Bitcoin and the Monetization of Code
On January 3, 2009 a mysterious person or group named Satoshi Nakomoto released a computer program on the internet. It’s operation is simple: a peer-to-peer network. Except instead of trading music (like Napster) or files sharing (like BitTorent), the network trades virtual coins. That’s right, imaginary coins, half-cousin of the economic widget. Bitcoin is a completely peer-to-peer digital currency valued as of May 2013 at $1-2 billion. It has zero corporate, public, or government oversight. To its supporters, it is a currency—yet there is much controversy. What backs this “currency”? Whereas the dollar bill states “In God We Trust,” the first commandment of Bitcoin is “Trust No One.” A confrontation is inevitable; Bitcoin is neither currently taxed, nor is it considered legal tender. What we are possibly witnessing with the onset of digital currency is the separation of money and state. The thesis proceeds in two parts. First, it examines the (limited) scholarship and (anecdotal) press surrounding Bitcoin. The thesis speculates that Bitcoin is a new form of money, and creates a new monetary spectrum comprising barter-fiat money-digital money. The second part investigates fiat money in the Middle Ages. It begins with a lengthy narrative of Michel Foucault’s scholarship, which is instrumental in two ways. One is in defining Bitcoin, which is a matter of controversy, but can still be described under Foucault’s notion of power. Secondly, Foucault provides an account of how mercantilism emerged from Christianity. Examining the beginnings of fiat money may yield timely lessons for what we can expect of digital currency in its infancy. Lynne White Jr’s Medieval Technologies and Social Change will provide more context. Integrated into this narrative will be an etymology of money, particularly 1200-1300AD. Finally Jacques Derrida’s “What is Ideology” documents how money emerged out of the ‘misty realm of religion’.
In order to understand this development, I engage the following major texts, ostensibly disparate, that allow us to understand this transformation in both the concept of money and information:
Michel Foucault’s Security, Territory, Population
Georg Simmel’s Philosophy of Money
F.A. Hayek’s The Denationalization of Money
Jacques Derrida’s What is Ideology?
Pierre Klossowski’s Living Currency
Selections from Marxs’ Grundrisse
Albert Camus’ The Stranger
What these texts reveal is that money is not simply an economic or mathematical phenomenon; money is a belief system, and borrows much from organized religion. Money is Janus-faced; it unites us together, but also estranges us. The thesis speculates about a future where the digital commons obscures the face-to-face quality of exchange. Will there be good Samaritans, or only Digitialluminati?