Progress pill
The great bubble of 2011

Bitcoin and political activism

Bitcoin's Pioneering Era

Bitcoin and political activism

  • The relationship with American libertarianism
  • Free Talk Live radio show
  • Roger Ver, Bitcoin's Jesus
  • Erik Voorhees, Ira Miller and their projects
  • The Free State Project in New Hampshire
  • The Occupy Wall Street movement
  • The role of ideology
Bitcoin is an inherently political object in that it serves as a tool of liberation and enables activities outside the legal framework. This is why it has naturally attracted ideologically motivated individuals, who often became its most passionate supporters. Moreover, its rise was aided by the great skepticism and anger towards the banking system that stemmed from the 2008 financial crisis: activists saw cryptocurrency as an alternative to the financial institutions they deemed corrupt.
Bitcoin in particular benefited from the American libertarian movement, which advocated both economic freedom (typical of Republicans) and moral freedom (typical of Democrats), and thus constituted a kind of political third way in the USA. Many libertarians thus became great promoters of cryptocurrency, and in particular supported its economic development in the state of New Hampshire.
In this chapter, we begin by examining Bitcoin's relationship with American libertarianism, which was not unanimous in its support. Then, we'll analyze the strong involvement of certain personalities, such as Ian Freeman, Roger Ver and Erik Voorhees. Finally, we'll see how Bitcoin became integrated into political movements such as the Free State Project or Occupy Wall Street at the end of 2011.

The relationship with American libertarianism

The proximity of American libertarianism to Bitcoin seems rather natural. Libertarians consider state intervention to be undesirable, including in the monetary function; while cryptocurrencies, for their part, offer an alternative to state money, thanks to their uncensorable and non-inflationary nature. This was why many members of the community at the time were libertarians themselves: they saw Bitcoin as a solution to the problems they were denouncing.
During this period in Bitcoin's history, the libertarian sphere was marked by Ron Paul's campaign for the 2012 presidential election. Ron Paul was a libertarian politician, representing the 14th District of the State of Texas in the House of Representatives. He was nicknamed "Doctor No" because of his habit of voting against all bills that reduce citizens' freedom or increase government spending. After running for the Republican nomination in 2008, he was doing the same in 2012. Although he had little chance of success, his candidacies excited a large number of libertarians and inspired a real grassroots movement. Ron Paul's second campaign for the presidential election roughly coincided with the period we're interested in: it began in May 2011 and ended in August 2012 with the Republican National Convention, which officially nominated Mitt Romney as the Republican Party's candidate. There were many references to the politician in the discussions of the time.
There is also a strong link between libertarianism and the Austrian school of economic thought, whose rational method is based on individual rather than societal behavior. Indeed, libertarians are very often supporters of the theories of this tradition, which largely reject state intervention. In particular, they agree with the assertion that the deterioration of the monetary system in the 20th century from a gold standard (fixed exchange rates) to a system of fiat currencies (floating exchange rates) led to an explosion in public spending. That's why they are also fans of precious metals, which they see as "real money", as opposed to Federal Reserve bills (i.e. dollars), which are "fake money". Those who swear by gold are commonly referred to as "gold bugs".
Some activists were quickly won over by Bitcoin, such as Stefan Molyneux or Adam Kokesh, who became interested in it in the summer of 2011. However, this was not the case for all libertarians. Many of them are deeply attached to the Austrian tradition, for which only precious metals can form the basis of a healthy economy, which leads them to reject Bitcoin in the first place. As we saw in chapter 6 of our first course, Bitcoin contradicts Ludwig von Mises's regression theorem in that it has no intrinsic value and is not backed by anything concrete. They believe that it cannot become a currency over time, and that there is no point in making the effort to use it. As Satoshi Nakamoto wrote "they're so used to being anti-fiat-money that anything short of gold isn't good enough. They concede that something is flammable, but argue that it'll never burn because there'll never be a spark".
On June 9, David Kramer, blogger for Lewrockwell.com, wrote thus the following in an article entitled "Just Another Bogus Medium of Exchange":
"A medium of exchange arises from something that had a material use/value in the market prior to becoming a medium of exchange, i.e., it was also a good being bartered for other goods and services. Over the centuries, the commodities gold and silver won out as the two most preferred mediums of exchange-with gold holding the number one position due to its being more scarce than silver. What was Bitcoin's prior material use/value? Zero. It is just bits in a computer
During the month of June, criticism began to mount. Peter Schiff, son of anti-tax activist Irwin Schiff and a staunch supporter of the gold standard, criticized bitcoin for having no "fundamental intrinsic value". Doug Casey, libertarian financier and author, asserted that "Like government fiat currencies, they are a con game, functioning only as long as people have confidence in them, regardless of whether that confidence is well placed or not".
Other libertarians, such as bloggers Michael Suede and Jon Matonis, and the young editor Vitalik Buterin, felt that this rejection was counterproductive for freedom. But their arguments didn't necessarily convince even the most stubborn figures, such as Peter Schiff, and Bitcoin never won unanimous support within the libertarian movement.

