{"id":17636,"date":"2013-11-22T09:00:52","date_gmt":"2013-11-22T13:00:52","guid":{"rendered":"http:\/\/thesocietypages.org\/cyborgology\/?p=17636"},"modified":"2019-12-19T06:34:49","modified_gmt":"2019-12-19T10:34:49","slug":"the-myth-of-virtual-currency","status":"publish","type":"post","link":"https:\/\/thesocietypages.org\/cyborgology\/2013\/11\/22\/the-myth-of-virtual-currency\/","title":{"rendered":"The Myth of Virtual Currency"},"content":{"rendered":"<span class=\"vvqbox vvqvimeo\" style=\"width:400px;height:300px;\"><iframe loading=\"lazy\" id=\"vvq-17636-vimeo-1\" src=\"\/\/player.vimeo.com\/video\/63502573?title=1&#038;byline=1&#038;portrait=0&#038;fullscreen=1\" width=\"400\" height=\"300\" frameborder=\"0\"><a href=\"http:\/\/www.vimeo.com\/63502573\">http:\/\/www.vimeo.com\/63502573<\/a><\/iframe><\/span>\n<p>File this one under \u201cwhat is at stake\u201d when we talk about the digital dualist critique. Bitcoin, the Internet\u2019s favorite way to buy pot and donate to Ron Paul, hit an all-time high this week of around $900 to one Bitcoin (BTC). The news coverage of Bitcoin and the burgeoning array of crypto-currencies (<a href=\"http:\/\/online.wsj.com\/news\/articles\/SB10001424052702304607104579210051252568362\">according to the Wall Street Journal <\/a>there\u2019s also <a href=\"https:\/\/litecoin.org\">litecoin<\/a>, <a href=\"http:\/\/bbqcoin.org\/\">bbqcoin<\/a>, <a href=\"http:\/\/ppcoin.org\">peercoin<\/a>, <a href=\"http:\/\/dot-bit.org\/Main_Page\">namecoin<\/a>, and <a href=\"http:\/\/feathercoin.com\/\">feathercoin<\/a>) has largely focused on the unstable valuation of the currencies and all of the <a href=\"http:\/\/www.huffingtonpost.com\/2013\/11\/21\/bitcoins-campaign-contributions_n_4317552.html?utm_hp_ref=politics\">terrible things people could do<\/a> with their untraceable Internet money. What hasn\u2019t been investigated however, is the idea that crypto-currencies are somehow inherently more \u201cvirtual\u201d and thereby less susceptible to centralized control the way US dollars, Euros, or Dave &amp; Buster\u2019s Powercards are. Both assumptions are wrong and are undergirded by the <a href=\"https:\/\/thesocietypages.org\/cyborgology\/2011\/02\/24\/digital-dualism-versus-augmented-reality\/\">digital dualist fallacy<\/a>.\u00a0<!--more--><\/p>\n<p>First, a few prerequisites and disclaimers. I am not a financial advisor, nor do I consider myself an economist. Therefore I\u2019m mostly sticking to what i know about the creation of value and the organization of work. I\u2019m not an avid or practiced user of Bitcoins, but I think that outsider perspective is more useful than detrimental. I don\u2019t want to spend too much time going over the mechanics of mining and exchanges, so for the rest of this essay I\u2019m going to assume the reader knows how Bitcoins are \u201cmined\u201d and how they are exchanged for state-backed currencies. I should also disclose that I have made a non-insignificant amount of money by totally forgetting that I bought $10-worth of bitcoins at <a href=\"https:\/\/www.mtgox.com\/\">Mt.Gox<\/a> in February of 2012. I cashed all but 0.05BTC earlier this week, but don\u2019t plan on reinvesting. I also feel like an asshole for making money doing absolutely nothing.<\/p>\n<figure id=\"attachment_17638\" aria-describedby=\"caption-attachment-17638\" style=\"width: 170px\" class=\"wp-caption alignleft\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-17638\" src=\"https:\/\/thesocietypages.org\/cyborgology\/files\/2013\/11\/bitcoin_logo.jpg\" alt=\"The Bitcoin Logo\" width=\"170\" height=\"168\" \/><figcaption id=\"caption-attachment-17638\" class=\"wp-caption-text\">The Bitcoin Logo<\/figcaption><\/figure>\n<p>As my disclosure above implies, Bitcoins have very IRL implications. They can buy things that are the product of real humans\u2019 labor and be converted (although maybe not directly) into just about every state-backed currency in existence. This is a classic example of what PJ Rey means by \u201c<a href=\"http:\/\/thenewinquiry.com\/essays\/the-myth-of-cyberspace\/\">The Myth of Cyberspace.