On Bitcoin, Part 3:

Money, banks, and other financial intermediaries

Georg C. F. Greve
Published in
5 min readJul 21, 2021


The financial side of Bitcoin is getting the most attention, mostly with a narrative of speculators, traders and alleged ponzi schemes. And for traders, Bitcoin is interesting. But so is foreign currency, lumber, or virtually anything else. Traders are not unique to Bitcoin. Neither are market manipulators. All markets lend themselves to some level of manipulation, and market manipulation also pre-dates Bitcoin by a couple of centuries. But while many markets have rules and regulation against certain kinds of manipulation, Bitcoin is far less regulated.

Which naturally attracts certain kinds of people who rarely engage with Bitcoin itself these days. For the most part they are focusing on so-called “alt coins” where they initiate “pump and dump” in which hapless people can get caught up and win or lose a lot of money. But it is important to understand that all these groups are distinct from self proclaimed Bitcoiners, who are typically not traders, nor do they participate in the “alt coin casino” except perhaps for recreational purposes. In fact a lot of them find traders as well as people who spin the narratives of these “alt coins” rather distasteful.

Bitcoiners are a different group, which is motivated more by financial policy and social issues of inequality, opportunity, and concern for disproportionate concentration of wealth. In fact they share a lot of values with many people in the software freedom community. But that similarity is often lost because these communities are not as interconnected as they should be, most likely because they speak very different languages.

It is time for the software freedom community to expand its horizon toward some economics, and the social issues that Bitcoiners seek to solve — because these issues are also crucial for the success of software freedom.

Software freedom and the cause of Bitcoinery

Historically speaking, specialisation and economies of scale were crucial to many achievements of humankind. They allowed us to provide housing, food, energy, entertainment and education to very large numbers of people at greatly reduced cost. So while they are not perfect, and some peoples remain excluded, there has been tremendous social benefit in both. But there are moments when economies of scale create problems, especially when they lead to concentration and oligopolies or monopolies.

Today, most software freedom advocates are very concerned about the concentration of power in the platform economy. Many of the proposed remedies involve self-hosting and using software or services with negative networking effects. As a result, most things become less convenient, less useful, and more expensive. A price few people gladly pay — no matter how much they agree with the problem.

Money was perhaps the most important invention in the history of humankind to enable sharing of labour, specialisation, and economies of scale. And it has always held tremendous power. Control over and access to funding has always shaped our societies — and evolved along with them. Much of our current system evolved with the industrial age. And although money circulates faster than ever, much of the underlying structure and process remains largely pre-digital.

It is held together by regulation, access control and trust of the institutions into one another. A trust that fell apart in 2008 due to the sub-prime mortgage crisis. The resulting cascade caused the financial crisis, and governmental countermeasures ended up socialising the cost of system failure on all of society.

Bitcoin started its journey as an idea to protect people across the globe against this kind of socialisation of costs. The goal was to create a store of value that cannot be seized, diluted, devalued or manipulated quite as easily. Bitcoin was to be software freedom money, accessible to everyone, transparent, fair and provably uncorrupt.

Looking back, it has achieved many of these design goals already, and with growing adoption is likely to reach the rest. Simultaneously, the changes afoot in the financial world make Bitcoin more relevant than ever.

The Economist on the changing role of banks in today’s society

But the sub-prime mortgage crisis is not the only systemic failure to incur social cost.

Social cost and social cause

The rise of surveillance capitalism, the growth of the platform economy, and the corresponding loss of control, privacy and security equally incur a cost that is borne by all of society. That cost manifests in many ways, including in the ways highlighted in the documentary “The Social Dilemma” which many people have meanwhile seen.

Software freedom, decentralisation, privacy, control and security are the antidote. Liberty, self-determination, good governance, security, privacy, control are the values at the roots of both the software freedom and Bitcoin communities.

As highlighted before, software freedom has provided the basis for today’s concentration of power and wealth online. In much the same way Bitcoin has demonstrated that a global settlement and value layer is technically feasible and trialled many of the concepts required to build it for mass adoption. So the traditional financial world took inspiration from the platform economy, and came up with Central Bank Digital Currencies (CBDC).

Centralised Bank Digital Control

Most of the world’s central banks are currently considering to introduce CBDC, and China has already gone ahead with its digital renminbi. Such CBDC are issued by a centralised authority, and holders of this currency have a digital wallet with the central bank itself, or with an entity that is reporting to the central bank.

For many governments and central banks, this opens exciting opportunities. Not only can each bank account and personal wallet be monitored in real time. It is possible to deliver financial stimulus straight into each person’s bank account. Or withdraw taxes or solidarity fees when necessary. No consent or intervention required.

It will also mean that each payment will be available as data in real time to the issuer of that CBDC. In other words, it will be very similar to Ecoin in the TV show Mr. Robot:

Kudos to the foresight of the screenwriters at Mr. Robot

Of course it is likely some countries will choose better, less centralised, less controlled implementations of CBDC. But COVID-19 has accelerated the death of cash, and many governments won’t be able to resist the temptation.

What will be the meaning of software freedom and its values of control, privacy and security in such a world?

Bitcoin is the antidote. Software freedom needs Bitcoin to succeed.

This is the third article in a series of six, exploring my personal take on Bitcoin, including its relevance, technical properties, environmental impact, social relevance and significance for software freedom. Articles will be published every couple of days. Here is a list of what has been published so far:

Links to follow-on articles will be added here as the series progresses.

Follow me to be notified when the next one comes out.

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Georg C. F. Greve

Chairman and Head of Product @VereignAG. Founding president FSFE. Software developer, physicist, author. Loves self-sovereign, open technologies and ice hockey.