Free Talk Live radio show

Among the first people to take an interest in Bitcoin within the libertarian sphere were Free Talk Live hosts Ian Freeman and Mark Edge. Free Talk Live is a libertarian free radio program that has been around since 2002, and is recorded in the town of Keene, New Hampshire. It was broadcast throughout the U.S. via the Genesis Communications Network (the same network used by Alex Jones, the host of InfoWars). It is also available as a podcast on the Internet.
Ian Freeman and Mark Edge, hosts of Free Talk Live (source: Mark Edge for Decrypt)
On December 28, 2010, following on from the PC World article, the subject of Bitcoin was raised on the show by one of the listeners (a certain Jeremy West, future manager of the gift card sales service Spend Bitcoin). This led Ian Freeman and Mark Edge to take an interest in cryptocurrency, and to meet Gavin Andresen on February 8. That day, the three individuals have lunch in Keene, and Gavin paid for his meal in bitcoins, by sending 25 BTC to Mark.
Both hosts were enthusiastic about Nakamoto's system and the uses to which it can be put. In particular, the Silk Road marketplace caught the curiosity of Ian Freeman who, a few months later, wrote on the Bitcoin forum: "thanks be to the Silk Road for giving me reason to catch the at least a portion of the vision of Bitcoin". On March 16, half of the Free Talk Live program was dedicated to Bitcoin and Silk Road, which attracted the attention of the libertarian audience.

