Jesse Hirsh is a co-founder of the Academy of the Possible, a “peer-to-peer life-long learning facility.” He has a weekly column on CBC Radio and owns Metaviews Media Management, Inc. Read Jesse’s full bio here…
Click here to watch Jesse’s full interview, “Bitcoin and Digital Currency.”
Ramona: What is digital currency?
Jesse: I think before we answer the question of digital currency, it’s worth understanding what currency is. Currency is both a reflection of value and a reflection of value connected to time. The problem with the nation-state is that everyone gets the sense that its time is done. That it’s a relic of a past time. We look at the Internet and say, “The Internet is now. Digital media is now.” So the notion of digital currency is the idea of value that’s rooted in the present empire, in the present society, rather than the old society. So rather than use dollars, the idea of using bitcoins, or the idea of using Facebook credit, or the idea of using Zynga credits, is much more relevant. None of us are farmers, in the sense of having acreage in rural Ontario, but many of us are farmers in the Farmville sense – that we’ve got a virtual plot of land and a virtual cow that if we get some virtual currency from our friends is easy to tend!
So it’s really a matter of where society’s going, and society is going digital. So it only makes sense that our currency keeps apace.
Ramona: What is bitcoin? Because bitcoin is one of the big names that you hear out there right now.
Jesse: Bitcoin is perhaps one of the leading candidates to the be the Internet’s digital currency. If only because it’s the most superior technology, rather than the one that’s backed by a specific authority. In fact, bitcoin was created by an anonymous individual and is backed by anonymous collectives who want to see it rise. Not just because they like it as a technology, but because they distrust traditional governments. Because they distrust the way in which the current economy is controlled. So they’ve declared autonomy. Bitcoin is the first currency on the Internet that has no connection to a national government, has no connection to anything but the Internet economy itself, and, as a result, has quickly grown to be very popular. Perhaps amongst money launderers, perhaps amongst web retailers. Certainly Wikileaks embraced bitcoin, because MasterCard, Visa and PayPal cut them off, so they had no other alternative. So it provides a way for people to pay, or get paid, without care of the law. Without care of traditional, established authorities. In that sense it really embodies, perhaps, some of the virtues, or some of the sins, of the Internet as a whole.
Ramona: I’ve read that bitcoin can go one of two ways: it’ll either be a giant Ponzi scheme or it’ll be the next greatest innovation to Google.
Jesse: Of course there’s no reason it can’t be both. Because Google is arguably a big Ponzi scheme. If you could be at the top of a Google result, you’ll get paid. But if you’re on the 50th page of a Google result, that’s useless, you’ll be nobody. Bitcoin is kind of similar. Normal currencies are kind of similar. If your family came to Canada 150 years ago and bought lots of land in what is now downtown Toronto, you’ve probably got a lot of currency. If you happen to be someone on the Internet who bought domain names in the early 90s, you’ve now got a lot of currency. If you’re someone who right now is buying up a lot of bitcoins, and is accumulating those bitcoins in such great numbers, 10 years from now you could have a lot of currency. Part of it is speculation, but part of it is anticipating where society is moving.
Ramona: So will the early adopters become rich?
Jesse: No one can predict the future. The question is not whether we’ll have a digital currency, it’s which digital currency that will be. Bitcoin has a huge head-start, if only because it was first past the post. What bitcoin does not have is the backing of a national government. The Canadian Government, the Royal Canadian Mint, has now unveiled a process in which they want to develop a Canadian digital currency. They’re asking Canadians and experts from around the world to give input on what that should mean. So it is possible that a nation-state could create a digital currency that is just as technically capable, and people choose to use, instead of using bitcoins.
But the issue comes back to death and taxes. Because it used to be that people would say there’s no way we can avoid death and taxes. But we have Ray Kurzweil saying we can escape death, and now we have the bitcoin people saying we can escape taxes. That if you use a digital currency that is not tied to any national government, then you can escape the gaze of the taxman. I suspect that will appeal to a lot of people. And if it appeals to enough, if there’s a critical mass of adopters, then bitcoin will be a reality and will trump any national or traditional currency.
The best way to describe a marketplace is as a shared hallucination. Because really, it’s just what people perceive as being true that is true. The fact that the farmer has to toil in very hard conditions on land that is expensive to produce that food, it’s how we value the food that counts. And part of what’s happening in industrial societies, we’ve devalued the farmer. We need to revalue the farmer in order to properly support them and sustain them. But the fact is, a magic sword that you obtain through six months of playing World of Warcraft is very valuable. Because there’s someone else around the world who doesn’t want to spend six months playing World of Warcraft, who wants to start on day one with that magical sword, and they’ll spend hundreds of dollars to get that magical sword.
So the fact is, we perceive value in very strange, very subjective, sometimes very absurd and ludicrous ways, but that’s human nature. What is economic nature is to convert and assess that value.
Ramona: What implications do these valuations have on our sense of value for tangible things? For food? To come back to the truly tangible – for food and shelter?
Jesse: I think there’s a real disconnect between the Internet economy and the real economy. The Internet economy is based on imagination, it’s based on the future, it’s based on our hopes and our dreams and our desires. As a result, its valuations know no limit, because it speaks to our hopes. It speaks to our inner potential, which is infinite. Compared to the traditional economy, in which we do have a sense of reality, we do have a sense of value.
I think that’s the moral of our era in history. We’re divorcing reality. Humans have been married to reality for millennia. All of a sudden the Internet came around, whispered in our ear like a very seductive lover and said, “Let us discard reality, and instead embrace fantasy.” Because fantasy is a much better basis for human civilization, because it allows everyone to have their cake and eat it too. So let us forget reality, and embrace surreality. Let’s embrace fantasy. And in that sense, I think everyone agrees, “Yeah, let’s do it.”
- Currency is a reflection of value connected to time, so as the world goes digital, the corresponding currencies gain value
- Bitcoin is the first Internet currency with no affiliation with a national government; a renegade currency gaining traction around the Internet
- Bitcoin allows users to avoid paying taxes; if widely adopted, it could trump all other currencies
- The farmer is losing value, while the “magic sword” in a World of Warcraft-esque environment is gaining value
- The Internet has allowed humans to divorce reality, and “embrace surreality” and fantasy