Recently, we have witnessed real-world scenarios where stablecoins such as Tether’s USDT and Circle’s USDC have become critical monetary instruments. In Turkey, for example, high inflation has prompted citizens to adopt these digital assets as a hedge against an unstable national currency.
Stablecoins promise freedom from the constraints of traditional financial systems, but how well they deliver on that promise depends on how freedom is defined. If we measure stablecoins against different definitions of freedom as they appear in the political science literature, this new form of money is not enough.
Burak Tamas is an assistant 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 a few political philosophers, and how they define freedom.
Let’s start with the Anglo-Russian political theorist Isaiah Berlin, and his seminal essay “Two Concepts of Liberty” argues that freedom can be understood primarily in two ways: negative and positive. Negative freedom, often called “liberal freedom,” refers to the absence of interference or barriers. In other words, to be left alone. In contrast, positive freedom focuses on the active exercise of freedom to achieve a goal or potential.
There is also a third alternative, the “republican” or “neo-Roman” conception of freedom, which draws on these two interpretations to raise questions about governance. The Irish philosopher Philip Pettit was a pioneer in this field, emphasizing a vision of republican freedom as the absence of domination, while the British intellectual historian Quentin Skinner later emphasized freedom from subordination. For both, the mere presence of an arbitrary force that can interfere in one’s life does not make one free.
Before returning to cryptocurrencies, let’s look at freedom another way – using the door analogy. Imagine negative freedom as choosing between several doors, and positive freedom as walking through the door you chose. Republican freedom brings another layer: it is 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 concept of freedom mentioned above, but from the republican point of view the mere possibility of interference already limits your freedom. In other words, to manage this gatekeeper, we need only positive freedom to secure our negative freedom.
Through this lens, the problem with stablecoins becomes clear. It can be said that stablecoins provide negative freedom, as there are few barriers to using these financial systems as long as the system operates smoothly. However, they misidentify republican liberty, or freedom without control.
And therein lies the problem: these assets are created and managed by centralized organizations. The stability and accessibility of stablecoins, along with their users, are linked to the decisions of these companies. You are free until someone intervenes. But more importantly, this freedom is at the mercy of the issuers.
Look at the recent situation in my home country, Türkiye. With the national banking system in crisis and inflation, many Turkish citizens are using stablecoins, specifically USDT on Tron, to protect their wealth. It may seem attractive at first: Instead of relying on the government to supervise banks, trust foreign companies. But from a certain point of view, this is just replacing one president with another.
Whether power is in the hands of a government or a corporation, the problem of arbitrary power remains, and this is the lesson of republican liberty. 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, bringing us closer to freedom as non-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 decisions of the network, reducing the risk of arbitrary authority and thus promoting a more republican view of freedom.
In conclusion, stablecoins may seem like a lifeline in unstable financial areas. But its essential dependence on central issuers endangers freedom as non-domination. It is not enough to exchange one master for another, whether a government or a company. True financial independence does not come from trading chains, but from eliminating or controlling them.