The article compares Cryptocurrency to Religion, roughly speaking.
First, there was financial chaos in 2008. Then with a bang, our Lord Satoshi Nakamoto solved the double-spend problem and created Blockchain, and He saw that it was good.
Second, you have your prophets: Vitalik who is an "alien sent to help us all" and Joe Lubin who has "seen the light". These are men that have been revealed something about Blockchain that no one else understands, thus them being a "9 out of 10" in terms of how much they understand the Blockchain. You can never truly be a "10 out of 10" because that spot is reserved for our Lord, Satoshi Nakamoto. But Vitalik is a Higher prophet than Joe because of his closer connection to Satoshi, having been so involved with Bitcoin so early.
Then you have your priests, there to aid the prophets: Vlad Zamfir, performing the ritual of computational wizardry in the corner of the room as the common folk surround him and praise Satoshi. Emin Gun Sirer interpreting the Holy Whitepaper out loud and vulgarizing its content for the masses.
Then you have the Temple: Twitter. Great truths such as "ok can you guys stop trading" are recorded in the Gospels (IRC archives), and propagated and interpreted throughout the Twitter Temple by the priests.
Fourthly, you have your warriors, guarding the Temple: Jimmy Song with a cowboy hat, planting his foot on the ground, pointing at the heretics entering the Twitter Temple and charging with religious fervor: "Shitcoin! Scam! Get out of the temple!".
All the while, the Blockchain glows mysteriously as our coal plants feed it more and more energy. Perhaps when the Messiah comes, we'll learn that Blockchain was a parody of Humanity all along...
I think most national currencies are based on religious-like beliefs and mass delusions to some extent. Take the USD for instance. With "in God we trust", and you have your great leaders and "prophets" i.e. founding fathers such as George Washington and Benjamin Franklin printed on the back, governed by a government that is bound to the "commandments" i.e. the Constitution...
All the while, the Whitehouse mysteriously glows as the nation's printing press is busy churning out a few more batches of fiat in secret.
> I think most national currencies are based on religious-like beliefs and mass delusions to some extent.
Lol, no. Four points:
a) Money isn't value, money is a standard measuring yardstick for value.
b) Since it's just a standard way to measure stuff, pretty much anything can be money.
c) Modern fiat money like USD are IOU's from the government. They became a standard form of money because the government requires taxes to be nominated in these IOU's and because the government pays welfare and wages in them.
d) Inflation is no big deal. It just means that your standard measuring yardstick becomes shorter over time. A logistical pain in the ass, but ultimately nothing that can't be dealt with.
Wow! I got the emotional talk-down tone... Looks like I spoke blasphemy against your money!
Your reply is exactly the same type of reply one would expect from someone who is defending themselves by coming up with some quotes from the bible. The points that you gave me completely ignore my point. It's like I've said that Santa doesn't exist, but you've given me reasons for why Santa only delivers presents to kids only if they were good. All you have presented are the common "memes" that are used to prop up the shared delusion of national currencies.
I can understand you - people don't like to have have their beliefs challenged, and will defend themselves vigorously if confronted.
The irony here is that I also participate in this delusion daily, I too use national currencies, including the USD quite often. Although I never pay taxes in USD, certainly never receive any welfare from the US, don't care that it's "backed by guns" or an IOU, or whatever. I use them simply because there are people all around globe who believe in them.
Money is about imbuing items - some of which may be intangible - with power and manna, and also about having an irrational faith that the power and manna will increase in the future.
It's bean counting with imaginary magic beans, controlled by a priestly caste of imaginary magic bean rationers.
Crypto was an attempt to create a different kind of imaginary magic bean controlled by a different kind of rationing.
The magic part about modern currency isn't the caste of the bean rationers. It's the number of guns they have.
Money is valuable because the people with a monopoly on the legal use of violence say it's valuable.
There are many of other things that are valuable because of their utility, like a sandwich, or some kind of agreed upon cultural intrinsic value, like gold, and many of those can be even used as a medium of exchange, but those things are not money.
> Money is about imbuing items - some of which may be intangible - with power and manna
People will imbue all sorts of things with power and manna. (Video game highscores, or clothes, or the food you eat, etc. , etc.) Money is not special here.
> It's bean counting with imaginary magic beans, controlled by a priestly caste of imaginary magic bean rationers.
No. Fiat money (like the USD) are just IOU scrips from the government. No more magical or priestly than the IOU's you might give to your neighbor.
Fiat money IOU's are special only because you need them to pay taxes.
