Why do ‘Seasteaders’ love Bitcoin?

Ariella Brown
May 24, 2013 at 10:52 UTC
Updated Jul 5, 2013 at 13:11 UTC

Bitcoin represents more than a digital currency. For many adopters, it is a means of breaking free of government and financial institutions’ control over money.

The Seasteading Institute shares those ideals. Just as libertarians in the Bitcoin community see the currency as a way to get free of fiat and avoid the financial transaction roadblocks erected at national boundaries or through credit regulations, seasteaders put their hope into the idea of new, independent cities as a way to escape the stranglehold of government systems.

Since April 2009, the Seasteading Institute has been working toward the goal of bringing about permanent, innovative communities that float at sea. The organization is headed by prominent libertarians, including Patri Friedman, the son of political theorist David Friedman and  grandson of economist Milton Friedman.

Friedman stepped down as chief executive of the institute in early 2012, though he retains the position of chairman.

While creating a viable, floating city would cost billions of dollars, Friedman has insisted that funding is not the real obstacle to bringing the project to life.

“The challenge is getting people to see that this can be a route to political reform,” he said.

The Seasteading Institute lays out its goals like this:

The Seasteading Institute wishes to enable the creation of ocean city-states in order to advance humanity through innovative startup governments. We believe that competition in government will lead to better government for the whole planet. Governments are ultimately the stewards of institutions, which are more or less the “rules of the game.” Looking around the world, it is easy to see that some countries have better rules than others. Good or bad, however, rules can become entrenched in the absence of competition from new market entrants. Currently no new governments can peacefully enter the “governance market,” but with seasteading, experimentation with new rules is possible.

PayPal cofounder Peter Thiel echoed that idea in an article in a Details magazine article titled, “The Billionaire King of Techtopia.

Thiel has noted, “When you start a company, true freedom is at the beginning of things.” He also draws a parallel to the inception of the US government.

“The United States Constitution had things you could do at the beginning that you couldn’t do later,” he said. What he seeks to explore is a way to begin fresh, with all the possibilities that suggests.

Thiel has supported The Seasteading Institute since its beginning. In 2008, he donated $500,000, the same amounted he put into Facebook in 2004.  Subsequent donations have brought his total contribution to around $1.25 million.

The Seasteading Institute’s philosophy dovetails with the views Thiel espoused in an April 2009 essay for the Cato Institute, “The Education of a Liberatarian.” In that piece, he declares that libertarians must get beyond restrictive government systems by finding a place of their own:

“The critical question then becomes one of means, of how to escape not via politics but beyond it. Because there are no truly free places left in our world, I suspect that the mode for escape must involve some sort of new and hitherto untried process that leads us to some undiscovered country; and for this reason I have focused my efforts on new technologies that may create a new space for freedom.”

Thiel identifies three possible spaces in which to find that freedom: cyberspace, outer space and the seas.  He explains his support for seasteading this way: “From my vantage point, the technology involved is more tentative than the internet, but much more realistic than space travel … It is a realistic risk, and for this reason I eagerly support this initiative.”

Thiel is also betting on the success of Bitcoin, as his Founders Fund has invested in the Bitcoin merchant services firm BitPay. In fact, Bitcoin might in fact be the realization of what Thiel once envisioned for PayPal.

Though we think of PayPal today as just another part of the standard payment system, like Visa or MasterCard, Thiel’s early goals were far more radical and ambitious.

As the Details article revealed, PayPal was intended to serve “the techno-cool libertarian ideal: a way of emancipating money from government’s monopolistic clutches.” That ideal was even reflected in early company-issued shirts, which bore the legend, “THE NEW WORLD CURRENCY.”

Ken Howery, one of PayPal’s co-founders, explained that Thiel was convinced that “people should be able to store their money in any currency they wanted, without fear of governments devaluing it.” While PayPal has gone on to great success as a company, it’s fallen far short of those libertarian ideals.

Bitcoin, however, has awakened new hope for the ultimate solution to a government-free currency … which is one of the concerns of Seasteaders.  One policy recommended by the Seasteading Mission Statement addresses the monetary system, emphasizing — for example — that the “Gold Standard would be set back in place.”

The proposed policy stresses it is not gold per se that is essential — what’s needed is for the monetary system to be determined by the marketplace rather by a governing authority: “So as libertarians, we really shouldn’t advocate a gold standard as it might imply that we think the government should manage it. For a truly free market, it is the marketplace that should decide on what will be used as money. Most likely, I would bet my fiat money that the market would choose gold again.”

For many today, though, the answer is to be found not in gold but in “Gold 2.0,, as Bitcoin as been dubbed. A recent Reason article explained that, while people have in the past looked to gold as a shelter from  inflation and currency crashes, “the high-tech Bitcoin cryptocurrency recently stepped in to fill that role in a more portable way.”

Mike Caldwell, the creator of Casascius Coins put it this way:

“Bitcoin is two things. It’s a community, and it’s a technology … because Bitcoin is just today’s embodiment of the idea that we now have the technology to democratize money.”

In the same way, seasteaders seek to harness community and technology to establish a new type of civilization, one where Bitcoin could serve as a currency not tied to any nation and allowing free transactions among all.

Incidentally, The Seasteading Institute does accept Bitcoin donations. (It also notes, however, that the US government does not recognize these as tax-deductible contributions.”)

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