People are prone to escape their problems. More often than not, at the expense of solving them. The most common experience of suffering shared by humans is of economic survival, which explains the popularity of economics and wealth creation. While it is unlikely that you will actually pass away if you are unemployed in a city (though, in some, it is possible), a source of income is necessary to satisfy needs tied to survival, procreation and further development. Despite our biggest hopes, however, we rarely inherit a fortune from a generous ‘Nigerian prince’. Even extremely intelligent or hard working individuals often fail to create wealth. But how would you even start creating wealth; by selling cows and crypto?
Cows and Crypto?
They represent two extremes; material and idea. From a historical perspective, this axis communicates the evolution of media of exchange. Before the invention of currency, people would exchange objects and very often animals. The value of the animal inevitably depreciates until it dies, but it does have characteristics of capital because you can use that capital to generate wealth, e.g. to generate milk and eggs.
People can also trade tools. If one individual has three hammers and another one has five knives, it is beneficial to trade. In this way both can cover different functions now. Tools are material, they qualify as capital and have a different depreciation pattern. While the cow will die of old age, a tool’s life cycle mostly depends on the frequency of its use, agιng much less by themselves. Unlike animals or natural resources being available in the wild on their own, tools are born from ideas. They are an ideal representation of a function.
Matter is damaged by matter and ideas are damaged by ideas, information, facts and heresies. Moreover, the feeling that a hammer will last forever comes from the durability of materials, further reinforcing the notion of indestructibility.This mental exercise leads us to the use of metals as currency. A hammer, made of metal, will very slowly reach its breaking point, depending on its use. If stored and never used, it will survive indefinitely. In this sense, rarely do we use gold for material functions, because it is rarer and softer. People store it and it survives without it necessarily being reforged. It makes sense that gold is the historical king of value. It is rare, beautiful and universally accepted. Iron-ically its relative softness, glamour and scarcity saves it from functional exploitation but creates an ideal representation of value.
In order to serve the purpose of liquidity (and other forms of monetary manipulation) metals inferior to gold and silver, and later paper, started being accepted as a representation of value, guaranteed by banks and states. The less the material value the more representational value they have. A hundred dollar bill holds this value because of what is written on it (a guaranteed document or ‘legal tender’) and we can even have them in an electronic form in our bank. In this sense, cryptocurrencies are not that far from fiat currencies. The main difference is that cryptocurrencies are ‘homemade’, decentralised ideas generated and trusted by private actors. Fiat currency is not handcrafted – it is centrally printed by a government. In contrast, cryptocurrencies are tied to communities (Bains, 2023). There are two important segments in these kinds of communities:
1. People who want to get rich from an exponential growth of the price of the cryptocurrency they own.
2. People who are anti-systemic, seduced by the idea of damaging banks, the dollar (Siripuraru and Berman, 2023) and national authority.
Cryptocurrencies, therefore, encourage escapism by being purely digital in a highly volatile technological environment, representing a promise of swift escape from material poverty as well. Which promise would you choose. The promise of a cow or a crypto?
Bains A. (2023), ‘The role of Bitcoin Forums in Cryptocurrency Community’, CNN, available at: https://www.ccn.com/bitcoin-forums-in-the-cryptocurrency-community/
Siripuraru A., Berman N. (2023), ‘Cryptocurrencies, Digital Dollars, and the Future of Money’, Council on Foreign Relations, available at: https://www.cfr.org/backgrounder/cryptocurrencies-digital-dollars-and-future-money