I’m going to spend some time — without remuneration! — writing about pointless shit that seems to consume so much energy, and money, and so on, I suppose because we are confused, or sick as a society.
Often one hears, “all currencies are backed by confidence,” and that they are valuable, “because we just think they are.” Sometimes these seem like excuses, or revelations; rather than explanations. Partially correct as descriptions, these statements also demonstrate two important facts about money, while ignoring perhaps the most relevant and obvious fact, when it comes to crypto currencies.
First, you don’t have to be hustled into investing into the US dollar.
You already believe it, and don’t need it explained to you. That is money, almost by defintion; and it is used to purchase stuff. No one from the Federal Reserve goes around explaining how money works, to everyone who uses what it pays the U.S. Mint to print. It remains money, whether anyone understands it or not. Nor is it part of a scheme to remake the world, and bring about some promised techopia: at least, no one speaks of it this way, before getting some.
Why should a currency require so much mythology, and future-promising? The future-world stories of ever rising value, and “making a difference, too,” are the real source of its “value,” I suspect, as a hustle; no different than any other speculation: tulips, art, real estate, cargo cults, beanie babies.
Second, US dollars already work.
That money may be exchanged for goods and services, and for other money too, is only partially responsible for the fact that it is exchanged. What else drives the circulation of money? Why do people believe in it, without having it explained? Because it works, even children see this: I can give this thing to that guy, and get a candy bar. But our beliefs don’t really provide the force required to drive all those dollars around the globe. Something else provides that.
Money is State Created. And You have a Body.
Here we come to third fact: the reason U.S. dollars circulate within the borders of the United States may be in part the result of belief in the “value” of that thing. And the belief in part comes from people using it, and being paid in it.
But, you can disbelieve all you want, and still the I.R.S. may come knocking on your actual door, and threaten you with imprisonment of your actual body. What drives the circulation of U.S. dollars, and what critical agent is not present in crypto-currency? Not simply cult-like faith, nor using to exchange for goods.
A state with a monopoly on violence, and all the means to exercise it upon actual bodies: that drives money’s circulation.
Whatever that state says you must give it, in order to pay off a debt (“tax”), THAT THING will become money. The State and Money are mutual creations, as David Graeber explains. This is one of the basic facts every student in my Introduction to Anthropology will learn. All other “currencies” are gift cards, with limited exchange spheres, no different than Chuck E. Cheese coins. Until I hear Etherium being valued in BitCoin, and not U.S. dollars, I’m inclined to regard these “currencies” as gift cards, exchangeable for some goods, in some places. And this will be true, until the I.R.S. says, “now we accept BitCoin!” And until Marines are paid in BitCoin…and so on.
Mostly the boom in their “value” (as a matter of someone trading U.S. dollars for them) has come, I suspect, from banks being willing to convert them, probably because money laundering — itself a result of the state — offers a reliable revenue stream. Not because the future is here!
Third fact part two: U.S. dollars are not backed by “faith,” they are the reserve currency for what remains the most important commodity on earth: oil.
If you want to buy oil in international markets, that oil is priced in U.S. dollars, not BitCoin.
For half a century this “oil standard” has created the U.S. dollar as a global currency, circulating beyond the borders of the I.R.S.’s ability to threaten you with collection. Until BitCoin gives us a military-industrial complex, it will remain a gift card.
So, “money” is a word that — like the most important concepts in our world — does not explain itself, just by using it, or having it; nor by simply thinking about the thing we call money, as users of it. Money? Do you mean U.S. dollars used to buy oil, so that economies can manufacture goods? Do you mean what the I.R.S. says I have to give it, or else? Do you mean what I buy candy bars with? Or what I put in the bank, or loan out at interest?
Where do crypto-currencies sit, in those answers? You can buy stuff with it, but all those genius BitCoin millionaries are not buying Lamborghinis with BitCoin, right? And they aren’t putting BitCoin into their cars as fuel? And they aren’t paying employees in BitCoin, nor are they working for BitCoin, and electrifying cities with it.
It is a gift card…and one can build a consumer economy, at the retail end, with BitCoin, but that is true of all gift cards. Unlike gift cards for retail stores, these also come with a story: keep this card, and you will be able to exchange it for more, in the (better!) future. More what? More consumer goods, produced by corporations that pay taxes and buy oil, enjoying militaries that protect their property and investments? A New World!
Crypto-currency is said to bring about a non-state exchange medium, and so on, a revolution where our money isn’t put to use by an empire, and so on, or at the service of banks that create it by fiat, to their lasting advantage. A consumer economy could develop where one buys a Lamborghini with BitCoin, but only of course, if the seller accepts it in exchange. And that seller could buy a beach front house with BitCoin, so long as that seller accepts the coin. And so on. Could they all live beyond the threats of the I.R.S., if these exchanges are profitable, as measured by…the I.R.S.? Doesn’t the I.R.S. simply have to assess crypto-currency as wealth, set a tax upon it, and not accept it in payment…and now you are back to exchanging your BitCoin for U.S. dollars?
Well, maybe all those crypto-currency geniuses will refuse to pay up, and stand up to the Man? Right. As a matter of principle, and out of a hope for the future? At what point does one’s pretended belief in the Star Wars universe no longer inform one’s actual decisions here? Whenever agents of the state are pointing a gun? Only cults and their Koolaid — historically — or starving parents, have been willing to stand up to those guns. BitCoiners as a cult? Or starving parents? The logic of its access, and reliance on investors with excess capital, has assured it will never become what some hope for it: a revolution of freedom-izing, a world without states.
The United States has a military rather more capable of blowing shit up, than does Ethereum-Bit-Coin United. You don’t have to believe this, for it to be so. It is. A promise of a brighter future tomorrow won’t really work quite as forcefully. Can Hackers offer an alternate threat of violence? I suspect the U.S. military can bring them to heel…or just buy their services — in U.S. dollars.
Money…a little like a disease: having it, doesn’t mean understanding it.
Crypto currencies RELY on enough wealthy people not understanding basic realities of money, even though these geniuses may understand computer codes, and read science fiction. Every speculation works this way. And as soon as crypto-currency buyers understand that threats of violence (David Graeber’s work informs this claim), rather than “faith” or “confidence” is the very real foundation of the modern monetary system, the spell will be broken; and many millionaries will be unmade, in a day. They won’t learn about money, by losing it, however. Unless, of course, they see the future, and exchange their coins for U.S. dollars, at a bank, and then pay taxes on their earnings, and go on…
Like I said, stupid shit to write about.