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The answer lies in Bitcoin, not Stablecoins
In recent times, we have witnessed real-world scenarios where stablecoins like Tether’s USDT and Circle’s USDC have become crucial monetary tools. In Turkey, for example, where high inflation has prompted citizens to adopt these digital assets as a hedge against an unstable national currency.
Stablecoins promise freedom from the constraints of traditional financial systems, but how they actually deliver on that promise depends on how one defines freedom. If we measure stablecoins against the various definitions of freedom as they appear in the political science literature, this new form of currency falls short.
Burak Tamaç is an assistant professor at Montclair State University.
Understanding why stablecoins fail at personal freedom – and why bitcoin (BTC) succeeds — it is useful to take a look at some political philosophers and how they define freedom.
Let’s start with the Anglo-Russian political theorist Isaiah Berlin and his seminal essay “Two conceptions of freedom” which says that freedom can be understood mainly in two ways: negative and positive. Negative freedom, often called “liberal freedom”, refers to the absence of interference or barriers. In other words, being left alone. In contrast, positive freedom focuses on the active exercise of freedom to realize a goal or potential.
There is also a third alternative, the “republican” or “neo-Roman” conception of freedom, which draws on these two interpretations to raise questions about governance. The Irish philosopher Phillip Pettit was a pioneer in this field and emphasized a view of republican freedom as an absence of domination, while later the British intellectual historian Quentin Skinner emphasized the absence of dependence. For both, the mere presence of arbitrary power that can interfere in a person’s life does not make one free.
Before we return to cryptography, let’s look at freedom another way: using the analogy of a door. Think of negative freedom as having a choice between doors, and positive freedom as walking through the door you choose. Republican freedom brings another dimension: it’s like having a set of doors without a guard.
In this sense, you are free as long as no one interferes. This is similar to the liberal conception of freedom mentioned above, but from the Republican perspective, the mere potential for interference already limits your freedom. In other words, to manage this gatekeeper, we need positive freedom only to secure our negative freedom.
With this in mind, the problem with stablecoins becomes clear. Stablecoins could be said to offer negative freedom, in that there are few barriers to using these financial systems as long as the system functions properly. However, they miss the point of republican freedom, or freedom without domination.
Here’s the problem: these assets are created and managed by centralized organizations. The stability and accessibility of stablecoins, as well as their users, are linked to the decisions of these companies. You’re free until someone intervenes. But above all, this freedom is at the mercy of the transmitters.
Look at the recent situation in my native Türkiye. With the crisis in the national banking system and inflation, many Turkish citizens are using stablecoins, especially USDT on Tron, to protect their wealth. This sounds attractive at first glance: instead of relying on the government to supervise banks, trust foreign companies. But from a certain point of view, it just replaces one boss with another.
Whether power is held by a government or a corporation, the problem of arbitrary power remains – and that is the lesson of republican liberty. You may still be under external control, unable to significantly influence the processes that govern your economic activities.
Bitcoin, however, offers a truly decentralized option, bringing us closer to freedom as non-domination. The decentralized nature of Bitcoin prevents the type of domination that comes with the centralized structures of stablecoins or traditional finance. Each participant can influence the network’s decisions, thereby reducing the risk of arbitrary power and thus promoting a more republican vision of freedom.
In conclusion, stablecoins can seem like a lifeline in unstable financial landscapes. But their intrinsic dependence on centralized transmitters compromises freedom as non-domination. It is not enough to exchange one master for another, whether it is a government or a business. True financial independence comes not from commercial chains, but from eliminating or controlling them.