<\/a>\u201d The Internet \u2014and by extension, BItcoin\u2014 does not reside on some other plane of existence. Just like any other currency, Bitcoins are equal parts material and ephemeral; they can be affected by natural disasters, ideology, and commodities markets. They exist as heavily protected bits that are ultimately meant to be converted into atoms of sustenance and extravagance. To call Bitcoin a \u201cvirtual\u201d currency is to fetishize its conceptual origin and distribution system. Granted, there aren\u2019t quite as many <a href=\"https:\/\/www.casascius.com\/\">physical representations of Bitcoins<\/a> as there are other currencies, but that distinction seems to be quickly diminishing. More importantly though, Bitcoins are subject to many of the same social structures and phenomena that keep capital unevenly and unfairly distributed. Calling Bitcoins \u201cvirtual currency\u201d is nonsensical because all currencies are virtual in that they are \u201ccollective hallucinations\u201d about measurement of worth, and they are all equally physical because they are held, exchanged and produced in very tangible ways with equally tangible consequences.<\/p>\n<p>Currency itself does not hold inherent value. Even gold, as Marx observed, does not have some natural or inherent property that makes it equal in exchange value to the products of human labor. Bitcoins are attractive to some people because Bitcoins\u2019 measurement of value cannot be altered by a central bank or government. In other words, Bitcoins aren\u2019t subject to value manipulation (i.e. inflation) by obscure bureaucracies with their own private interests. What I think is overlooked here, is that escaping direct control of one bureaucracy (the Federal Reserve or the Chinese government) does not mean you have separated yourself entirely from that organization or from the influence of similar bureaucracies. The fetishization of the \u201cvirtual\u201d aspect of Bitcoins goes a long way in obscuring the possibility that Bitcoins could be manipulated. The promise of Bitcoin\u2019s stability is strengthened by our belief that the network is immune from old social structures; that a decentralized computer network determines an <a href=\"https:\/\/thesocietypages.org\/cyborgology\/2011\/10\/07\/ows-and-the-formation-of-rhizomatic-associations\/\">isomorphic social organization<\/a>.<\/p>\n<p>Bitcoins came into this world always already unevenly distributed. They circulate over and through a landscape of uneven technological fluency and access to computer networks. They must be either bought with existing currencies or mined using hardware made through human labor. Electricity and silicon, Bitcoins\u2019 constituent parts, are still controlled by private bureaucracies with their own private interests. Before those Bitcoins could exist, someone had to spend some other kind of currency to buy the computer and set it up to start mining. There\u2019s also the cost of the Internet connection (to my knowledge, no ISP accepts Bitcoins as payment) and the opportunity costs of learning about and setting up your Bitcoin mining operation. These are not insignificant costs. The Bitcoin mining network is faster and more powerful than the top 500 supercomputers in the world. <a href=\"http:\/\/thegenesisblock.com\/bitcoin-network-8-times-faster-than-top-500-super-computers-combined\/\">Combined.<\/a><\/p>\n<figure id=\"attachment_17639\" aria-describedby=\"caption-attachment-17639\" style=\"width: 400px\" class=\"wp-caption alignright\"><img loading=\"lazy\" decoding=\"async\" class=\"size-medium wp-image-17639\" src=\"https:\/\/thesocietypages.org\/cyborgology\/files\/2013\/11\/bitcoin-fpga-mining-rig.jpg--400x300.jpg\" alt=\"A Bitcoin mining operation (Source)\" width=\"400\" height=\"300\" srcset=\"https:\/\/thesocietypages.org\/cyborgology\/files\/2013\/11\/bitcoin-fpga-mining-rig.jpg--400x300.jpg 400w, https:\/\/thesocietypages.org\/cyborgology\/files\/2013\/11\/bitcoin-fpga-mining-rig.jpg--250x187.jpg 250w, https:\/\/thesocietypages.org\/cyborgology\/files\/2013\/11\/bitcoin-fpga-mining-rig.jpg--500x375.jpg 500w, https:\/\/thesocietypages.org\/cyborgology\/files\/2013\/11\/bitcoin-fpga-mining-rig.jpg-.jpg 1600w\" sizes=\"auto, (max-width: 400px) 100vw, 400px\" \/><figcaption id=\"caption-attachment-17639\" class=\"wp-caption-text\">A Bitcoin mining operation <a