The Age of Cryptocurrency: How Bitcoin and Digital Money Are Challenging the Global Economic Order by Paul Vigna
My rating: 4 of 5 stars

Competing For Trust

Just as light is considered as both a particle and a wave in modern physics, the new forms of exchange that have been developed using the technology of the Internet are both currencies and commodities. This is another way of saying that neither in physics nor economics do we have an adequate description of either light or money, although we might temporise and muddle on regardless.

Surprisingly perhaps, we may be further ahead in developing a unified theory of money thanks to the 'experiments' that have been undertaken over the last two decades that involve so called cryptocurrencies - DigiCash, bit-gold, b-money, hashcash and Bitcoin among many others. What this experience shows is that money isn't really either a 'medium of exchange', that is a special kind of thing which neutrally denominates the value of other sorts of things. Nor is it really a 'store of value' that is a commodity like gold which can from time to time be converted into or even used as currency.

Rather money is in reality 'merely' an entirely symbolic entry in a ledger, that is a system of rights and obligations, that is accepted as accurate and trustworthy in a community. It is the perceived integrity of the ledger that is the essential condition for money to exist. Whether it exists as a currency or a commodity is a secondary consideration at best. If nothing else, this is the manifest lesson of both the successes and failures of bitcoin technology in its most general applications.*

That is the story of this book. And like the best of post-modernist fiction, it is a story without a definitive denouement. No one can predict the ledgers that will be created and trusted. There are good reasons to trust the (still evolving) system of regulated money that is based in banking and governmental control (it works most of the time for most people in the developed world). And there are equally good reasons to mistrust it as well (most of the world is in fact excluded and governments have a natural tendency to abuse their power).

And the same can be said of the new cryptocurrencies (the logical unassailability of distributed blockchain technology doesn't guarantee the integrity of the software which puts this logic into commercial practice nor does it ensure the integrity of the necessary connections - dealers, exchanges, storage facilities etc. - between any cryptocurrency and the rest of the world).

So whatever the outcome, the future of money is going to involve both a system of regulation and a less than free-for-all proliferation of ledgers. Minimally, the competition for trust will be interesting. Let's hope it isn't disastrous as well. To the extent that Goldman Sachs is involved, my hope diminishes.

*Ensuring the integrity of the ledger requires just about every philosophical strategy available in the epistemological playbook. See here for some details: https://www.goodreads.com/review/show...

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