That was my very point, thank you for clarifying it. IIRC I came across it via Jan Irvin's The Pharmacratic Inquisition from 2007 [1] though I don't necessarily agree or endorse his work(s).
I saw it being referred to here [2] as well.
Perhaps its a matter of etymology. Wiktionary does not draw the link but I did find it an interesting read [3], and it did mention 'Good Friday'.
To be legally recognised it has to also exist as some paper or electronic records usually. For instance in the UK it has to be registered at companies house. If you Bob and Joe get together to do stuff and say 'lets call ourselves the Bob and Joe company' I think you'll find that legally speaking you are actually a partnership which can be iffy if Bob signs a lease in your joint names.
Yes but that’s not really news. I think the article’s elucidation is that Cryptocurrency, like money, is comprised of humans and thus has all the same baggage (as opposed to being a non-human solution that avoids issues of trust or governance).
For USD, I think the commandments would be the invariants of the monetary policy, as opposed to the entire constitution: "inflation shall average 2%", "grow the money supply to prevent deflation", and "shrink the money supply to reduce inflation". The religious part is made apparent by it being so difficult to explain why 2008 didn't lead to significant inflation - whereas inflation appears a direct result if the reasoning of these policies is accurate - yet we still follow the policy and just pray it will carry us through anyway.
Thanks for the summary. I don't know how accurate it is, of course—but I'll accept it, as five minutes into the article I still had no idea what it's about other than “cryptocurrencies.”
I find it strange that journalists tend to use singular boom and singular bust, and rarely mention that there's been at least 4 major boom/bust cycles, each one bigger than the previous ones.
As someone fairly knowledgeable about the Ethereum ecosystem I am pretty impressed by the mostly accurate portrayal of the social intricacies of the scene. I wonder how long this took to research.
it's remarkable how stable bitcoin has been recently. It actually has less volatility than even tech stocks. The vast majority of people who trade bitcoin and other currencies seem to have very little (less than 10k or so) , so this is not enough move the price much. The only way bitcoin can go up a lot is if institutions and large funds buy it at once. Otherwise it's just stuck in a really tight trading range.
The interesting bit about the stability is the fact that 12,000 new bitcoins enter circulation every week. The miners have to sell in order to pay the power bills (or they are simply holding since the mining has centralized to the bigger players with deep pockets).
So, how is the price remaining stable then? The general thought I've seen is that they are selling on private markets and it is the institutions and funds that are buying them up.
There are private individuals, a.k.a. 'whales', that have millions of dollars worth of Bitcoin to sell. These people can't sell on the exchanges we hear about because these exchanges do not have buyers on them wanting to buy huge quantities of Bitcoin.
You can't just go along to an online exchange and sell millions of dollars worth of Bitcoin, not only is there the problem of finding a buyer but there is also the problem of price. You could find people only wanting to pay a hugely discounted price with the 'market price' falling due to the surplus availability. This is not in the interest of a 'whale' as a big sale could render the rest of the portfolio to be worthless.
Instead of trading 'over the counter' these people are 'serviced' by an entirely different breed of traders that attempt to match buyers and sellers. These intermediaries try to get their percentage, however, as soon as buyer meets seller the need for the middle man and his cut is eliminated. These sales also take a long time to organise, so it is more like trying to sell a house than buying some candy at a convenience store. In this sales environment the price is different to the headline price and not as volatile. Much like house sales though there is a huge likelihood that a given sale will not go through.
Your stereotypical Bitcoin bore only really dreams of getting the 'Lambo to the moon'. In the bigger scheme of things a fancy sports car isn't really that expensive, it is just a bit of bent tin with a fancy paint job. These greedy dreamers are not currently trading their little coin things, they are in the same boat as the 'whales' that can't sell, they are just 'Holding On for Deal Life', a.k.a. 'HODLing'. They might as well be praying for rain.
The price is 'stable' not only due to the problems of large and small 'investors'. There is always the hope that some regulatory approval will come along to make it so that institutions and funds will enter the market. As things currently stand Bitcoin is a 'commodity' whereas every s4itcoin is a 'unregulated security'. So it could be Bitcoin that is undervalued and, when the institutional investors come along, the 'asset' will reach its true value of '50K'. That is the dream and the hope that keeps small time Bitcoin bores HODLing on to their imaginary stores of 'wealth'. This time next year they will obviously be able to pay the deposit on that second hand 'Lambo' proving them to be wealthy.
