The stage is set for early elections in Iceland. The October 29th election is proving to be a challenging one for the traditional parties, especially after the Panama papers debacle. Fringe parties like the libertarian Icelandic Pirate Party may well reap the benefits of public discontent. Judging by the Pirate’s Party platform, their success in Iceland could be a victory for bitcoin. The party could consider making bitcoin legal in Iceland and it also promises to engage in more direct democracy. Both of these prospects are interesting for bitcoin and blockchain enthusiasts, and they could also bring many benefits to the people of Iceland.
The Relationship between Iceland and Bitcoin
Should the Icelandic Pirate Party succeed in the polls and subsequently in pushing bitcoin legislation coupled with more direct democracy through, Iceland could exploit the potential of 2 of bitcoin’s functions. On the bitcoin aspect, the official adoption of the cryptocurrency as legal tender has the potential to expand bitcoin mining activities in the country, and to a lesser extent, could serve to ameliorate some of Iceland’s economic shortcomings. As for the technological aspect, direct democracy could have a blockchain component. The country could even experiment with the concept of liquid democracy through a blockchain-powered electoral system. The first one is more obvious and more attainable than the second one, but neither should be ruled out.
Bitcoin in Iceland’s Economy
The economic argument for bitcoin in Iceland is quite straight forward. There are a lot of factors that support the economic argument for Iceland’s adoption of a foreign currency. Iceland’s economy has a history of instability, high inflation and currency volatility. Many have suggested that Iceland should get rid of the Krone – ISK – and should instead adopt the Euro, or perhaps another currency such as the US or Canadian Dollar. Doing so however, will take monetary control away from the country and will place it in the hands of foreign central banks.
Iceland does not have to replace its currency in order to deal with some of its economic problems. The country could instead legalize and even promote the use of bitcoin. Some may argue that bitcoin can be even more volatile than the ISK, but it is largely deflationary, which would be a positive development in terms of controlling inflation swings. Bitcoin can also serve to smooth out aggressive swings in the value of the ISK, without surrendering monetary policy to a foreign central bank.
Control through Bitcoin Mining Advantages
Iceland also has many of the necessary characteristics to participate in the distributed control of the Bitcoin network. Geographic location coupled with an impressive renewable energy generation capacity, place Iceland in a unique position to ‘mint’ a significant portion of the world’s bitcoin. Energy intensive bitcoin mining in Iceland would generate less pollution, be more energy efficient – because of the temperatures – and would be cheaper to carry out. Both bitcoin adoption and bitcoin mining activities can also help Iceland develop its financial system further.
Direct Democracy through Blockchain
Insofar as the Pirate’s Party proposal to engage in a more direct brand of democracy, blockchain offers a great opportunity to do so. Not only will the government be able to see the results of every referendum immediately, should it adopt a blockchain voting system, but it will also be able to give Iceland’s citizens an opportunity to change their votes. If the Icelandic Pirate Party and Iceland’s political echelon are intent on revolutionizing democracy, they could use blockchain to deliver liquid democracy. This in broad terms means that citizens will be able to withdraw support for specific policies even if they once voted in favor.
Iceland’s Bitcoin Prospects
There is no doubt that using blockchain as the technological element that underpins fundamental democratic philosophy, is a farfetched scenario. But a blockchain based electoral system is not. Should Iceland choose to implement blockchain voting, it will probably be able to reduce costs associated with elections.
As far as the adoption of bitcoin as a currency that can be used locally together with the ISK goes, the proposal might be a much more palatable option for the public than blockchain voting. That is the area in which the Icelandic Pirate Party should invest its political capital, if it gains enough of it during the upcoming elections.
It is difficult to succumb to idealism and think that bitcoin will be widely adopted in Iceland or that it will take up a significant part of the transactions there if it becomes legal tender. Nevertheless bitcoin adoption gives the citizens of Iceland the opportunity to hedge their inflationary risks and develop new sectors of its economy. For those cryptocurrency enthusiasts that cannot vote, it will be interesting to follow the results of this election, despite the little international coverage. After all, not too many libertarian parties have the kind of political opportunity that the Pirates have in Iceland right now.
Click here to visit the official website of the Icelandic Pirate Party
Update: The Icelandic Pirate Party is now the second biggest party in the 63 member parliament with 10 seats. This result falls short of the expected 19 seats that some polls showed, but it is still an impressive result. The party effectively tripled its number of representatives in the Icelandic parliament. Nevertheless the sweeping reforms it promised during the election, might have to wait. The Pirate Party might not be able to muster the support necessary to make bitcoin legal tender in Iceland or initiate other reforms, yet the result is impressive and it signals a shift in public opinion.