href=\"http:\/\/www.openmobilefree.net\/?p=1308\" target=\"_blank\" rel=\"noopener noreferrer\">(Source)<\/a><\/figcaption><\/figure>\n<p>All of this <a href=\"http:\/\/www.butterflylabs.com\/\">dedicated silicon<\/a> is subject to labor and energy costs. Bitcoin\u2019s valuation, conceivably, could be manipulated by the holders of the means of production. Just like the flow of dollars from the Fed, labor and energy markets are subject to organized manipulation. Its not hard to imagine a scenario where a person builds a million-dollar mining operation and selectively hordes Bitcoins to control their value relative to the cost of mining. Manipulating Bitcoins for fun and profit seems just as likely as controlling oil reserves or adjusting interest rates. Currencies are <i>meant<\/i> to be tools of mass control given that, historically, money was \u201c<a href=\"http:\/\/www.nakedcapitalism.com\/2011\/08\/what-is-debt-%E2%80%93-an-interview-with-economic-anthropologist-david-graeber.html\">whatever the king was willing to accept in taxes.<\/a>\u201d Saying you&#8217;re making a democratic currency is a lot like saying your building a non-lethal weapon: the damage might not be as severe or predictable, but its still meant for controlling and hurting people.<\/p>\n<p>Bitcoins are undeniably good for masking your identity. The promises of delivering a \u201cvirtual\u201d currency free of private interest manipulation however, do not hold up. If we\u2019re concerned about individuals\u2019 decreased purchasing power at the level of currency, then perhaps we should question the usefulness of currency itself. Instead of seeking out new forms of value measurement, we should reconsider the usefulness of measuring value at all. Does everything need to be assigned a specific value, or are there <a href=\"https:\/\/thesocietypages.org\/cyborgology\/2013\/05\/27\/bondsy-and-the-modern-myth-of-barter\/\">radically different ways<\/a> of exchanging goods and services? Can our digital connections afford new ways of trucking, bartering, and exchanging such that huge numbers of people are not subject to the whims of powerful entities? I think its possible, but not with crypto-currencies.<\/p>\n<p><em>David is on <a href=\"http:\/\/twitter.com\/Da_banks\" target=\"_blank\" rel=\"noopener noreferrer\">Twitter<\/a> and <a href=\"http:\/\/thoriumdirigible.org\" target=\"_blank\" rel=\"noopener noreferrer\">Tumblr<\/a><\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Bitcoins are undeniably good for masking your identity. The promises of delivering a \u201cvirtual\u201d currency free of private interest manipulation however, do not hold up. <\/p>\n","protected":false},"author":1512,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[9967,892],"tags":[26493,2418,98,2521,16047,12082,12616,868,19973],"class_list":["post-17636","post","type-post","status-publish","format-standard","hentry","category-commentary","category-essay","tag-bitcoin","tag-bureaucracy","tag-capitalism","tag-control","tag-currency","tag-cyberspace","tag-manipulation","tag-power","tag-value-measurement"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/thesocietypages.org\/cyborgology\/wp-json\/wp\/v2\/posts\/17636","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/thesocietypages.org\/cyborgology\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thesocietypages.org\/cyborgology\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thesocietypages.org\/cyborgology\/wp-json\/wp\/v2\/users\/1512"}],"replies":[{"embeddable":true,"href":"https:\/\/thesocietypages.org\/cyborgology\/wp-json\/wp\/v2\/comments?post=17636"}],"version-history":[{"count":7,"href":"https:\/\/thesocietypages.org\/cyborgology\/wp-json\/wp\/v2\/posts\/17636\/revisions"}],"predecessor-version":[{"id":24110,"href":"https:\/\/thesocietypages.org\/cyborgology\/wp-json\/wp\/v2\/posts\/17636\/revisions\/24110"}],"wp:attachment":[{"href":"https:\/\/thesocietypages.org\/cyborgology\/wp-json\/wp\/v2\/media?parent=17636"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thesocietypages.org\/cyborgology\/wp-json\/wp\/v2\/categories?post=17636"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thesocietypages.org\/cyborgology\/wp-json\/wp\/v2\/tags?post=17636"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}