest barrier to appreciation of its true potential.

What saves The White Paper is that its commentators recognize that Bitcoin’s design itself bears responsibility for all the Lamborghini-driving cryptobros, devious scammers, and hangers-on. After all, Satoshi created a form of money for the taking. And the crucial innovation of Bitcoin’s design was that those who secure the network, the miners, are incentivized by a potential monetary reward, issued by the system itself. “Bitcoin is largely to blame” for its own bastardization, the introduction to The White Paper acknowledges, “by putting all of the potential of a truly distributed, anonymous network in the service of the market.” The technology investor Naval Ravikant expressed this most effectively when he tweeted that, “Bitcoin is a tool for freeing humanity from oligarchs and tyrants, dressed up as a get-rich-quick scheme.” That leaves open the question of whether its adopters will be too busy pursuing riches to bother with the troublesome business of freeing humanity.

For the curious, The White Paper does a good job explaining the mechanics of how Bitcoin implements deeper concepts of decentralization and “trustless” value creation, with due acknowledgment that the one thing that must be trusted is Bitcoin itself. If one can step back from the politics and messianism, then one can find just below the surface of the exegesis a helpful guide for better understanding the context and concepts behind cryptocurrencies. The final section, however, returns to being undiluted scripture, collecting most of Satoshi’s mailing-list utterances before his account went dead in 2011. (These are freely available online from the Satoshi Nakamoto Institute website, among other locations.)

What is missing from The White Paper, in addition to critical distance, is a sense of history. The commentators describe Bitcoin’s decentralization agenda as a response to the “crypto wars” of the 1990s, when the US government sought to exert control over strong encryption technology. But those were only skirmishes in a much longer conflict.


Finn Brunton, a professor of Media, Culture, and Communication at New York University, brings to life the history of efforts to synthesize money out of math and electrons, with Bitcoin as its culmination. His book bears the prosaic title Digital Cash, though a better one might have been “passing current,” which Brunton himself describes as the best summation of its contents. When we call something like the dollar a currency, it suggests many things: dynamic movement of “current money” through exchange, transferring electricity through wires, and ultimately, time itself. As Brunton explains, the construction of money is a gateway between acknowledged value in the present and potential value structures in imagined futures. And as John Adams or Benjamin Franklin would recognize, the greatest challenge in such a process is the people who carry it out.

Digital Cash is stocked with colorful characters, such as the Depression-era management huckster Howard Scott, promoter of “Technocracy Inc.”; the genius World War II computer scientist and later Navy rear admiral Grace Hopper; and the radical cryptographer Hal Finney, who made essential early contributions to Bitcoin shortly before dying of ALS, and now sits cryonically preserved in a tank in Arizona. The book also touches briefly on a substantial number of intellectual, literary, and technology figures and the complex interconnections between their ideas. Readers may at times feel as though they were dropped without explanation into the middle of a dinner party, albeit a delightful one. This said, Brunton’s often brilliant utopians, Extropians, cypherpunks, and Austrian School anarcho-capitalists, are hardly the sort of people one would trust to run an NCAA Tournament pool, let alone the global monetary system. Yet that is precisely their objective.

Brunton unpacks a series of technically complex innovations in economics, computer science, cryptography, and finance by showing, for their proponents, how these innovations were actually political in nature. Or, more precisely, they constituted new ways to achieve what John Adams articulated two centuries before: the Enlightenment ideal of laws, not men. As a prominent cryptocurrency enthusiast tweeted in June of this year, “Bitcoin is underpinned by math and cryptography. Like gravity, it works, whether you believe in it or not.”

Here we once again come to the tragic flaw in a beautiful dream. Our belief in gravity will not affect gravity, but by shaping our actions, it could very well affect us, as Galileo found when called before the pope. Even if a mechanistic monetary system (and by extension, such a society) “works,” we may not want to be part of it. Is the point to enable new, more egalitarian, and free communities? Or is it to avoid the need for community entirely, along with its rewards, like mutualism and human contact?

Brunton tells the story of Ted Nelson’s ur-hypertext system, Xanadu, and its sister project, Phil Salin’s American Information Exchange (AMIX), an e-commerce platform for digital services from the 1980s. They surpassed in some ways what the commercial internet and the World Wide Web would introduce a decade later. In particular, both incorporated the concepts of money and ownership. Yet both failed before ever really getting off the ground. Their ideas were unrealistically ambitious, especially for the computing and networking technology of their era. Digital cash, for example, wasn’t ready for primetime until many years later.

Perhaps, though, the Web and internet succeeded not in spite of their rejection of money, but because of it. They were created as public infrastructure for anyone to build on, embodied in open-source software. The currency of the Internet Engineering Task Force (IETF) was neither money nor authority derived from democratic processes, but “rough consensus and running code.” Consensus implies a community. It also happens to be the name for the process that Bitcoin and other blockchain systems use to verify transactions across a distributed network of participants. Recognizing the need for consensus means recognizing the need for governance: for the messy processes of collective action and allocation of authority. Bitcoin and other cryptocurrencies have already experienced several governance crises, including acrimonious “forks” that literally created competing ledgers from the same currency. Satoshi’s design, no matter how brilliant, can’t address every situation.

