Joseph Diedrich

Nor do producers need a conventional internet connection. Wireless connectivity, courtesy of a worldwide cellular network, is penetrating every corner of the globe at a blistering rate. The New York Times recently reported that Oman and Kazakhstan outranked wealthier nations like Switzerland and Germany in mobile broadband use. In the not-so-distant future, the Bitcoin protocol itself could provide a decentralized, distributed internet.

Bitcoin solves the access problem that fair trade exacerbates. While fair trade enhances the power of large farms at the expense of small farms, bitcoin creates a privilege-free playing field, allowing producers of all sizes unhampered entry into the international marketplace.

Price & Demand

Certified producers are guaranteed a minimum (above-market) price for their goods. The purpose of the minimum price is to “ensure that producers can cover their average costs of sustainable production,” and to act “as a safety net for farmers at times when world markets fall below a sustainable level.”

Unfortunately, whenever the price of a good is artificially raised above its market level, a binding price floor is created. The price floor reduces demand for the good, and consumers buy less of it. Marc Sidwell of the Adam Smith Institute writes, “Fair trade does not aid economic development. It operates to keep the poor in their place, sustaining uncompetitive farmers on their land and holding back diversification, mechanization, and moves up the value chain. This denies future generations the chance of a better life.”

Bitcoin reduces transaction costs. PayPal assesses a 2-4% fee per transaction, whereas bitcoin transactions can be executed for less than 1%. Without the need for third party intermediaries (banks, credit card companies, etc.), producers, transporters, and merchants can charge less for their goods. Increased sales will likely be the result of those lower prices, and the benefits will ripple throughout the economic ecosystem.

Fair trade artificially raises prices, making the world a slightly more dreadful place for producers and consumers alike. Bitcoin does away with superfluous expenses, lowers prices, and blesses everyone touched by its digital hand.

In addition, smart property, an imminent (and immanent) application of the Bitcoin protocol, will afford third-world agricultural operations the opportunity to grow and improve. Cathy Reisenwitz says it best: “Smart property obviates the need for trust, and its proxy, discrimination.” With risk (and international transaction costs) for lenders substantially reduced, capital can flow freely to anyone with a good idea, irrespective of credit or location.

Notwithstanding good intentions, the results of fair trade have been bitterly dismal. In contrast, bitcoin delivers immediate empowerment without political initiative. Third-world producers, first-world consumers, and everyone else in between reaps the benefits. It’s time for doubters of bitcoin to wake up and smell the coffee.


Joseph Diedrich

Joseph Diedrich is a Young Voices Advocate and law student at the University of Wisconsin–Madison. As an avid liberty-oriented blogger, author, and speaker, he has been featured or referenced at The Washington Times, Reason Magazine, Liberty.me, The MacIver Institute, the Center for the Study of Innovative Freedom, The College Fix, LibertyBlog, and elsewhere. Joseph also holds a bachelor’s degree in music composition and has worked with multiple internet startups. He constantly seeks to identify and illuminate connections between the many diverse people and ideas in his life.