Finally crystallized what bothers me about all the Blockchains/Bitcoin/Ethereum hoo-hah. Its not the really the pump-and-dump dynamic (everyone will all of course dump right before the last second so that precisely no-one will be left holding the bag). But under that is a dream And idea. A hope. A belief. Totally wrong. But cherished nonetheless….
The dream? That currency is a store of value….
It isn’t. It never will be. Get used to it. Hammer that into your head. Never let that go.
Currency is a “means of exchange.” A socially convenient common denominator for enabling transactions. You work. Receive dollars/gold/silver/cowrie shells/huge round stone discs for it. Turn around and spend it one someone else’s work. Etc etc.
We really really really could substitute cowrie shells or huge round stone thingies for dollars. They sound ridiculous, but no less ridiculous than magical green pieces of special paper.** I can walk into a store with a green piece of paper and walk out with milk. In an alternate universe, I’d walk in with string of cowrie shells. Nothing else need change.
That collective delusion is a feature of the system, not a bug. Your visceral response to “primitive” cowrie shells and un-questioning acceptance of dollars is evidence of how powerful and important that delusion is. We have to believe to make the whole thing work. And that belief must be un-examined to stay valid.
But that belief bleeds over to the illusion that money is a “store of value.” A person with a million cowrie shells isn’t rich. A person with a million green papers is? Both are equally silly. Except one is invested with the holy magic of a powerful collective delusion. A necessary delusion to sustain currency as a unit of exchange.
But no currency functions as a “real” store of value. Never has. Never will. Piling up dollars will lead to homelessness and starvation just as fast as piling up cowrie shells. Until/unless you “means of exchange” them into food and housing. Dollars don’t digest.
But real-world blockchain activity is almost entirely around this magical “store of value” idea. No-one really uses Bitcoin to transact (except for drugs and PC ransomware I guess?). The belief behind this mining and storing up a “coin” as a thing with value in itself.
Piling up Bitcoin is no different than piling up cowrie shells and declaring yourself a millionare. That works as long as other delusional people will convert your cowrie shells to dollars and thus to food/shelter/cocaine.*** But its still founded on that collective delusion. The cowrie shells, or dollars, or bitcoins stubbornly remain means of exchange for things that actually have value – like food and housing.
That’s where gold investors fall down the rabbit hole. They want to believe that a shiny metal is somehow more “real” than a piece of paper. Although that shiny metal depends on the same “someone else will accept this as a means of exchange” mechanism as a cowrie shell.
And if things break down to the point currency’s “means of exchange” function fails? You won’t need gold. You’ll need a shotgun and a Mad Max tribe of buddies. Because society will have atomized backwards to a more primitive, less functional collective delusion (tribalism). Its just delusions all the way down (or really turtles all the way down).
Gold bugs and Bitcoiners desperately don’t want to accept that they are just part of a really useful but artificial collective delusion. Because that leads back to a whole lot of uncomfortable introspection about their own human-ness and impermanence and perception and all the rest of that stuff.
That nesting box of socially useful delusions is a scary thing to contemplate. Its not easy to think about how we are all just watery bags of chemicals participating in a self-sustaining-and-functional-but-still-totally-artificial collective delusion. Unless you drop a lot of acid I guess.
But some people are more scared by this than others. It’s too much of a threat to their sense of self, order in the universe, and the value of a really well organized sock drawer. Or it reveals a collective dependency and mutual obligation they really don’t want to acknowledge (see “Libertarian Techno-Geeks”). People who had Mr. Spock as a teen bedroom poster.
They desperately want/need to believe in some deeper grounding and truth in the universe. There is some Ur-Turtle at the bottom that is “real” and not standing on the back of another turtle! REALLY! YES! [voice rising to an angry shriek]!!!!!
Of course, this is just another self-delusional belief in the whole stack of turtles holding up our self-delusionally-defined universe. But try telling that to an libertarian-leaning Bitcoin enthusiast…. Probably that hit of acid is the only real way to shift them. We could add it to the water at a Bitcoin conference?!? 🙂
Absent psychedlic intervention, Blockchain has enticed that gold-bug crowd. Plus a whole lot of techno-futurist types who are always trying to somehow escape our/their human frailties. Engineers of a certain stripe. Self-regarding meritocrats. The professional investor class (looking for stock prices in “the numbers” vs the stories behind those numbers). Etc….
Piling up the cowrie shells.
It won’t end well. Better to ground your hopes and dreams on something a few turtles further down the stack. Follow Bugs Bunny, not Daffy Duck.
A great cartoon in its entirety BTW. Especially in the Age of Trump.
** At least blockchain “mining” just burns server cycles and electric power. Massive scale cowrie-farming and/or rock quarrying to “print money”would be an environmental disaster. Although we could have the Fed laser engrave serial numbers on specific shells/rocks. Heck, we could use Bitcoin or some other blockchain to generate those serial numbers! Get some benefits of fractional reserve banking and avoid the (proven) toxic side effects of the old fixed money supply approach to currency. So blockchains could be useful after all I guess?
*** Even when Bitcoin is used for a transaction, its pretty rapidly converted to dollars or Euros somewhere. At least by the smarter folks out there.