Brunton’s quasi-cranks are largely indifferent to the challenges of community. They are individualists united in their belief that greed is good, whether because it hastens the emergence of Hayekian “spontaneous order,” or speeds the coming of the Singularity whose benefits will infinitely dwarf any possible costs, or keeps what’s mine away from what the government can touch. And at times, they have a point. The “censorship-resistant” nature of Bitcoin’s blockchain technology makes it difficult for authoritarian governments to spy on dissidents; corrupt local officials to manipulate land titles to steal from peasants; and distributors to pass off low-quality fish, diamonds, or pharmaceuticals for the real thing. It also makes it hard to police money laundering, terrorist financing, and fraud, which are significant problems for the Bitcoin economy.

Greed is good just like ice cream is good — in moderation. Unconstrained, it produces not just the get-rich-quick mentality decried in The White Paper; it leads to the corrosive inequalities and social dysfunction of today’s United States. The belief in Bitcoin and other cryptocurrencies as platonic systems that eliminate the need for human governance nurtures an ethos of anything-goes nihilism. Bitcoin was conceived of as a way to replace central bankers with the infallible execution of software algorithms: rule by law embodied in code and cryptography. Yet, because it accords no special significance to decisions made by democratically elected and legally sovereign governments, the movement that developed around Bitcoin stands in direct opposition to the normal understanding of “the rule of law.” It is thus no surprise that prominent figures, such as economist and New York Times columnist Paul Krugman, believe that “Bitcoin is evil.”

Brunton tells the story of Bitcoin as the payoff for the quixotic and failed experiments that came before; it was the realization at last of the dream of passing current through the ether of a ubiquitous global data network. And yet at the end of his book he acknowledges the project’s ultimate emptiness if all that effort, and the fantastic amounts of computer processing and energy usage today dedicated to cryptocurrency mining, has no greater purpose:

It may well be the purest and most honest expression of a society that could not figure out what to do with its technological inventiveness — its energy, innovation, and abundance — except to squander it in creating new kinds of artificial scarcity: the monumental folly of our age.


Up to now, this has been a story populated by misfits and tinkerers at the margins of society. One consequence of Bitcoin’s success in demonstrating the feasibility of real digital cash is that the Bitcoin world changed quite rapidly. If we are talking about money, the kind that ordinary people agree is worth something, then we are now in the domain of the rich and famous: the celebrities and financiers and beautiful people. Satoshi published the white paper in 2008, but it was five years later, around 2013, that Bitcoin suddenly burst into mainstream consciousness and its price first spiraled into the stratosphere. That inflection point separated the true idealists from those pursuing the main chance. It also attracted the kinds of people who arrive at VIP concert lounges on yachts or rent villas in Ibiza to blow off steam. People like Cameron Winklevoss, rich Harvard graduate and Olympic rower, who happens to be the author of the tweet quoted earlier about how Bitcoin works like gravity.

You may recall Cameron and his twin brother, Tyler, as the foils to Facebook founder Mark Zuckerberg in the 2010 movie The Social Network, adapted from author Ben Mezrich’s The Accidental Billionaires. The Winklevoss twins return as the heroes of Mezrich’s new book, Bitcoin Billionaires, which chronicles their unlikely second act as two of the largest holders and most prominent investors in the Bitcoin world. A chance meeting with an entrepreneur at a party in 2012 thrusts them into the early Bitcoin scene. They had earned millions settling with Zuckerberg but found themselves pariahs in Silicon Valley when they tried to put it to work as venture capitalists. Branded as entitled jocks who nearly brought down a genius entrepreneur, the scions of Greenwich, Connecticut, and members of Harvard’s elite Porcellian Club were suddenly the outsiders. Until they found Bitcoin: “There was something about a system that relied on math, not trust, that was intensely appealing. Math was built on rules that no one, not even Zuckerberg, could break.”

You can probably imagine what happens next. Mezrich is an accomplished storyteller, and he reconstructs scenes and dialogue to tell a straightforward tale of redemption. Along the way, we meet Charlie Shrem, Erik Voorhees, and Roger Ver, Bitcoin true believers who could easily have appeared in the penultimate chapter of Brunton’s Digital Cash. Shrem, who runs the dollars-to-Bitcoin gateway that is the twins’ entry point as Bitcoin buyers and investors, is the most interesting and poignant character in the book. In a matter of months, he moves from his Orthodox Jewish parents’ Brooklyn basement to globe-trotting as a high-living Bitcoin celebrity to federal prison for money laundering. Shrem is the only one in the story who doesn’t get rich. He’s too busy building (and partying) to amass a Bitcoin hoard. The twins like a good party, but in Mezrich’s account, they never take their eyes off the ball.

