Saturday, 10 January 2015

Show me the real money: Three monetary myths that need busting

CENTRAL BANK?

This article originally appeared in the December edition of Penguin's ThinkSmarter Newsletter.


Money pervades our everyday economic interactions. But, despite its importance, it is also pervasively misunderstood. Here are three common monetary myths – frequently perpetuated by economists – that need challenging.

Myth 1: Money emerges from barter

Economists often tell a tale about how old communities first used barter to exchange goods and services. Bartering throws up tricky situations. Take as an example a farmer trying to exchange a cow for bread from a baker, a clumsy and difficult negotiation. Thus, according the old economists like Adam Smith, money was supposedly 'invented' as a way to get around that inefficiency and confusion.

This narrative is ahistorical and inaccurate. Anthropologists have long had a much more convincing account: in small communities without money, exchange does not take place through on-the-spot barter. Rather it takes place through reciprocity, the process whereby I give you something now, and then you return the favour over time. In essence, communities develop elaborate systems of score-keeping – informal ‘mutual credit’ systems are created, and if I don’t eventually honour my obligations under that system, I will be shunned from the community.

It is these ‘I owe you one’ systems that are behind the origins of money. Money is an abstracted form of such credit, taken out of the interpersonal context of a small community, and formalised and legalised within a political system.


Myth 2: Money is a commodity, and a store of value

Money is commonly defined as a store of value, a means of exchange, and a unit of account. But if we break it down, we see that money alone does not store value – whatever form that money takes.

Compare a £5 note, £5 worth of coins, and an internet banking screen saying you have £5 in your account. The same concept of £5 can be expressed in paper, metal or electronic form. There is nothing about the physical state of the money that carries the value. Instead, the value is held in the collective agreement of a community to honour what the money stands for.

There have been many cases where that agreement breaks down, for example, in Zimbabwe. In 2008 there was ‘hyperinflation’, a phenomenon where people lose belief in the money. As that belief disappeared, so too did the value of the money, and Zimbabwe was forced to abandon their national currency. The money itself is not the store of value. The community that agrees to uphold money is the store of value.

Nevertheless, people still cling to the notion that money is a ‘thing’ that has an independent existence that we can identify, like oil or rocks. This is the commodity illusion of credit money. Money is in fact a socially constructed, and politically backed, claim on goods and services. While it may have a physical manifestation, it could also exist purely as an accounting entry.

Imagine doing 5 hours of work for a community, and in return getting given a credit for 5 hours, which is simply written down on a central list that everyone can see, saying ‘We acknowledge you did 5 hours of work, and now you can claim back 5 hours from the rest of the community’.

Now imagine tearing that entry for 5 hour credits off the central list, and shaping it into a rectangle piece of paper – like a voucher – that you can pass around to people. That’s pretty much what paper money is right?


Myth 3: Modern money is created by central banks

THE REAL MONEY PRINTERS
If you ask many people who creates the money we use, most people say that it's down to the central bank. In reality, the central bank creates only a small percentage of the money we use. The majority is created by commercial banks, via a process called fractional reserve banking, in which they issue IOUs against central bank money. Nowadays these IOUs are electronic, and we use them every time we use internet banking or a debit card.

This means that if you bank with HSBC, your money actually takes the form of HSBC electronic IOUs which exist nowhere else but in HSBC’s IT system. That’s what you use when you pay with a card in a shop. This act of ‘moving’ your digital money is really just one bank telling another bank to change a data entry in their IT system. The central bank exists to back up trust in the system, and attempts to influence the private issuance of electronic money by commercial banks, but it doesn’t control the money supply itself.


Some further reading

If these topics interest you, you might want to take a look at my piece Breaching the monetary Matrix: Five exercises to help you understand money, and my essay Riches Beyond Belief. You might also consider taking a look at David Graeber's Debt: The First 5000 Years, Felix Martin's Money: The Unauthorised Biography, and Nigel Dodd's The Social Life of Money.


