Recently, we have witnessed real-world scenarios where stablecoins such as Tether's USDT and Circle's USDC have become crucial monetary instruments. In Turkey, for example, high inflation has led citizens to use these digital assets as a hedge against an unstable local currency.
Stablecoins promise freedom from the constraints of traditional financial systems, but how well they actually deliver on that promise depends on how one defines freedom. If we measure stablecoins against various definitions of freedom found in political science literature, this new form of money falls short.
Burak Tamaç is an associate professor at Montclair State University.
To understand why stablecoins fail when it comes to personal freedom – and why Bitcoin (BTC) succeeds – it's helpful to take a tour of some political philosophers and learn how they define freedom.
Let's start with Anglo-Russian political theorist Isaiah Berlin and his groundbreaking essay “Two Concepts of Liberty,” which argues that freedom can be understood in two main 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 both interpretations to raise questions about governance. The Irish philosopher Phillip Pettit was a pioneer in this field, emphasizing the view of republican freedom as an absence of domination, while the later British intellectual historian Quentin Skinner emphasized freedom from dependence. For both, the mere presence of an arbitrary power that can intervene in one's life does not make one free.
Before we get back to cryptocurrency, let’s look at freedom from a different perspective – using the analogy of a door. Imagine negative freedom when you have a choice between many doors and positive freedom when you walk through the door you choose. Republican freedom brings another level – it's like having a set of doors without a gatekeeper.
In this sense, you are free as long as no one interferes. This is similar to the liberal idea of freedom mentioned above, but from a republican perspective, the mere possibility of interference already limits your freedom. In other words, to manage this gatekeeper we need positive freedom just to secure our negative freedom.
From this perspective, the problem with stablecoins becomes clear. One could say that stablecoins offer negative freedom because there are few barriers to using these financial systems as long as the system functions smoothly. However, they miss the goal of republican freedom, i.e. 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, depend on the decisions of these companies. You're free until someone interferes. What is crucial, however, is that this freedom is at the mercy of the issuers.
Look at the current situation in my home country, Türkiye. Facing the crisis of the national banking system and inflation, many Turkish citizens are using stablecoins, especially USDT on Tron, to protect their assets. This sounds tempting at first: trust foreign companies instead of relying on the state to monitor the banks. However, from a certain point of view, this is just replacing one boss with another.
Regardless of whether the power lies with a government or a corporation, the problem of arbitrary power remains – and that is the lesson of republican freedom. You may still be under external control and unable to significantly influence the processes that govern your economic activities.
However, Bitcoin offers a truly decentralized option that brings us closer to freedom rather than domination. The decentralized nature of Bitcoin prevents the kind of dominance that comes with the centralized structures of stablecoins or traditional finance. Each participant can influence the network's decisions, reducing the risk of arbitrary power and thus promoting a more republican view of freedom.
In summary, stablecoins could seem like a lifeline in unstable financial landscapes. But their inherent dependence on centralized issuers endangers freedom as non-domination. It is not enough to exchange one master for another, be it a government or a company. True financial independence comes not from chain stores, but from eliminating or controlling them.
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