A Wall of Separation Between Money and State: Policy and Philosophy for the Era of Cryptocurrency


This article sets out a philosophy for money in this new digital age. Specifically, we propose two descriptive and two prescriptive theories relating to cryptocurrency.

On the descriptive side, we first introduce a novel classification scheme to categorize cryptocurrencies. Distinct terms like “central bank digital currency” and “cryptocurrency” are often interchanged, so a precise typology is necessary in setting the parameters of debates over monetary policy. Secondly, the article explains the ideological roots of private digital currency and specifically focuses on the impact of the Austrian School of Economics on Satoshi Nakamoto, the creator of bitcoin.

On the prescriptive side, we argue that governments’ plans for central bank digital currencies are neither novel nor good policy. The reality is that most of today’s central bank currencies are already digital, and any attempts to disintermediate the banking system—that is, to allow individuals to hold accounts directly with the central bank (and not private banks)—will result in a dangerous temptation for governments to micromanage the finances of their citizens.

Our second policy conclusion is a positive one. We recommend that central banks in developing nations adopt private, decentralized digital currencies or fixed money supplies to encourage foreign investment and increase the economic well-being and stability of their citizens.