Bitcoin Is More Than Money (As Is Any Money)

Bitcoin Is More Than Money (As Is Any Money)

Our use of money is infused with profound cultural and political meaning, and the interplay of rival currencies can offer insights into cultural tensions. This was as true of post-Soviet Russia as it is of Bitcoin today. The anarchic virtual currency is part of a wider cultural movement that embraces technology, and replaces institutions with networks. The long-term impact of this transformation may be even greater still, a resilient non-institutional currency could form the bedrock for a wider transnational identity.

Any economist will tell you that money has three core functions: allowing users to purchase, to save, and to price. When a state-sanctioned currency fails to fulfil any of these functions, complementary currencies seep in. Most countries have experience of this, especially during times of inflation and uncertainty. During the collapse of the Soviet Union, US dollars circulated openly as “hard currency,” allowing relative certainty during a turbulent period. Three years later as Yugoslavia disintegrated, it was the Deutsche Mark which provided local traders with a stable pricing and saving system. The presence of complementary currency can be hard to shake off. Even today, fifteen years since the ruble’s last currency shock, rent in Moscow is often priced in dollars.

Rival currencies often represent opposing sides in a wider cultural divide. During the post-Soviet transition, US dollars were more than just a means of exchange, they were infused with cultural meaning, an embrace of the West and its promise of riches. As new currencies were introduced, they were met with an ambivalence that reflected widespread disappointment with post-Soviet realities. Anthropologist Jennifer Dickinson found that when Ukrainians greeted their new national currency, the hryvnia, with confusion, mistrust, and open mockery, they were treating it as a proxy for the shaky institutions that issued it.

This is the nub of the issue, money has many more functions than the three I listed above. Money is also a demonstration of trust and political deference, and a physical representation of collective heritage. Keith Hart calls money a shared cultural memory. Vasily Rozanov goes even further, seeing it a as a metaphysical connection to ancient civilizations. The semiotic connotations of money come into stark contrast when users can make a choice between two currencies. Anthropologist Julie Chu describes how in China, while dollars are used for gifts and remittances, renminbi are used for market transactions. Dollar wealth is seen as earned (if maybe a little selfishly), while renminbi wealth is associated with corruption.

Understanding the cultural meaning of money is central to understanding virtual currencies. Many Bitcoin transactions don’t make any sense when viewed only in terms of material exchange value and convenience. We have to take into account the implied social value of money, in this case the novelty and cachet that comes with using Bitcoin, to understand why someone (including me!) would go through the fuss of buying a beer using a smartphone app that seeks confirmation from a global network, rather than just using the crumpled fiver in the pocket.

Furthermore, money can be deeply entrenched in identity, witness how nationalists in Britain and the United States show pride in the status of their currencies. Even the euro was part of a wider effort to build a European political identity from scratch, but with less success. The European Central Bank decorated euro banknotes with imagery of fictional buildings and bridges, all typical of certain styles but not specific enough to upset national sensibilities. Pictures of nowhere. Or, as we might render it in Greek, “Utopia.” Baudrillard would have called this a simulacrum, a charade designed to mask the great void within Europe, a political bloc that lacks a sense of self. As the currency slides into crisis, the absence of fiscal solidarity is the most obvious void of all, with tragic results. We ignore the cultural meaning of money at our peril.

Money of nowhere.
Money of nowhere.

In contrast to the top-down euro, Bitcoin is a grassroots currency with no agreed goals other than in its own adoption. But Bitcoin does bring with it elements of cultural identity. That identity is not necessarily as a “Bitcoiner”, though the term exists, but rather as a networked digital native who sees the Internet as a home and lifeworld. As the meme goes: “It’s ok, we’re from the Internet.” This is a cultural movement that embraces technology, transparency, and collaboration, and in the process replaces institutions with networks. That movement has been visible in the form of Anonymous, Wikileaks, Occupy, and if we wanted to cast the net wider we might include Wikipedia, open source software, and maker/hackspace culture. Bitcoin users are not politically monolithic or coherent, they span from radical left to radical right, but in giving the Internet its own currency, they give those who are “from the Internet” an increasingly credible claim to global citizenship.

10 Replies to “Bitcoin Is More Than Money (As Is Any Money)”

  1. There’s one function of money that deserves to be mentioned here. Money is a carrier of information. Price is more than just a number, it is an expression of information. The market price is, in effect, the result of the knowledge of all traders.

    The crux is that, in our Information Society, the information carrying function of money (which permeates all of its other functions) is challenged by the fact that so much more non-money information is available and exchanged.

    So “money”, in its traditional sense, is losing value, because it is losing its natural monopoly on expression the information of value.

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