Bitcoin as a Sign of Our Times
Bitcoin is constantly in the news. If you have a hard time wrapping your head around all the headlines – or indeed wrapping your head around bitcoin and cryptocurrency as such – you are probably not alone. Here, I will try to explain the main ideas behind bitcoin and how they connect to broader sentiments in our contemporary society. I will also explain why I think these views are misguided and why it is important to resist the allure of bitcoin.
What is bitcoin and who wants it?
Bitcoin is basically a type of internet token (or digital unit) that some people think can be the future of money. What makes it different from the type of money we use today – regular dollars, euros, and yuan – is that it is not governed by formal institutions such as governments, central banks, or commercial banks. Instead, it is governed by computer algorithms and its own network of users. A central part of the algorithms is cryptography (hence the epithet cryptocurrency), which relies on advanced mathematical formulas to preserve the secrecy and integrity of digital information. This allows users to set up anonymous accounts and send money directly to and from each other without oversight or control from any authority. The network is also open to anyone, so bitcoins can be sent from a consumer in Chile to a vendor in Singapore without extra hassle.
I think there are two main driving forces behind the fascination with bitcoin, both of which resonate with broader sentiments in contemporary society. One is a strong belief in progress through technological development – which we may call “techno-utopianism”. Our world has changed drastically, at least on its surface, with the rise of personal computers, the World Wide Web, mobile phone apps and, most recently, artificial intelligence. So, it is perhaps not strange that people would think the future of money must be some new invention as well. What makes it most appealing is perhaps how it is “decentralized” and “network-based” just like the internet itself. According to its proponents, bitcoin “is not just money for the internet … it’s so much more. Bitcoin is the internet of money” (Antonopoulos 2016: 8).
The second driving force is a growing distrust of institutions such as governments, central banks, and commercial banks. It is no coincidence that bitcoin was launched in 2008-2009, in the wake of the Global Financial Crisis that cost millions of people their jobs, homes, and/or life savings. People had lost faith in the traditional monetary institutions and wanted something different. Unfortunately, subsequent years have seen several developments that have only eroded social trust further – such as climate change, migration crises, the Covid-19 pandemic, the rise of nationalism, and new large-scale wars. The great thing about bitcoin, its proponents say, is that it is “based on cryptographic proof instead of trust” (Nakamoto 2008: 1). That is, it allows users to bypass the institutions and/or social structures they simply don’t trust anymore.
But are these really good reasons to support bitcoin?
Is bitcoin technically superior?
Since bitcoin’s technology is complex and hard to explain, it is easy to think that it must be ingenious. But on closer examination, I think that it actually is not. What the technology boils down to is a set of mechanisms that seek to replicate or improve the integrity of a bank ledger – that is, a record of financial accounts and transactions – without having to rely on a central mediator such as a commercial or central bank. While this may sound innovative on the surface, the result is a system that is more convoluted and less efficient than the original. I will give two examples to illustrate this.
First, consider storing and updating financial information. An ordinary bank can do this cheaply by keeping a central ledger of people’s accounts and balances. This is little more than an Excel-sheet – for instance, it may contain a row saying “Joakim, $100”. But since bitcoin wants to do away with the central mediator, it instead keeps this type of information spread out across the computers of a peer-to-peer network. This is called “distributed ledger technology” and seeks to ensure that the information is mutually observable and therefore incorruptible.
But this makes it more cumbersome and costly to continuously update the ledger with information about new transactions. Each new transaction needs to be broadcast through the whole network and then checked and recorded by each user. For instance, all users must note that “account X sends 1 bitcoin to account Y”. Since small-scale users have limited processing power, the throughput is currently limited to 1 megabyte per ten minutes, which translates to around 3-7 transactions per second (Croman et al. 2016). By comparison, centrally managed payment systems, such as Visa and MasterCard, process around 10,000 transactions per second.
Second, consider safeguards against fraudulent transactions. An ordinary bank can do this by vetting its customers, monitoring suspicious transactions, and cooperating with authorities. That is, it is ultimately our public institutions that guarantee the integrity of our monetary system. But since bitcoin wants to bypass authorities, it uses a different solution: “proof-of-work technology”, which essentially involves making it very costly to broadcast new transactions. More specifically, “miners” must set their computers to guess a random number that will unlock a very difficult encryption – sort of like guessing a very long and complex password. This takes gazillions of guesses, and it therefore costs a lot of electricity and computer power. The incentive is that whoever guesses the right number first and gets to broadcast the transactions also gets rewarded with new bitcoins (which is why the process is called “mining”). The point of the mechanism is to make it incredibly expensive to try to cheat the system and broadcast bogus transactions.
While the proof-of-work mechanism may seem innovative, it is very cumbersome and costly. The total number of guesses by miners today is about a sextillion per second – meaning 1,000,000,000,000,000,000,000 calculations per second. This consumes an enormous amount of electricity and emits massive volumes of greenhouse gases. It is estimated that bitcoin’s total electricity consumption was 188 billion kilowatt-hours in 2025, which is more than the total electricity consumption of my home country of Sweden. Its carbon footprint was estimated to be 95 million tons of carbon dioxide equivalents, roughly double the footprint of Sweden (CCAF 2026). This is at least 4 to 5 times greater than the combined footprint of all traditional forms of money – coins, notes, and credit card networks (Pagone et al. 2023).
To sum up, bitcoin’s technology is indeed different, but it is hard to see how it is better than the system we already have. The problem with “techno-utopianism” is that we jump too quickly from seeing that something is new to assuming that it must be better. What we should do with every new technology is to pause and consider what it actually can do for us, and then weigh this against the extra costs that it may impose on society. In the case of bitcoin, there are tremendous costs in terms of both economic efficiency and planetary health.
Is bitcoin socially superior?