Bitcoin Billionaires is a morality play, in which the Winklevoss twins’ hard work and honesty triumphs over insider claques, hedonism, and perfidy. The technology itself is just the MacGuffin. Few watching The Social Network, Part II: Revenge of the Winklevii will be particularly interested in the mechanics of Satoshi’s proof of work consensus algorithm. That’s fine for a movie or a beach read. And perhaps books targeting the general public will be a gateway to exploration of the deeper ideas animating the blockchain movement. Still, it would be a shame if the character-driven drama obscures the significance of what everyone is discussing.

In a climactic scene near the end of Bitcoin Billionaires, the twins are subpoenaed to testify at a hearing before New York’s Department of Financial Services. The 2015 BitLicense regulations on cryptocurrency businesses that emerged from that hearing provoked outrage in the Bitcoin community. Yet the Winklevoss brothers do not use the microphone to rail against government intrusion. Quite the contrary. When his turn comes to testify, Cameron declares, “I don’t think anybody here would disagree with the fact that a sheriff would be a good thing.”

The twins, like their fellow enthusiasts, are fully committed to trusting the algorithmic laws of Bitcoin as a better, more efficient, and more just regime than governmental creation of money. In Mezrich’s telling, they diverge from Shrem, Ver, and Voorhees because they are the adults in the room: they want a regulated future for Bitcoin. They are wise enough to see that Silk Road, the notorious Bitcoin-powered dark marketplace for illegal transactions whose operator, Ross Ulbricht, is now serving life in prison, was an inevitable outgrowth of unregulated money. In subsequent years, billions of dollars would be taken from investors by scammers offering cryptocurrency tokens in “initial coin offerings” that turned out to be worthless. And customers of QuadrigaCX, the largest cryptocurrency exchange in Canada, would discover their $200 million of assets had been siphoned off by its now-dead CEO, with no recourse. Governance and regulation to rein in such behavior are essential if cryptocurrencies hope to take the next step in terms of legitimacy and growth, and many efforts in this direction are underway around the world. At that point, they truly could transform the world by offering a new decentralized foundation for money.

Mezrich concludes his book with an imagined scene of a hoodie-clad Mark Zuckerberg at Facebook headquarters in early 2018, typing out his annual missive to his nearly two billion users. In it, he identified encryption and cryptocurrencies as important technologies of the future that Facebook would need to explore. The message was clear: the Winklevoss twins had won. Not so fast. Eighteen months later, Facebook unveiled Libra, a cryptocurrency framework with an audacious plan to reinvent money, leveraging Facebook’s massive footprint. Meanwhile, the Winklevoss Bitcoin exchange-traded fund (ETF) application, their ballyhooed effort to bring Bitcoin to the masses, languishes at the Securities and Exchange Commission. The twins are Bitcoin billionaires (as long as the volatile price stays in the five digits). Yet Zuckerberg may get the last laugh.


Any successful new system for generating money or power will attract idealists, fools, con men, and the establishment in equal measure. The main difference between the eccentrics in Brunton’s book and the wealthy entrepreneurs in Mezrich’s is that the latter had the luck to pick the digital cash that actually worked. We should never delude ourselves into thinking that math and software, as extraordinarily powerful as they may be, can eliminate contingency and the sorts of abuses that brought down most utopian schemes throughout history.

In March 2019, Donald Trump announced his intent to nominate Stephen Moore, a conservative commentator, to the Board of Governors of the Federal Reserve. The Fed, with its convoluted structures and deeply cherished commitment to the independence of central banking from politics, is perhaps the modern American epitome of government by “laws and not of men.” Moore, a political hack with a long record of dangerously incompetent statements, represented the opposite. So embarrassing was his nomination even to conservative economists and business leaders that it was pulled after a few weeks.

If you have read this far, Stephen Moore’s next act should not be surprising. He joined a cryptocurrency company, just as Bitcoin was entering a bull run. Its goal: A cryptocurrency to serve as a decentralized central bank. “I’m really excited about doing this,” Moore said. “I hope it makes me rich.”

John Adams, he of “government of laws and not of men,” is surely rolling over in his grave at the state of the United States today. He can take comfort that, somewhere, Satoshi Nakamoto is experiencing the same anguish.


Kevin Werbach is a professor at the Wharton School, University of Pennsylvania, and the author of The Blockchain and the New Architecture of Trust. Follow him on Twitter @kwerb.

LARB Contributor

Kevin Werbach is professor of Legal Studies and Business Ethics at the Wharton School, University of Pennsylvania. A world-renowned expert on emerging technology, he examines business and policy implications of developments such as broadband, big data, gamification, and blockchain. Werbach served on the Obama administration’s Presidential Transition Team, founded the Supernova Group (a technology conference and consulting firm), helped develop the US approach to internet policy during the Clinton administration, and created one of the most successful massive open online courses, with nearly 500,000 enrollments. His books include For the Win: How Game Thinking Can Revolutionize Your Business and The Blockchain and the New Architecture of Trust.


LARB Staff Recommendations

Did you know LARB is a reader-supported nonprofit?

LARB publishes daily without a paywall as part of our mission to make rigorous, incisive, and engaging writing on every aspect of literature, culture, and the arts freely accessible to the public. Help us continue this work with your tax-deductible donation today!