We are sharing this planet with a cargo-cult group of Bitcoin believers that will not let their dreams be shattered. They no longer talk of 'ICO' blockchain things, they have also kind of given up on the general population becoming the 'greater fools' that will buy their imaginary coin things at a huge premium from them. There really is just this belief in Bitcoin getting to be magically approved by financial authorities and them being able to see a return when mythical institutions buy big shortly thereafter.
Despite the obvious jealousy? hatred? distaste?, a very interesting response. I didn't consider that the ETF's might not actually be for the investors, but might be more interesting for the people wanting to exit their large bitcoin holdings. Good point on that.
Have you heard the news about the Coinbase/Circle stablecoin? What are your thoughts there?
It enjoyed previous periods of stability, between bubbles, as well.
The profile of ownership hasn't changed that much in the last year, even though there was a ton of price movement a year ago. There just hasn't been much in the way of the news that drives the feeding frenzy.
It's not transforming the world, but too many people who said bitcoin was worthless when the price was $600 are claiming to be prophets because the price is ten times that.
They were half right. Bitcoin has been a monumental failure in every respect except price. They hit the nail on the head about Bitcoin's technical and economic merits even if they dramatically overestimated the rationality of the market.
Having the background research discussed can be valuable.
However I'm short on finding the salient points and reasons why I should care to read this; it needs something more like a table of contents and a preface summary so that I know where to focus my efforts, at least initially.
Story author is Nick Paumgarten. Staff writer at the New Yorker for 13 years. Seems to favour stories on sports talk radio, internet dating, a bit on the WEF (World Economic Forum). His Twitter (grand total of 20 tweets) has a mugshot of a motorcycle.
Not what I would consider to be a credible authority on economic theory or cryptocurrencies. I'll take this story like I have most from the New Yorker: cursory homework done by an upper middle class person who was born and raised on the US northeast coast.
The New Yorker, as you say, is probably not the place you would expect to find the greatest journalistic minds writing about crypto. It is, however, a place where you can often find smart writing on things that are verging from obscurity into the mainstream, and I think this article does do a decent job of communicating the perspective of a layperson like the author who is new to the crypto world.
Did you read a different motive of the article than that?
Or, did you feel that there was something inaccurate about it? I felt like he did not dismiss Lubin's assertions late in the article about the future of crypto when debating Nouriel Roubini. It seemed pretty balanced to me in just reporting their arguments, and not taking sides, which I think is actually quite rare in mainstream journalism when discussing anything crypto! To me, it didn't seem like there were many assertions made that contradicted the bright future or doom of crypto coming from the prophets or naysayers.
Did you read the article? The entire point of the thing is to talk about crypto from the perspective of someone who doesn’t know much about it at the outset.
He investigates it and reports back, as a proxy for the reader.
> He investigates it and reports back, as a proxy for the reader.
And that's enormously valuable.
People are often dismissive of The Economist, since many of the writers in its anonymous collective are young Philosophy, politics and economics (PPE) graduates from Oxford, and what do they know. But they're smart, and by virtue of their association with The Economist and its network have access to world class experts, and they can talk to them on and off the record, and synthesise the gist of some development or controversy in an excellent short article.
First, there was financial chaos in 2008. Then with a bang, our Lord Satoshi Nakamoto solved the double-spend problem and created Blockchain, and He saw that it was good.
Second, you have your prophets: Vitalik who is an "alien sent to help us all" and Joe Lubin who has "seen the light". These are men that have been revealed something about Blockchain that no one else understands, thus them being a "9 out of 10" in terms of how much they understand the Blockchain. You can never truly be a "10 out of 10" because that spot is reserved for our Lord, Satoshi Nakamoto. But Vitalik is a Higher prophet than Joe because of his closer connection to Satoshi, having been so involved with Bitcoin so early.
Then you have your priests, there to aid the prophets: Vlad Zamfir, performing the ritual of computational wizardry in the corner of the room as the common folk surround him and praise Satoshi. Emin Gun Sirer interpreting the Holy Whitepaper out loud and vulgarizing its content for the masses.
Then you have the Temple: Twitter. Great truths such as "ok can you guys stop trading" are recorded in the Gospels (IRC archives), and propagated and interpreted throughout the Twitter Temple by the priests.
Fourthly, you have your warriors, guarding the Temple: Jimmy Song with a cowboy hat, planting his foot on the ground, pointing at the heretics entering the Twitter Temple and charging with religious fervor: "Shitcoin! Scam! Get out of the temple!".
All the while, the Blockchain glows mysteriously as our coal plants feed it more and more energy. Perhaps when the Messiah comes, we'll learn that Blockchain was a parody of Humanity all along...