Roger Ver, Bitcoin's Jesus

One of Free Talk Live's most loyal listeners was Roger Ver, and mentions of Bitcoin on the show did not fall on deaf ears. Roger Ver is an American businessman who founded an online computer component reseller called MemoryDealers in the late '90s, and became a millionaire in the process within a few years. At the same time, he has developed libertarian convictions, notably through his reading of Ludwig von Mises, Murray Rothbard and Henry Hazlitt. He also held an optimistic view of technical progress, having been influenced by transhumanist futurologist Ray Kurzweil.
Roger Ver was a man of action. In 2000, he ran for the California State Assembly on the Libertarian Party ticket. However, his outspokenness didn't sit well with the authorities, and in 2002 he was arrested for selling unlicensed fireworks and jailed for 5 months. This traumatic experience prompted him to move to Japan, where he became a permanent resident. In 2011, he lived in Tokyo.
Roger Ver at the Money2020 convention in October 2012 (source: Digital Trends)
He learned about Bitcoin in December 2010 via Free Talk Live and bought a few. However, it was only after the March 16, 2011 broadcast that he fell in love with cryptocurrency. He then experienced a kind of epiphany: he read everything he could on the subject, so much so that he had several sleepless nights in a row. He confided several years later to the online journal London Loves Business:
"I realized it's the best form of money that the entire world has ever seen. I literally got so excited because I felt my life's calling had arrived in the form of Bitcoin. I didn't leave my house for over a week and spent every waking moment reading every single thing I could find on Bitcoin. I got so sick from the lack of sleep that my friend had to take me to the hospital."
Following this experience, Roger Ver became involved in the community. On April 26, he began to accept bitcoin payments through his company MemoryDealers. On June 4, he used a billboard he owned to promote Bitcoin and his company. The billboard could be seen from a busy highway in Sunnyvale, Silicon Valley, which drew attention to Bitcoin at a time when speculative enthusiasm was at its peak.
Billboard advertising Bitcoin in Sunnyvale (source: Roger Ver on Bitcointalk)
In June, following the first problems encountered by Mt. Gox, Roger offered Mark Karpelès to come and help him, as he lived very close to the company's Tokyo offices. Mark accepted, and Roger showed up at the Cerulean Tower. He was accompanied by several people, including Jesse Powell, a high school friend and entrepreneur from San Francisco who was also interested in Bitcoin (the latter will create the Kraken platform in 2013). Despite Mark Karpelès' nonchalant attitude, they managed to stabilize the situation and reopen the platform after a week.
But Roger Ver's commitment to Bitcoin did not stop there. As mentioned, he was firmly convinced of Bitcoin's revolutionary potential and felt he had a mission to accomplish in this respect. He sought to spread the word. He appeared on Bruce Wagner's Bitcoin Show in June. He broadcasted advertisements for Bitcoin on Free Talk Live radio, replacing the promotion of his company that he had previously done through this medium. Over the months, he established himself as one of Bitcoin's most zealous promoters, to the point where he was nicknamed "Bitcoin Jesus" in February 2012 by Canadian trader GoWest. The nickname stuck, although Roger never claimed it.
Moreover, Roger was particularly optimistic about the cryptocurrency's market price, and speculated in this direction by buying a lot of bitcoins from May onwards. On August 4, 2011, he made the public bet that the dollar price, then stabilizing at around $10, should increase 100-fold within two years (a prediction that would come true a few months later). He also invested in ecosystem companies such as BitPay, Blockchain.info and BitInstant.

