One of the most talked-about Super Bowl ads was that of Larry David traveling through history and naysaying innovations that turned out to be hugely beneficial, from the wheel to portable music players—including, in 1776, the liberties enshrined in the Declaration of Independence.
The theme of the commercial for the FTX cryptocurrency exchange was that cryptocurrency, though it may seem weird and mysterious to many, is no more revolutionary than other innovations were at the time they were introduced. And this is especially the point when David meets the Framers of the truly revolutionary Declaration of Independence, who had radical notions of universal freedom.
In fact, both the characteristics of cryptocurrency and the events that have fueled its growth would not have been that foreign to the Declaration’s signers, who likely would understand cryptocurrency better than the paternalistic “Larrys” of the chattering class blasting David’s and other ads for crypto as luring Americans into unnecessary risk.
This is something we should think about as we celebrate the upcoming holiday commemorating George Washington’s birthday (The holiday has been transformed into President’s Day in popular culture, but it is still officially Washington’s Birthday on the books.). As I write in my book George Washington, Entrepreneur: How Our Founding Father’s Private Business Pursuits Changed America and the World, our first president would have a particular understanding and likely a fondness for cryptocurrency. In the book I write that Washington, as “a fellow who kept detailed ledgers and used invisible ink,” would be “fascinated by the encrypted ledgers at the core of cryptocurrency and its associated blockchain technology, both of which promise new levels of privacy and efficiency in transactions.”
I show in my book that Washington, though he lacked a college education, was a lifelong learner who read constantly and would seek knowledge from people of all walks of life. He utilized this knowledge from reading and listening to build several innovative businesses from a whiskey distillery (rebuilt by the modern Mount Vernon in 2006) to the first mule breeding service in the U.S.
Washington was also a champion of early American inventors and the emerging technologies of his day, such as steam power and hot-air balloons. After hearing about the new balloons that could transport human beings through the air at very limited distances, Washington made an amazing prediction. He wrote in a letter that “our friends at Paris, in a little time, will come flying thro’ the air, instead of ploughing the ocean to get to America.” That he could envision long distance air travel before even the invention of railroads shows that Washington was indeed a farsighted guy.
So, it’s not that much of a stretch that Washington would see some familiar properties in crypto and embrace the technology, or at least the freedom of Americans to use it. The three familiar properties he would likely recognize in cryptocurrency, are encryption, ledgers, and privately-issued currency.
Encryption.The “crypt” in “cryptocurrency” refers to cryptography and encryption. Cryptography and encryption werea round in Washington’s day, and he utilized them as general of the Continental Army.
As those who have read Brian Kilmeade’s and Don Yaeger’s pathbreaking book George Washington’s Secret Six, or watched the AMC series Turn, are aware, Washington and his Culper Ring spy network used invisible ink to send messages to one another. Washington worked with physician James Jay (brother of future Supreme Court justice John Jay) to develop a state-of-the-art ink that could be made visible only with the use of another chemical. He would also use secret codes and ciphers—groups of numbers to represent certain words—to communicate secret information. The recipient of the message would then decode it with a “key” that matched these numbers to words, similar to the “private key” passwords held by cryptocurrency recipients.
Ledgers.In cryptocurrency, blockchain works as a distributed ledger, in which multiple users keep encrypted records of a transaction. While Washington and his contemporaries had yet to come up with a distributed ledger, and wouldn’t have the computing power to deploy it even it they had, Washington did keep sophisticated ledgers of his business transactions nearly all his life. As I note in my book: “Since the age of 14, Washington kept and preserved his … business ledgers.” Today, many of those ledgers are available on the Mount Vernon website and shed light on many of his innovative business operations, including the whiskey distillery.
Privately issued alternative money.As I note in the book, “currency was always short in the colonies as Britain didn’t have national banks or mints to directly issue its currency outside the mother country.” The colonists had a variety of methods of exchange from barter to foreign currency such as Spanish dollars. Tobacco warehouse receipts—privately issued promissory notes that were good at a number of tobacco warehouses throughout the colonies and later the original American states—soon began to be traded to purchase other items as well. They became a go-to currency of Washington’s day.
As I point out in a paper for the Competitive Enterprise Institute, cryptocurrency merely “adds an electronic dimension to the privately issued currency and tokens that have existed through much of world history, as various items took on the role of money without government playing much, if any, role.” So, Washington would recognize the use of and need for privately-issued currency and likely see cryptocurrency as an innovative and beneficial extension of the private money that circulated in his day.
Finally, Washington and other of the Founders would likely see the benefits of decentralized cryptocurrency as a mechanism to protect liberty given the arbitrary actions of freezing bank accounts taken by our neighbors to the North. In his farewell address issued near the end of his presidency in 1796, Washington warned of “the spirit of encroachment” that “tends to consolidate the powers of all the departments in one and thus to create, whatever the form of government, a real despotism.”
Given the warning he issued, it’s not at all a stretch to think Washington would agree with this statement on cryptocurrency from P.J. O’Rourke, who passed away much too soon this week. O’Rourke, who revered Washington and the other founders, said at a Cato Institute forum in 2018, “I am much more worried about government abusing its police powers than I am about individuals abusing their purchasing powers. So that’s the case in favor of cryptocurrency.”
CEI Research Associate Christian Johannessen contributed to this post.