Many people today distrust banks and governments and may therefore be attracted to bitcoin’s promise of limiting the influence of those institutions. The idea might resonate with some libertarians (or people on the political right), who believe that individuals should be free to act in whatever way they choose as long as they do not infringe upon other people’s rights to do the same. But it might also resonate with some egalitarians (or people on the political left), who believe that many banks and governments have misused their (in theory justifiable) influence for illegitimate aims, such as personal profits (Sandberg & Lindblom 2024).
However, would a bitcoin-based system fare any better in these regards? I think the answer is no. Starting with the libertarian case, the kind of financial “freedom” that bitcoin offers is extreme. There is no way of surveilling or censoring transactions between consenting individuals, but there is also no way of identifying or censoring transactions that stem from non-consensual activities such as theft or fraud. This is of course why bitcoin has become the favorite currency among many criminals. According to some estimates, about one-quarter of bitcoin users are engaged in illegal activities, such as buying and selling illicit goods and services on the dark web, and their transactions amount to 46% of all bitcoin transactions (Foley et al. 2019). While some libertarians may want to defend people’s rights to buy drugs, many other transactions (e.g., in stolen goods and murder contracts) will infringe upon people’s liberties and should therefore be out of bounds even on this view.
The freedom awarded to criminals will also diminish the freedom awarded to ordinary, law-abiding citizens. Since illicit transactions can be neither identified nor reversed, if you lose your bitcoins to thieves or scammers, there can be no “night watchman” to call to get them back. While you may face a lower risk of the state taking your money, you face a higher risk of other people taking it (at least without repercussion). Another way to put it is that the kind of “freedom” bitcoin gives you is like the Wild West: you are only free as long as you manage to protect yourself with a gun. I do not think this is the kind of freedom that most people want.
Moving on to the egalitarian case, bitcoin may reduce the financial influence of institutions such as governments, central banks, and commercial banks. However, this does not mean that it is more democratic or egalitarian. As noted, you need to become a “miner” and spend millions of dollars on electricity and computer power to have some say over which transactions are broadcast on the network. Moreover, the vast majority of bitcoins are already held by early adopters, such as computer-savvy innovators and well-connected risk capitalists from California and Hong Kong. These people have an outsized influence over bitcoin’s price and therefore over how other users will behave. This is so since users have a strong economic incentive to stay on the path chosen by the economic majority (Warren 2023). If they should act to move bitcoin in a new direction, e.g. by proposing new code or software, they risk creating a “hard fork” of the currency that quickly loses all its value. This has happened several times in recent years and the alternative coins have all gone to (almost) zero.
To sum up, many people may be attracted to bitcoin since they distrust formal institutions such as governments and banks. However, there is nothing to suggest that bitcoin would usher in a better society. If anything, bitcoin would mainly empower certain informal forces such as tech investors and criminals.
Conclusions
I have argued that bitcoin is a troubling sign of our unfortunate times. Many people get excited about cryptocurrency since they have a strong but blind belief in technological progress. They may also have lost faith in society’s institutions and are therefore attracted by the idea of bypassing governments and banks. But they have all been deceived. What they get with bitcoin is a system that is only more cumbersome and costly than our ordinary monetary system. And while it removes power from formal institutions such as banks and governments, it instead empowers informal forces such as tech investors and criminals.
In this regard, the story of bitcoin is similar to that of Donald Trump’s presidency. He was elected because people had lost faith in society’s formal institutions and also wanted something new and different. But they were all deceived, I say. What they got instead was something even worse – a social system that is making life harder for everyone, and that is indeed controlled by tech investors and criminals. We must not make the same mistake again. Therefore, we must think critically and resist the allure of bitcoin.
Joakim Sandberg is Professor of Practical Philosophy and Director of the Financial Ethics Research Group at University of Gothenburg.
References
Antonopoulos, A. M. (2016). The Internet of Money, Vol. 1. Merkle Bloom.
Cambridge Centre for Alternative Finance (CCAF) (2026). Cambridge Bitcoin Electricity Consumption Index. Available at: https://ccaf.io/cbnsi/cbeci (Accessed: 5 October 2026). Licensed under CC BY-NC-SA 4.0.
Croman, K., Decker, C., Eyal, I., Gencer, A. E., Juels, A., Kosba, A., Miller, A., Saxena, P., Shi, E., Sirer, E. G., Song, D. & Wattenhofer, R. (2016). On Scaling Decentralized Blockchains, Financial Cryptography and Data Security. Lecture Notes in Computer Science 9604: 106–125.
Foley, S., Karlsen, J. R. & Putniņš, T. J. (2019). Sex, Drugs, and Bitcoin: How Much Illegal Activity Is Financed through Cryptocurrencies?, The Review of Financial Studies 32 (5): 1798–1853.
Nakamoto, S. (2008). Bitcoin: A Peer-to-Peer Electronic Cash System. Available online at https://bitcoin.org/bitcoin.pdf
Pagone, E., Hart, A. & Salonitis, K. (2023). Carbon Footprint Comparison of Bitcoin and Conventional Currencies in a Life Cycle Analysis Perspective, Procedia CIRP 116: 468-473
Sandberg, J. & Lindblom, L. (2024). Bitcoins Left and Right: A Normative Assessment of a Digital Currency, in Sandberg, J. & Warenski, L. (eds.), The Philosophy of Money and Finance, Oxford: Oxford University Press, pp. 303-320.
Warren, M. (2023). Bitcoin: A Game-Theoretic Analysis. Berlin: De Gruyter.
Disclaimer: Any views or opinions expressed on The Public Ethics Blog are solely those of the post author(s) and not The Stockholm Centre for the Ethics of War and Peace, Stockholm University, the Wallenberg Foundation, or the staff of those organisations.