Erik Voorhees, Ira Miller and their projects

But Roger wasn't the only fervent libertarian involved in Bitcoin; there was also Erik Voorhees. Born in 1984, Erik Voorhees grew up in Colorado. He is the son of Jacques Voorhees, who was CEO of diamond trading platform Polygon before selling it for $8.4 million in 2004. His father, also a libertarian, passed on to him a liberal and entrepreneurial streak. After graduating from the University of Puget-Sound with a degree in business administration and political economy, Erik lived in Dubai for a time, where he held the position of communications manager for a real estate company. He was particularly affected by the 2008 crisis, which prompted him to take an interest in the banking system and money.
Erik Voorhees at the Colorado Renaissance Festival in Larkspur in June 2007 (source: Forbes)
In 2011, he moved to Portsmouth, New Hampshire as part of the Free State Project (which we'll describe in the next section). It was there that he learned about Bitcoin, via an article shared on Facebook by local politician Keith Ammon, who was also his friend. It was May at the time: the price was $5 and rising very quickly. After a few hours studying the question, he was convinced by the concept and fell in love with it. He confided in 2013:
"That day was one of the most important days of my life. It was like discovering some great truth, like seeing the future. I quit everything I was doing and jumped down the rabbit hole."
His motivation was mainly ideological: he was seduced by the unstoppable nature of the system and the impossibility of creating more money than planned. He saw Bitcoin as the embodiment of "the separation of money and state". He was also convinced by the agorist practice promoted by Samuel Konkin and believed that "Bitcoin is to agorism what gills are to fish", i.e. an essential cog.
In June, Erik Voorhees bought a large quantity of bitcoins at a time when the price was at its highest. He also tried GPU mining, but his girlfriend did not like it, and he was forced to sell his machines. In August, he traveled to New York to attend a conference organized by Bruce Wagner, where he met many of the players in the ecosystem.
One of the people he met at the conference was Ira Miller, aka Bearbones on the forum. The latter was a young developer originally from Illinois, now living in Denver, Colorado. Despite his rather technical profile, Ira Miller was also politically committed. Following in his family's footsteps, Ira Miller was initially a social democrat (liberal in the American sense) and voted for Barack Obama in 2008. However, he was fundamentally disappointed by the Democratic camp's broken promises and anti-freedom policies. Also disliking the Republican camp, he turned to libertarianism, supporting Ron Paul in particular.
Ira Miller in November 2011 (source: Bitcoin Show on Youtube)
With Bitcoin, Ira Miller aimed "to build alternate systems, to compete with the horrifically corrupt status quo". In 2011, he put his money where his mouth was. In May, he launched BitMunchies, an online store specializing in food (the munchies is slang for food cravings). During the summer, he also developed BTCinch, a payment processor enabling merchants to convert bitcoins into dollars and vice versa.
The two men got on very well and their skills complement each other. In August, Erik Voorhees was looking for a programmer to develop one of his ideas, and Ira accepted. It was FeedZeBirds (literally "feed the birds"), an ad platform enabling users to boost content on Twitter by purchasing retweets, which they launched on November 23. It was a questionable use (Twitter certainly did not encourage this kind of behavior), taking advantage of Bitcoin's censorship resistance and lack of transaction fees. On November 28, the two partners appeared on the Bitcoin Show to promote their product. Subsequently, they also developed the Paysius payment processor and the Coinapult e-mail remittance service.

The Free State Project in New Hampshire

As hinted at, these people had more or less close ties to the Free State Project. The Free State Project is a political migration movement, aimed at bringing libertarians together in one state in order to influence local government. It was initiated in July 2001 by Yale PhD student Jason Sorens, who lamented the failure of libertarian efforts at the polls and invited "libertarians of all stripes" to move to a small state. In 2003, the state of New Hampshire was chosen because of its individualist culture, its official motto being "Live Free or Die". People had to sign a declaration of intent, with a target of 20,000. This threshold would be reached in 2016, but the most motivated individuals relocated in the meantime.
Welcome sign at the entrance to New Hampshire in 2018 (source: New Hampshire Public Radio)
In 2011, New Hampshire had already become a hotbed of libertarianism. Free State Project organizes two annual events there. The first is the New Hampshire Liberty Forum, a classic convention featuring some of the biggest names in libertarianism, held during this period at the Crowne Plaza Hotel in Nashua, in the south of the state.
The second event is the Porcupine Freedom Festival (more commonly known as "PorcFest"), which is a week-long festival held in the summer at a campground near Lancaster, further north. The atmosphere is more relaxed, so much so that the event was qualified in 2011 as "Woodstock for rational people" by libertarian author Roderick T. Long. That year's edition, held in June, was a success, gathering over 1,000 people.
Bitcoin naturally attracted the attention of the movement in the spring, which saw it as a pragmatic tool for local action. In October, fractions of bitcoin were distributed to project members thanks to the proselytizing of Roger Ver, Erik Voorhees and Ira Miller. This operation had an educational purpose: to make Free State Project signatories understand that they can move money from one end of the world to the other, without having to give their identity. In addition, Liberty Forum organizer Chris Lawless announced that the conference would accept bitcoin as payment for registration.
Thanks to this concentration of libertarians, New Hampshire would, over the years, become a central hub for cryptocurrency adoption. In addition to its institutional transformation, it would become a veritable "proving ground" for Bitcoin and other freedom-enhancing technical innovations such as 3D printers.

