Bitcoin’s Existential Crisis

Cryptocurrencies lack leaders — they have no single source of truth. Philosophically, this can get complicated.

Nic Carter


Photo: Apisit Sorin/EyeEm/Getty Images

Identity is a troublesome thing — for humans, nonliving systems, and objects alike, especially as they change over time. Humans can rely on essential traits like DNA to serve as stable markers of identity, and nonliving systems (corporations, for example) can rely on governments and legal systems to anoint them with stable identities.

Cryptocurrencies and public blockchains, though, have no such privilege. They aim to decentralize their leadership without relying on a single third party in establishing their identity. Instead, they rely on subjective social- and economic-consensus mechanisms. While some cryptocurrencies use foundations or corporations to resolve disputes and arbitrate core issues of identity, that’s a fragile approach and generally not consistent with the objectives of these systems.

The most sustainable approach for cryptocurrency is to dispense with the kingmakers, bite the bullet, and leave it to intersubjective consensus. This requires a commitment to a set of practical values that constitute the essence of the system. Systems with more internal consistency and more universally agreed upon value sets are better equipped to last.

The Ship of Theseus Paradox

A classic question-of-identity paradox goes like this: The Greek hero Theseus asks his crew to rebuild his travel-worn boat, and they replace it plank by plank. When the task is done, he ponders whether his restored boat is really the same boat as before, given that all the parts have been replaced. He further considers that if he were to ask his crew to build a new boat with the planks of the old one, two boats would both have a credible claim to being his old vessel. But which is the true original?

It’s compelling because there’s no clear answer. The story shows us that the identity of an object isn’t absolute — it’s assigned, rather than essential.

This comes up even in human contexts: Your cells replace themselves so often that the present you shares very little physical matter with the version of you that existed a decade ago; prisoners held for…