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Tuesday, 30 December 2014

Peer-to-Peer Review: The State of Academic Bitcoin Research 2014

PHILOSORAPTOR'S RESEARCH, SOON APPEARING IN ECONOMETRICA JOURNAL

I decided to build a rather large database of academic research on Bitcoin. If you'd like to see it, click on the link. It's a Google Doc, and it allows you to comment if you think there is something I've missed. You can also download it as an Excel spreadsheet. It includes academic, and quasi-academic, research papers, journal articles and theses related to Bitcoin.

Admittedly, the definition of 'academic' or 'quasi-academic' is pretty loose. It can include peer-reviewed papers that appear in major journals, to working papers released from university departments and think tanks, to a thesis of a PhD student, to independent research from people with clear expertise.

I built this list because I myself like to write quasi-academic articles on Bitcoin, and have been trying to find good quality analysis of cryptocurrency, frustrated by the huge amounts of spurious opinion churned in the media, and self-promoting rants by opportunists and ideologues.

How I built it: Lots of searching

To build this list, I spent about four days going through different academic search engines. Many of these search facilities found the same papers, but each also tended to find some unique articles that the others didn't. The sites include:
  • JSTOR (here)
  • ScienceDirect (here)
  • IngentaConnect (here)
  • Microsoft Academic Search (here)
  • SpringerLink (here)
  • SSRN (here)
  • Taylor & Francis (here)
  • Google Scholar (here) (including year-by-year search from 2008)
  • Wiley Online Library (here)
  • Directory of Open Access Journals (here)
  • DiVA-portal (here)
  • Econpapers (here)
  • ArXiv (here)
  • IDEAS (here)
  • Oxford Journals (here)
  • Cambridge Journals (here)

Open access vs. closed: A bit of both


A lot of the papers in the list are open access, which means you can get them as PDFs or HTML files. Unfortunately though, the top journals tend to be behind corporate-controlled paywalls and require university subscriptions or money to get in. That said, if a paper is closed access, search for it online and you'll often find earlier PDF versions of it floating about, because the authors often publish draft versions or working papers in open access formats before getting them accepted into closed journals.


Language: English

I'm not one of those people who is oblivious to the fact that research exists outside the English language, and I know that it's quite possible that some of the most cutting edge Bitcoin research could be going on in a Chinese university or in a Greek think-tank. Unfortunately I don't speak those languages, so be aware that these are only English language papers.


Quantity of research: Reasonable

A LOT, BUT NOT THAT MUCH

Bitcoin literature is very new. The first paper - Satoshi Nakamoto's paper - came out only in 2008. I could find almost no academic research from 2009 and 2010, and only a trickle in 2011. It's only in 2012 that we start to find a decent amount emerging in the record. It's really in 2013 though, that the big research starts to come. 2014 has by far the most research, and it's in this year that peer-reviewed academic journal articles start to come out.

Bear in mind that peer-review processes for big journals can take years, so it's little surprise that there are so few cryptocurrency articles out in the really big-hitter journals. My prediction for 2015 though, is that there will be a big flood of research, and a significant batch of peer-reviewed journal articles. Good research takes a while to do, especially in the social sciences.


Quality of research: Hmm... 


Quality to some extent is in the eye of the beholder, but I'll be honest - there is a fair amount of crap research out there. For example, I've found 'academic' analyses of Bitcoin from people that work in big universities, that still hold onto archaic beliefs about money emerging from barter. There are also a lot of PDF documents floating about with academic-sounding titles, written by people with academic sounding affiliations, but you never really know how good they are, or if they're written by some enthusiastic second-year students who don't really know what they're talking about.

