There have been big headlines this week about an Internet phenomenon called Bitcoin. Bitcoin is an open source peer-to-peer virtual money system, unsupported by any government or bank or underground vault stacked with gold bars. It works on the basis of simplicity and transparency, and is backed only by the fact of its own existence. The surprising news about Bitcoin is that people are using it and it works: the peer-to-peer system manages to provide complete transactions without any of the presumed requirements for a currency platform.
Bitcoin is an experiment, obviously, in applied economics, created by ambitious techies. The existence of an extra-governmental open source currency system suggests a new way to define our relationship with governments. In this sense, it’s an extraordinarily exciting idea, and certainly an idea with a big future. Does the open communication of the Internet age offer us a new capability to rethink the role, shape and substance of money in our lives?
This is an appealing idea for an age in which economics often seems like an evil science, rife with hidden hazards, drenched in corruption, besotted by noisy and near-hysterical political debate. The clean simplicity of an alternative digital currency system seems to present the eventual possibility of a global financial system reboot. The idea should catch the attention of both conservative libertarians concerned with the power of central government and progressive liberals concerned with economic justice and corporate/Wall Street corruption — and to anybody, really, who isn’t happy with the questionable economic systems and practices (remember 2008, anyone?) that still define the status quo today.
The media coverage of Bitcoin, unfortunately, has been inane. As Bitcoin experiences its first blush of fame — it is expanding greatly as we speak — it is being confronted by a gigantic barrage of negative media coverage, based mainly on the fact that a few people seem to have made instant profits by trading on Bitcoin, while others have lost their investment or may lose it soon, and by the ridiculous fact that the Winkelvii are involved. As if any of this mattered.
By evaluating Bitcoin as a get-rich-quick scheme (which it was never meant to be), the media can dismiss the experiment with a laugh and avoid the responsibility to take it seriously. (This is a familiar pattern in the tech field, since this was how major media outlets treated the entire Internet/World Wide Web communications revolution during the first dot-com era: they hyped it as a get-rich-quick scheme, then damned it when it failed to deliver on those terms.)
I am ignoring the inane media coverage and following Bitcoin with great interest, because I have long wished for more public experimentation with alternative economic systems. Why is there so little public awareness of the possibility of alternative economics? We live in an era of (hopefully) positive change, but our culture freaks out at the very thought of changing the basic principles of our economic structure. Hell, we’re suddenly managing to accept gay marriage, which is great — and yet the topic of alternative economics is still absolutely taboo. Our thinking about money is stuck in the dark ages.
I like Bitcoin as an experiment, though I’m actually not sure that this particular approach to alternative economics encompasses my own ideas about how we can improve our money system. As I’ve described in previous articles, I wish for a simpler, more elemental, even more primitive money system. Bitcoin makes money even more virtual, but this is the opposite of the change I have dreamed of: I’ve wished we could make money more physical. The picture at the top of the page shows the famous Rai stone currency used by the citizens of Yap (Wa’ab) Island in Micronesia. What I like about the idea of gigantic, heavy money is that it emphasizes the idea that money does not necessarily help us — having money is a burden, and we should all be careful how much burden we take on.
Well, this concept reflects my own personal ideas about money, and may not become widely popular. I don’t think we’ll be trading Rai stones around anytime soon, and the Bitcoin experiment probably has a better chance of providing some fresh ideas about the basic structures that should underlie our economic system. What do you think about alternative economic systems, and what do you think we should do to reinvent the role of money in our world?