Bitcoin—is this “a thing”? How can something that cannot be seen or felt have a value, let alone be exchanged as currency or be used as money? Since it claims this use, how can it be anything more than scrip at a company store, casino tokens, or poker chips? These are questions we have when considering this digital thing, which is so very new, it seems it cannot be categorized using our experience up to this point.
Curiosity, Patience & Perspective
While the older generations may scoff at Bitcoin in bewilderment, younger people may, perhaps too readily, sneer at the mental challenge to accept the world of decentralized money. The good news is this: with effort and the will to understand our world as part of a transactional universe, we can accept and endorse this technology.
It’s frightening that Bitcoin is, by nature, detached from the material world. For example, Bitcoin is the manifold result of these three components: a digital currency native to the internet, the database or data structure called blockchain, and the network of computers each containing a copy of that blockchain to provide consensus.
Well-meaning proponents, arguing in favor of Bitcoin’s ability to transport value across space and time, don’t seem to help. We’re perplexed without the prerequisite conceptual background. When we express our concerns about Bitcoin’s stated stability and security, our worries are usually dismissed by the response, “it’s in the code.”
Understanding from Observation
The popular practice is to explain from a computer programmer’s perspective through deductive reasoning, descending from abstract principles and technical know-how, when it would be better to use inductive reasoning through observation—taking what we can already grasp and understand about money and to then progress toward something new and unexpected. So, we build upon the things that are familiar and recognizable as opposed to extracting and divining meaning from technical descriptions, only.
To this end, understanding the nature and use of money demands that both monetary history and value theory not be so esoteric or ephemeral. The origins of value and the factors contributing to its increase are of paramount importance. The mental imagery of gold or silver bullion, coins, bills of exchange, and paper currency are useful before demanding that we, the intended audience, accept the mysticism of digital money value transformation without suspicion.
Relevance of History
The past is not dead. The relationship between past and present is organic. It is possible that old sources can help us perceive a revealed truth about value offered by new technology. Writing in the late 1300s, the “father of English literature”, Geoffrey Chaucer encouraged us when he wrote, “As from the soil, each year comes new corn. So, from old books, new learning springs.” Expressing this, he offers us comfort that the wisdom of the ages can provide familiarity to the strangeness of our present time and what we may see as a disintegrating world.
This column is the first in a series exploring monetary history, interaction, exchange, and how these factors apply to Bitcoin. Here, older and younger generations have a new opportunity to learn from each other.
Let’s begin.