The Occupy Wall Street movement

However, libertarianism was not the only political ideology to have affinities with Bitcoin. On the other side of the political spectrum (if we consider that libertarianism's economic positions are rather right-wing), there was the whole anti-capitalist, anti-finance movement that was bound to find an interest in cryptocurrency.
However, much like libertarians, this political family also tended to reject Bitcoin, because it did not align with their vision of money. It was too rigid, too little subject to political control. Bitcoin was not a social currency that can be managed managed democratically, as activists envisioned through local currencies. Yánis Varoufákis, libertarian Marxist and future finance minister of Greece, criticized it in 2013 for its deflationary and inegalitarian character, writing that "there can be no de-politicised currency capable of 'powering' an advanced, industrial society".
In September 2011, the Occupy Wall Street movement shook up political life in the United States. Faced with the disasters of the economic recession caused by the subprime crisis, the Canadian foundation Adbusters (under the impetus of founder Kalle Lasn and editor Micah White) called to "occupy" Wall Street, the symbolic center of New York finance, by staging a kind of sit-in. The main demand was to reduce the influence of big business and the money powers on the country's politics, an influence deemed responsible for the crisis. The protest slogan was "The one thing we all have in common is that We Are The 99% that will no longer tolerate the greed and corruption of the 1%". The protest began on September 17 in Zuccotti Park, not far from New York's financial district, bringing together over a thousand people. As the weeks went by, the movement gained momentum, spreading to other major cities in the country, such as Chicago and Los Angeles, as well as internationally.
The movement needed to finance itself: the demonstrators needed food, waterproof clothing, and equipment so that the event could be broadcast live on the Internet. The aim was for people to stay on site as long as possible. However, funding was difficult because of the radical nature of the protest: some of its actions were indeed illegal, as evidenced by the numerous arrests that took place. As a result, the movement was sensitive to financial censorship, as demonstrated, for example, when the PayPal account of #FeedtheProtest, a news group reporting on the events, was frozen without notice on September 26.
Thus, the multiple organizations within the movement decided to accept bitcoin, which they saw as an anonymous digital currency and which had proved its worth by being accepted by WikiLeaks. The general assembly of protesters in New York received donations as early as September 19, for a total of 686 BTC or over $3,000 at the time of receipt. #FeedtheProtest accepted also bitcoin from the 27th, in reaction to the closure of its account. For their part, Bitcoin community members were interested in Occupy Wall Street, as they too were opposed to the traditional financial world. They therefore promoted the use of Bitcoin to the movement (even if it meant going there in person, like Matt Cropp) and also made a number of donations.
Poker player Prahlad Friedman protesting at Occupy Los Angeles in November 2011 (source: Bryan Micon on Twitter)
Occupy Wall Street led many people to ask questions about cryptocurrency, with the subject even being evoked in the general press. The movement formally came to an end on the night of November 14-15, when the NYPD evicted protesters from Zuccotti Park, where camping was no longer permitted. However, the idea of using Bitcoin as a political tool remained.

The role of ideology

Political ideology was an essential element in building Bitcoin in its early years. It helped sustain the passion that early users had instilled in the cryptocurrency, attracting committed entrepreneurs eager to see the project succeed. It was in particular thanks to the American libertarian movement, despite its internal divisions, that Bitcoin was able to flourish, whether through individuals like Roger Ver or Erik Voorhees, or through the Free State Project. The more left-leaning Occupy Wall Street movement also played a key role in the rise of bitcoin as a currency of disobedience.
Yet this ideological aspect was at odds with a far more attractive force: that of financial interest. Over the years, a tension was built up between the two aspects, which manifested itself in a change of discourse from 2013 onwards, and in a phenomenal rise in the exchange rate. But before this could happen, the tools needed to enable financial players to invest in the ecosystem had to be developed. And this development was to take place largely during the first real "bear market" in Bitcoin's history.
Quiz
Quiz1/5
Which libertarian radio show in the U.S. was one of the first to mention the existence of the Silk Road marketplace?