You don’t have to believe bitcoin will herald a new era of nationless, inflationless finance to
appreciate that it’s already achieved something previously unthinkable.
Don Quixote put a barber’s basin on his head and said it was the golden helmet of Mambrino.
This is how bitcoin — and all money — is made.
You should be thankful for bitcoin even if you didn’t get rich, even if you think it’s a scam, and even if the Winklevoss twins don’t feature in your fantasies of financial utopia.
You should be thankful for bitcoin even if it was invented by a comic-book supervillain, and even if the code he futzed with in his basement a decade ago multiplied into a power-hungry Napoleon testing the limits of our electrical and electoral grids — as well as our sanity.
You should be thankful for bitcoin even if it means every financial transaction in history will be written onto one of those endlessly long drugstore receipts.
You should be thankful for bitcoin even if the most profitable use of all the world’s computing power today is solving Sudoku puzzles (in order to generate that endlessly long drugstore receipt).
You should be thankful for bitcoin even if the insufferable tech bros and their Sudoku-solving supercomputers both spend their days running an infinite loop of the same word: “mine, mine, mine, mine, mine … ”
We should all be thankful for bitcoin, in fact, because bitcoin made us all think.
I know. I know. “Think”? Hasn’t bitcoin mania caused people to do the opposite of thinking?
Yes. If all the bubbles in history from Dutch tulips to Disney superhero movies teach us anything, it’s that greed doesn’t heed.
And yet, bitcoin BTCUSD, +2.90% has made us think. It’s made us think about the very nature of money, the sheer weirdness of money, which most of the time we’re too busy spending, saving or worrying about to actually think about.
In the past month alone I heard kids on the subway debating fiat currency, Uber drivers ranting about central bankers — hell, even my mom has had some choice words about the best store of value. You don’t have to believe bitcoin will herald a new era of nationless, inflationless finance to appreciate that it’s already achieved something unthinkable.
Bitcoin is a philosopher’s stone. It’s also a pet rock. It’s worthless, and it’s worth millions. It’s magic, and it’s marketing — and it reminds us that these same contradictions are true of all money.
What is money? Dictionaries and economics textbooks prove inadequate to answer, as Dickens’s flustered Mr. Dombey demonstrates when his son poses the question. Money is “coined liberty,” says Dostoyevsky. It is “frozen desire,” the writer James Buchan puts it in his superb book by the same title. “Money takes wishes, however vague or trivial or atrocious, and broadcasts them to the world, like the Mayday of a ship in difficulties.”
Is it really so absurd that some dude from MIT can point a finger and declare, ‘Let there be Litecoin,’ and suddenly he has enough cash to buy his own Caribbean island?
Money is a “social technology,” the economist Felix Martin says — one of the twin pillars on which civilization was built. Writing was the other. Of course, writing was originally money, too.
When prehistoric Steve Jobs unveiled the invention of writing in his Mesopotamian keynote five thousand years ago, writing’s killer app wasn’t poetry, philosophy or presidential tweets — it was keeping track of debts. The early adopters were the proto-CPAs, and they probably drove all their friends bananas gushing about the stone slab’s cuneiform factor.
All of this is to say the most important thing to remember about money is that we made it all up. Money is an act of imagination. It’s a fiction. The great American novel isn’t “Huck”; it’s the buck.
With that in mind, is it really so absurd that some dude from MIT can point a finger and declare, “Let there be Litecoin,” and suddenly he has enough cash to buy his own Caribbean island?
OK. That is still pretty absurd. It’s as absurd as Don Quixote putting a barber’s basin on his head and insisting it’s the gold helmet of Mambrino. But if enough people believed Don Quixote or the dude from MIT, would it not be so?
Why do you think money is stamped with the words “In God we trust”?
Money is a leap of faith. Even when we had the gold standard, we really only had the god standard. It’s not a god we are trusting in, however, but each other. The word credit literally means belief, my colleague Jason Zweig of the Wall Street Journal points out.
Money is ultimately backed by faith in our institutions, our government and our Facebook FB, -0.49% friends. The dollar is the value and values of America rendered into an abstraction, allowing us to trade and transact with strangers we might otherwise not trust.
Bitcoin and other cryptocurrencies are more atheistic. They run on an almost paranoiac guiding principle to trust nothing and encrypt everything — which, admittedly, isn’t as catchy a slogan. Bitcoin would be better off adopting the motto Benjamin Franklin advocated for America’s coins: “Mind your business.”
In our galaxy, money is the Force: It surrounds us, penetrates us, binds us together. Money is also the Matrix: an illusion, a simulation, a game we are all playing. Bitcoin is the red pill Laurence Fishburne gives Keanu Reeves to show him the “real world.” It’s given us a glimpse of the wires and duct work underpinning our moneyed world.
Bitcoin is “forcing people to reckon with the fact that all money is virtual,” Felix Martin told me. “And this reckoning is and always has been discombobulating for people.”
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No matter what you think of capitalism and free markets, money and the symphony of financial instruments performing its music have made possible much of our scientific, artistic and social achievements. As Niall Ferguson relates in “The Ascent of Money,” the advent of banking, insurance, double-entry bookkeeping, mortgages, bonds, stocks, derivatives and the Dow Jones Industrial Average DJIA, +0.09% all stoked innovation and the betterment of the human enterprise. Has the financial system also inflicted pain, suffering and alienation? Without a doubt. Could it be better and fairer? Yes.
This brings us to the second most important thing bitcoin reminds us about money: We can change it.
Consider gold. One of the ironies of gold US:GCG8 is that what was originally prized as the most malleable of all metals is now prized for being the least malleable of all assets. Though many have described it as “digital gold,” bitcoin demonstrates that money itself is flexible. It is continuously evolving. We created it, and we can re-create it.
Money is a medium of world change. It can be a force for good in the world, and when it isn’t we can upgrade its operating system to be fairer, faster and more efficient.
So no matter what Warren Buffett, Jamie Dimon, Paul Krugman and all the other naysaying titans of finance and economics say about bitcoin, we are all indebted to the comic-book villain who invented it. Don’t put your whole 401(k) into cryptos, don’t jump on the bandwagon, but do give it some thought. Do try it out. Play some Sudoku. Write yourself onto that endless drugstore receipt.
Bitcoin, after all, is the new Oprah: Everyone gets a Lamborghini — and then we get to complain about the taxes.
Well, at least we get to complain about the taxes.