Bitcoin looks to me like a free market currency.
Some background: most Austrian economists agree that the Reserve Banks and the banking system (and government intervention) are responsible for all the world’s financial evils. Or, at least, for making them far worse than what they need to be.
One of their suggested solutions is rescinding the monopoly of the Reserve Banks to print money. While this might cause chaos at first (because it would give anyone the right to print their own money) – the market would eventually decide whose money was the most secure, the least easy to replicate, and therefore, the most acceptable for the settlement of transaction.
An example: if the right were rescinded, and I designed a bank note, printed it on my deskjet, and then took it to the Shell garage to pay for fuel – the owner would probably put me in the back to clean toilets until I’d worked off the price of my tank of fuel.
But let’s say that Walmart designed an IOU note, with some bar-coding, that entitled you to a bundle of grocery purchases from them. And let’s say that I got paid for my accounting services at an agreed amount of Walmart IOUs. And then took those to the Shell garage. Possibly, in that case, the garage owner might accept them.
And presto: you have a currency. Being Walmart IOU coupons.
If lots of big and reputable companies did that, you would rapidly develop exchange rates and security features and so on. And if a company got naughty about standing behind its currency, then people would stop accepting those notes, and move to another currency.
Personally – I think that the eventual outcome here is that the current monetary system would reassert itself. The big companies would spin off their coupon divisions into separate entities, merge them with the major coupon competition, establish a monopoly, entrench themselves with de facto regulation*, and we’d be back to a Reserve Bank.
And then, like the goldsmiths of old, the institution would realise that accepting deposits leaves them with an opportunity. People are unlikely to buy more than a month’s supply of groceries at a time, but they like to keep a few months of coupons on deposit as a cushion in case of job loss, etc. So the institutions start to lend out some of the coupon deposits they receive – based on their experience of what depositers have in their accounts versus their liquidity requirements.
At which point, we’re back to a fractional banking system.
BUT THAT ASIDE: bitcoin. Sounds like we’re making inroads on this road!
*For example: agreements with key retailers so that they only accept these specific coupons, in exchange for support and better loan rates. With heavy economic penalty for failure to do so.