How the digital currency represents our desire for independence.
It is a recurring habit of technologists to create anticipation for things that we already have. The emergence of Bitcoin and its cryptocurrency counterparts in the last four years have captured this paradox: exciting because it's new, and disappointing because it's just money at the end of it all.
In the last week, the value of the overall Bitcoin market has plummeted after a steady surge, dropping from a total value of $2 billion to roughly $1 billion in a matter of days. This volatility has created the perfect narrative backdrop for an obsession. Like a high school boyfriend with a motorcycle, bitcoins are thrillingly suggestive of freedom but also wickedly dangerous, allowing us to consider the closeness of the pavement below while speeding along at 50 miles an hour.
If the sudden popularity in Bitcoin does represent something revolutionary, it is part of a growing series of movements seeking to offer an alternative way of organizing society without relying on government paternalism.
The quick rise in value had been attributed to reactionary speculation in countries like Cyprus, which face intense market instability or banking crises. The currency value had also surged in Argentina, where severe restrictions on purchasing US dollars to control the world’s fastest inflation rate led a number of speculators to open Bitcoin exchanges to profit from nervous investors.
After a rush of new buyers came into the market, it soon became apparent the currency’s infrastructure backbone wasn’t ready to handle the quick rise in attention, with exchange servers going offline after being overwhelmed with traffic and rumors of denial of service putting a damper on trading.
The search for alternative approaches to currency is not an especially new phenomenon. In America, public figures like Ron Paul, Peter Schiff, and Glenn Beck have helped reintroduce the idea of pegging the dollar to the value of gold in an attempt to stabilize an economy beset with intractable consumer debt and toxic lending practices. Having a currency tied to a fixed commodity would, the theory goes, protect Americans from the graft and incompetence of politicians who write banking laws and appoint cronies to set monetary policy.
The debate is centuries old, with Invisible Hand supernaturalist Adam Smith calling it foolishness to tie money to something like gold that served "only a symbolic function, yet absorbed real resources in their production." Bitcoins embrace the wastefulness of the pursuit of symbols, tying their production and distribution to complicated algorithms that, unlike Sony’s Folding at Home application or SETI@home, have no purpose other than to produce more bitcoins. This has in turn fostered a parallel industry of speculators using powerful computers dedicated to crunching Bitcoin algorithms in the same way that miners chipped away at dirt and rock in hopes of finding a rich vein of gold in years past.
The Bitcoin system imposes an artificial limit on its currency, claiming there will be a final total of 21 million bitcoins, of which roughly 11 million have so far been released from their computational trappings. The scarcity and fixed nature of the currency is meant to psychically stabilize market behavior by removing the elasticity of fiat currency and its attendant network of credit witchcraft.