Bitcoin Isn’t Real Money – But Hey, Neither is Money

Before i weigh in on Bitcoin, the world’s first decentralized virtual currency, let me be perfectly clear: i don’t get money, literally or figuratively. i don’t have much of it, when i do get it i don’t hang on to it for very long, and once it’s gone i’m never quite sure what i actually had to begin with.

i recall a much simpler time when i was a young lad, and i could go to the store to exchange a little metal token that my mom gave me for a handful of candy. Back then, i knew that the token was made from metal mined from the ground—”probably gold,” i thought—and that the metal was precious, and that the token with the beaver on it would buy me less candy than the one with the moose on it.

As i aged and grew more economically educated, i made some disturbing discoveries about money: that the cost for the Canadian Mint to produce a penny was higher than the penny’s actual value; that money itself wasn’t actually valuable, but that it merely represented something of value; and that the antlered thing on the quarter wasn’t actually a moose, but a caribou. Mind officially blown. Now the penny has ceased to exist, and i’m reasonably sure that caribou, like unicorns, never really existed in the first place.

When i landed my first job, i was not paid in representative moose tokens, but rather in cheques—pieces of paper that were promises of money, while money itself was representative of bits of gold stored in a vault somewhere (but somehow not since the Gold Standard was dropped in the 1930s?). By putting a cheque into an ATM, the numbers in my bank account would go up.

Sometimes i would ask the machine to decrement my account and give me representative moose tokens to spend on candy. i grew accustomed to pushing those numbers up and down through ATMS and, increasingly, my computer, while beeping my credit card against a little machine at the store whenever i had a hankering for a bag of Fudge-Nuggets or Sugarnips. Representative moose tokens no longer entered into it. My money, my wealth, and my worth were all digital.

Over the course of my life, the question has slowly dawned on me: what on Earth is money, anyway? The answer, as evidenced by Bitcoin, is “fairy farts.” Bitcoin is a fiduciary currency, which is a fancy way of saying that it has only the value that people ascribe to it. A loonie is worth what it’s worth because we all collectively agree that it is. Likewise, the more that people value Bitcoin, the more valuable it is. If we ignore it, it goes away. If you clap your hands enough, Tinker Bell will come back to life at the end of Peter Pan; likewise, the valuation of Bitcoin will go up if you believe in it hard enough.

To my mind, this is all completely insane. Indie game developer and Braid creator Jonathan Blow put it best in his interview with The Atlantic:

“It just drives home how fictional money is… One day I’m looking at my bank account and there’s not much money, and the next day there’s a large number in there and I’m rich. … because somebody typed a number into my bank account.”

Is a pseudonymous peer-to-peer distributed virtual currency based on complex (but therotically hackable) computer encryption like Bitcoin worth your time, money and attention? To answer that, you have to ask yourself one question: “do i believe in fairies?” And why not? They’ve already brought you this far.