Peer-reviewed journals obviously demand a certain degree of quality, but being published in a big journal doesn't necessarily mean an article is groundbreaking. It just means you managed to pitch it right, and get past a panel of peers who might have the same biases as you. For example, it's widely suspected that the peer-review process in the big economics journals systematically excludes economic theories that don't follow neo-classical interpretations of markets. To be accepted into the hallowed halls of such journals, one must cow down and play the game, and couch everything in the apolitical language of mathematical equations and spurious models. Needless to say, some of the most interesting economics research is not found in the big prestige economics journals.

So, it's best to treat this list as an initial starting point to launch into papers, and to make your own decisions about how interesting they are.


Research themes: The tech, the law, the economics... the humans

There are a number of themes coming out in the research
  1. Firstly, there is a huge amount of technical stuff about the cryptography, computer science, security and systems design. Computer science researchers have clearly enjoyed the chance to get involved in this cutting-edge area. The only problem with this though, is that the quantity of this research drowns out a lot of the equally important social sciences research, and tends to present Bitcoin as a technological issue, rather than a profoundly human phenomenon
  2. Secondly, there is a sub-strand of the tech-related research that focuses on how to change Bitcoin, or create a variant of it, or point out some failing it has. See, for example, this piece on a Bitcoin-based emissions trading model
  3. Thirdly, there is a pretty big strand of research on the regulatory status, tax status, and legal status of Bitcoin. This is clearly driven by the need to reach some clarity on these questions so that people know how to practically proceed in the short-term. There is also a nascent strand of accounting research - check out, for example, this new piece
  4. Fourthly, there is a growing field of economic analyses of Bitcoin, mostly coming from pretty mainstream economics, or from Austrian-style libertarian economics. Like most economics, the attempt is to create models, or to analyse incentive structures, and they will tend to call people 'agents', rather than, well, 'people'. See, for example, this piece coming out in the prestigious Journal of Economic Perspectives
  5. Then, finally, there is an emergent trickle of social sciences research on actual humans, including the sociology, anthropology, politics and even ethics of the system. This research remains hugely underrepresented though, which is ironic, because it's by far the most important area of research

Areas that need more attention: Humans

There are a number of areas, in my opinion, that need deeper research and analysis. 
  • Bitcoin as money: There are surprisingly few real discussions about the monetary theory embedded in the Bitcoin code, or how it might function as money. The papers on 'the economics of Bitcoin' don't address it deeply enough (but then again, economics has always been pretty shite at money analysis). I'd love to see more deep analyses of the nature of decentralised electronic money, and the social dynamics of such money
  • Despite the huge amounts of focus on the technology of Bitcoin, there is still very little critical reflection on the technological politics of Bitcoin, or critical studies of decentralised algorithm-based systems. My piece on the Politics of the Bitcoin Blockchain sketches out areas that need more focus
  • Ethnographic studies of Bitcoin: There are a few surveys of Bitcoin users, and some interesting attempts to use social media to analyse users, but there are few true ethnographic studies 
  • The geographical dynamics of Bitcoin: Bitcoin is often spoken of as a global currency, but in reality most of the writing about it comes from Americans and Europeans, and many of them sitting in cities. I'd love to see true studies on, for example, whether someone in rural Zimbabwe would actually use cryptocurrency (given that most of my family is from rural Zimbabwe this is not just a throwaway question)

