Never Mind the Bitcoin?

By Patrice Riemens, Eduard de Jong, and Geert Lovink

We wrote about (and against) the crankiness that is called Bitcoin back in 2015, at a stage when everybody was gawking at its sudden rise in ‘value’ from $250 to something like $400 – up from $5-15 not tah much earlier (1)

OK, if “a week is a long time in politics” (Harold Wilson)(2), how long must be two years in the Digital Era?

Now that Bitcoin is ‘futured’, and has briefly peaked at a ‘stratospheric’ $19K – that is before ‘crashing’ at well below $15K – it’s time to take stock. The short story: it’s as cranky as ever, only the numbers are crazier than ever. (Oh, do we hear “and you ain’t seen nothing yet”?)

But then, so is the ‘Zeitgeist’.

The longer story:

Our present challenge is to ‘ship’ our message before Bitcoin unavoidably crashes for real, reverting to the ‘value’ it held for long time: gift economy rather than speculative markets gone bananas. Publicizing after the inevitable crash will earn us the stale notoriety of belonging to the ‘told you so’ grumpy brigade, a corollary of François Mitterand’s remark that ‘they’ will never forgive you to have been right before your time.(3)

Conversely, ‘telling you so’ before, let’s repeat, the unavoidable showdown probably earns us the risée of the Bitcoin aficionados, prone to tell you, in a fine replay of Dotcom boom times, that “this time, it’s different!”

Never mind that this argument has been peddled ever since humans tried to part other humans from their money by letting them walk in (or into) a pyramid, because, in fact, they succeeded every time.

The same applies to Bitcoin. Just forget about outlandish concepts like ‘public ledgers’, ‘wallet’ or ‘encryption’, concentrate on the most easy to grasp part of its working mechanism that is so abundantly clear: Even if you buy at $15K for something that’s not even worth the bits it’s expressed in, if it sells a day later at $19K, you still make a helluh’of a profit!

The reverse is, of course, also true, but hey, it’s a casin… err, sorry … the ‘magic of the market’! Which points to what may be the chief characteristic of the ‘Bitcoin phenomenon’: the perversity of a steadily more unequal and unfair world, where far too much money is concentrated in far too few hands (even if there are millions of them).

And these owners, to use that hallowed Dutch phrase, “don’t know what to do with it out of sheer madness.”

There is another aspect: following Saskia Sassen’s dictum “Finance is not (about) Money”(4), we now can safely say that Bitcoin is no longer a crypto-currency as such. It is a speculative vehicle in the form of a crypto-currency, leaving it into a class of its own with regard to other crypto-currencies, more appearing so every day—we lost the count quite some time ago. Maybe, one should make an exception for Ethereum, another wonder of hacker dude driven fintech, surrounded by nearly the same exalted hype as Bitcoin.

This leaves another interesting question: where are the Bitcoin pioneers in this high-stake, demented risks, game of crypto Wheel of Fortune? We all remember the years of the Satoshi legend, that mysterious entity that must now turn in its anonymous grave. Those were the days: ‘Bitcoin evangelists’ evoking a financial revolution—liberation—for the little man, those oppressed and ransomed by the big financial players …

There was talk of ‘community’, of frictionless payments, of smooth usability and widespread acceptance (actually, a large shop accepting payment in Bitcoins, smack in the middle of London’s ‘hipster district’,and equipped with a Bitcoin ATM, admitted to fewer than 20 over-the-counter BTC transactions over the past couple of years)(5). This evaporated as ‘exchanges’ appeared all over the place (and got bust, or hacked, or both), as an ever smaller number of increasingly bigger ‘miners’ took an ever larger part of the mining cake, and sale & purchase of Bitcoins got expressed in any currency but its very self.

But then, have the ‘early adopters’ of Bitcoin struck it rich? After all, in these days, Bitcoin ‘mining’ was easy and they went for free, for a beer, of for a couple of Dollars at the most. They must be millionaires by now! Well they may, and probably do, ‘feel’ so (as far as their Bitcoins did not vanish when their computers crashed, they lost their phone in the bus, or their thoughtlessly ditched hard drive came to rest in a landfill). Yet for a majority of them, our guess is: they never cashed out. Partly because the engrained Bitcoin ‘philosophy’ of hoarding, partly because they became trapped in the eternal curse of the market: it’s always too early to sell (while it’s always too late to buy, of course).

As in all trading, in the end, the only ones who will have handsomely benefited from the Bitcoin craze are the intermediaries — the very outfits Bitcoin was supposed to dispose of.

In the meanwhile, fired up the spectacle of exponential valuation, the mainstream press has, as it were, caught up with the Bitcoin phenomenon. They muddle with a question they could as well have asked — and answered — 5 years ago: “Is it a bubble?” Repeated often enough, and in combination with the – somewhat disingenuous – ‘scepticism’ of large, established financial institutions and their regulators, this has all the likeliness of becoming a self-fulfilling prophecy — as both early and the more recent Bitcoin fans alike will not fail to point out after the actual collapse.

End of the story? Forget it! Just as hope springs eternal, the body of Bitcoin may decease before soon, but its skeleton will remain alive and kicking … you in the ass!

So no prize for guessing right: our next deconstruct is about the blockchain. Keep tuned!

Notes/Sources

(1) Our Bitcoin texts:

http://networkcultures.org/geert/2015/01/28/geert-lovink-and-patrice-riemens-the-bitcoin-experience-part-i/

http://networkcultures.org/moneylab/2015/11/30/10-bitcoin-myths/
Bitcoin price history:
https://en.wikipedia.org/wiki/History_of_bitcoin#Prices_and_value_history
(2) Harold Wilson:
https://en.wikipedia.org/wiki/Harold_Wilson
(3) Francois Mitterand:
https://en.wikipedia.org/wiki/Fran%C3%A7ois_Mitterrand
(4) Saskia Sassen:
https://vimeo.com/90207380 (Saskia Sassen @ MoneyLab#1 conference)
(5) Bitcoin acceptance:
https://www.theguardian.com/business/2017/dec/02/bitcoin-is-it-a-bubble-waiting-to-burst-or-a-good-investment

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