What would Plato think of Cryptocurrencies?
Cryptocurrencies are perhaps the most novel thing in the economics world. Furthermore, in less than 15 years, they have managed to become a mainstream choice for investors. And as it happens with any new application, development, or any other novelty, it is useful sometimes to try and extrapolate what great minds of the past would think of those. This is often a way to get valuable insights, even though you can’t possibly walk in the shoes of great minds of the past. To that end, in this article, I will try to guess what Plato would think about cryptocurrencies based on what he believed about conventional currencies of his time.
Before we start, let’s remember Plato’s teaching on money from my article “Learning Economics from Plato”:
“When it comes to money both historians and economists agree that Plato was ahead of his time. Plato understood the dual nature of a currency’s value, namely the intrinsic and extrinsic value. Plato was in favor of what we would call today “paper money”, a means of exchange valid only in the state’s territory. He preferred paper money for several reasons, of which the most important are: i) The fact that coins made of gold, silver, or any other precious material would be perceived by people as a sign of wealth, and they will try to accumulate them due to their extrinsic value and ii) By having a currency that has value only because it is supported by the state and has no value in other cities or territories means that “international” trade was impossible and no merchants with luxurious goods would like to visit the city to sell them, hence the chance of the state falling in corruption was small (Karayiannis, 1998). Furthermore, in the case that a city was not self-sufficient and trade with other states was necessary, then the state should conduct those transactions by itself by having gold or silver coins for this purpose exclusively. If someone was given metal coins to conduct such transactions, he should return all remaining coins to the state after he was done (Amemiya, 2007).”
From the passage above it is evident that Plato would be in favor of the intangible form of money, whose value only depends on the people’s trust. But this is where Plato’s support of cryptocurrencies would end.
As you can tell, Plato believed in a just but strong controlling state, that motivated people to live virtuously. He believed that consuming luxurious goods would end up corrupting the state. From this, we can extrapolate that Plato would be against the borderless nature of most cryptocurrencies (especially Bitcoin) and the inability of the state to control such a coin. He might have been more positive towards a centralized cryptocurrency that was under the control of a respective “philosopher-king” *, similar to what he believes to be the optimal solution for governing a prosperous state.
But there are also additional reasons that Plato would be against cryptocurrencies. Plato (and other ancient Athenians) believed that being a merchant was a lesser profession. He believed that one should first produce value and then sell it for a living, not buy and resell something at a higher price. It is thus obvious that a currency whose most common use would be for trading would make Plato sick. Furthermore, to add insult to the great Philosopher’s injury, Plato would be against a cryptocurrency whose value subjects to that much volatility, as he believed that everything had a fair price and changing the price of something would lead to injustice (as either the former or the latter price would be unjust).
Overall, it is obvious that we live in a world much different than Plato’s, and perhaps if he were alive today, he would have a much different opinion. However, one cannot help to wonder if the abovementioned extrapolations have some merit, as today crypto is used to bypass sanctions to Russia as it invades Ukraine (lack of the ability of the state to intervene in cryptocurrency transactions) and many people are victims to crypto scams as they are promised to get rich quick through crypto trading.
*Philosopher King: Plato believed that the ideal leader for a state was a man who had learned the ways of the philosophers from a very young age.
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