Bitcoin and the Story of Money
In the end, Bitcoin may be both more and less useful than we think
As it seeps into the mainstream of financial understanding, Bitcoin feels like a cryptographic miracle to the many in contrarian money theory circles who’ve lamented US monetary policy over the decades.
Finally, true decentralization! No need for a central bank! And, empirically, BTC is gaining legitimacy; it verifiably has value, on exchanges, across a wide range of participants. Even more miraculously, it’s easy to explain to non-techies: it’s “scarce” because it has to be “mined” and so it feels like the return of gold to the backing of our currency.
A miracle is a thing that was impossible under an existing story of how the world works, and thus has no readily-available explanation for our mind to backfill. But miraculous things shed the label over time, as our understanding of their context evolves.
Such it is for Bitcoin: Satoshi’s design is not perfect, and many hardcore enthusiasts now describe it as the first release of an integral piece of open source software, from which innumerable improved options will arise over time.
The integrity of Bitcoin’s blockchain (and other technical, structural details) are a story, a collection of reasons to believe that it can be maintained as a useful store of value, a story which is true externally (for anyone else coming in) until its users perceive that it’s not.
And there are many reasons to believe that Bitcoin’s story will evolve drastically. Other cryptocurrencies (mostly based on the BTC codebase) will continue to compete, and their uses will evolve (a prominent VC describes some very interesting uses for Bitcoin as a financial protocol), and regulation will play a role as the various financial interests jockey for leverage around the early days of the cryptocurrency revolution.
But no matter what happens to Bitcoin, it’s already had one very important effect on the ‘mainstream story’ of money. Indeed, all most people know about US Dollars is that they wish they had more of them, and some people have obscene amounts of them, all because whoever has lots of them is powerful.
The idea of cryptocurrency, through the story of Bitcoin’s rise (singular stories always have the most emotional impact), is dealing ever-larger blows to another story, the one that dominates our conception of money: that money can only work, is only legitimate, when it comes from banks and governments, and Ours are called Dollars.
In fact, private regional community currencies built most of this country before central banking “smoothed out” the economy. But stories like those are unfortunately today lost from our cultural and economic memory.
Bitcoin’s emergence is a fascinating new way to tell the story that normal people, together (literally, a pool of GPU power) can create their own value. Even if the public doesn’t understand its intricacies, and doesn’t appreciate its shadowy, Anonymous-esque origin story, they understand its (golden) glimmer of a promise to bring fairness to the idea of money.
No matter what the future actually holds for Bitcoin, that is a powerful concept, right now.
Like this? Let me know and I’ll keep writing about these kinds of issues!
