This paper concerns the open source software project Bitcoin. Bitcoin is often described as virtual cash and this paper asks what the term ‘virtual’ signifies when applied to ‘cash’ and in turn what ‘virtual cash’ says about Bitcoin.

Bitcoin is related to the 1990s activist movement of libertarian cryptographers known as ‘cypherpunks’ and to the cyber-libertarian political philosophy, demonstrating the historical intertwining of cryptography and politics. Cypherpunks argued that privacy is a prerequisite for an open society and that cryptography and anonymous transaction systems were needed as assurance.

Bitcoin is the latest effort by cryptographers to create digital cash, where Bitcoin’s designer Nakamoto argues that with Bitcoin users no longer have to trust a third party, traditionally the bank. Bitcoin does not fulfill this promise as trust remains to be established, albeit in a different manner. Power is not destroyed, but transferred from banks to Bitcoin’s protocol.

The paper concludes that ‘virtual cash’ refers to Bitcoin’s model of how cash appears to function in everyday exchange, allowing user privacy. Bitcoin does not model another aspect of cash, namely that it is a credential referring to debt. 

However, should power be exercised in this way? The author of this paper, in the context of the purported crisis of the contemporary money system, argues in favour of a debate that should unfold focusing on the values embedded in Bitcoin’s code and whether uses agree on the manner its power is exercised. In other words, does Bitcoin live up to our ideas how money should function in the age of the internet?