Abstract
AbstractCurrency is the fundamental economic technology that makes promises credible among actors within and across societies. From shells, to metals, to paper, the technology of money has continually evolved to meet the changing needs of human society. The twenty-first century is witnessing yet another evolution in the technology of money: digital currencies. Although political economy scholarship has begun to focus on digital currencies, this research has largely focused on single early examples like Bitcoin. I argue that this generally narrow focus has obscured important degrees of variation among digital currencies and, by extension, has omitted important lines of research on digital currencies as a familiar evolution in the technology of money. In this article, I revisit the history of digital currencies with explicit attention to not only economic inefficiencies but also political power structures and offer a new typology for theoretically organizing digital currencies along dimensions relevant to practitioners of political economy. I illustrate that variation along these typological dimensions produces important differences among different digital currencies and, relatedly, I explore the implications this has for digital currencies’ externalities and governance demands. Drawing on this typology, I conclude with a proposed research agenda for the political economy of digital currencies.
Highlights
Currency is the fundamental economic technology that makes promises credible among actors within and across societies
As I argue in greater length in the following text, whereas much research approaches digital currencies as motivated strictly by inefficiencies, this evolution in the technology of money cannot be wholly understood without concurrent attention to both the preexisting power relations among actors in economic arenas and the implications of digital currency design choices for power relations among traditional and new actors in economies
This is due in part to the early focus on economic inefficiencies, I argue that the importance of power relations to digital currency development implicates political economy theory in this area
Summary
While digital currencies constitute a familiar intersection of economics and politics, political economy scholarship has not yet rigorously engaged with the full ecosystem of digital currencies. We see early support for the twofactor framework around the technology of money applied to digital currency development: the intersection of a breakdown in social structures that triggered a widespread economic crisis, and the application of expert knowledge in the form of blockchain to build a system that would disrupt those prior power structures In leveraging this political context to gain salience as the first actualized cryptocurrency, Bitcoin functionally created a market space for digital currencies. We see the infamous choice of public ledgers for Bitcoin as part and parcel of the initiative to disintermediate money and finance, where we see traditional actors in the financial sector leveraging private ledger technologies to facilitate their own technological improvements as a counterforce against these rising challenges. Again, we see evidence that the choices in digital currency ledger technology are both byproducts of power structures and causes of change in power structures around these currencies
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