25 interesting looking papers to peruse

I haven't had a chance to read all of these, but here are some really interesting looking articles that are probably not going to get as much attention as they should. 
  1. “When perhaps the real problem is money itself!”: the practical materiality of Bitcoin (here): Written by the economic anthropologist Bill Maurer and his collaborators Lana Swartz and Taylor Nelms
  2. "BitCoin meets Google Trends and Wikipedia: Quantifying the relationship between phenomena of the Internet era" (here)
  3. "Virtual Currency, Tangible Return: Portfolio Diversification with Bitcoins" (here): One for  the investment portfolio analysts
  4. "Nowcasting the Bitcoin Market with Twitter Signals" (here)
  5. "The digital traces of bubbles: feedback cycles between socio-economic signals in the Bitcoin economy" (here)
  6. "Who Uses Bitcoin? An exploration of the Bitcoin community" (here)
  7. "Is Bitcoin a Decentralized Currency?" (here)
  8. "Testing the Efficient Market Hypothesis on Bitcoin Exchanges" (here)
  9. "Alderney: gambling, Bitcoin and the art of unorthodoxy" (here): From the Island Studies Journal, ha ha
  10. "Coining Bitcoin's 'legal bits': Examining the regulatory framework for Bitcoin and virtual currencies" (here)
  11. "Bitcoin and the legitimacy crisis of money" (here), coming out in the Cambridge Journal of Economics, from Beat Weber. Beat is critical of Bitcoin, and it's worth checking out his other piece in the Journal of Peer Production here
  12. "Do the Rich Get Richer? An Empirical Analysis of the Bitcoin Transaction Network" (here)
  13. "The (A)Political Economy of Bitcoin" (here) - this one is from Greek commons-based economy advocates from the P2P Lab
  14. "Bitcoin: a regulatory nightmare to a libertarian dream" (here), from P2P law expert Primavera de Filippi
  15. "Internet architecture and the layers principle: a conceptual framework for regulating Bitcoin"(here), from a Google employee
  16. "Characteristics of Bitcoin Users: An Analysis of Google Search Data" (here)
  17. "The politics of cryptography: Bitcoin and the ordering machines" (here): This is from Quinn Du Pont, who is doing intriguing work on cryptography political philosophy
  18. "The paradoxes of distributed trust: Peer-to-peer architecture and user confidence in Bitcoin"(here)
  19. "Synthetic commodity money" (here) - this one is in the Journal of Financial Stability, but free versions are floating around on the internet
  20. "The Economics of Bitcoin and Similar Private Digital Currencies" (here) - this one is in the Journal of Financial Stability, but free versions are floating around on the internet
  21. "The Ethics of Payments: Paper, Plastic, or Bitcoin?" (here): In the big-hitter Journal of Business Ethics
  22. "Are Bitcoin Users Less Sociable? An Analysis of Users’ Language and Social Connections on Twitter" (here): A very intriguing paper, which suggests that 'Bitcoin followers are less likely to mention family, friends, religion, sex, and emotion related words in their tweets and have significantly less social connection to other users on the site'
  23. "How Did Dread Pirate Roberts Acquire and Protect his Bitcoin Wealth?" (here): Everyone likes a pirate story
  24. "Do libertarians dream of electric coins? The material embeddedness of Bitcoin" (here): Great title, and out in a pretty innovative Scandinavian journal
  25. I'll let you decide what number 25 is: Perhaps a paper that you'd like to write?

Enjoy, comment, and please share

Thanks for reading this. If you see any mistakes in the list, or have any suggestions and additions you'd like me to make, please do comment, either here or on the Google Doc. I get sent an email every time that happens so I'll definitely see them. I'll update this list periodically as new pieces come out. Finally, please do share this with people who might find it useful - I spent a fair amount of effort creating this, so I want it to be as useful as possible.


Lastly: Much energy went into this, so feel free to buy me a beer

This took me at least four days to build and double-check, and it was pretty damn exhausting. If it's useful to you, and helps you in your own research or enlightenment, please do consider supporting me. Here are three things you could do:

ME BTC ADDRESS



    Monday, 20 October 2014

    Bringing the jungle to the city: A techno-shamanic quest to reconnect urban life to ecological reality



    Note: I originally published this in June 2014 Issue of Contributoria. It is republished here under a Creative Commons licence. If you wish to republish, please also attribute the original article


    I once lived in a village on the rural Wild Coast of South Africa. It had a horizon so vast you could almost glimpse the curvature of the earth. There was one computer with a dial-up modem, and it almost never worked. That was just before I moved to London, to work in the steel and concrete of the city’s colossal financial sector. In London, as in many cities, you cannot see the horizon. The average visibility extends perhaps 30 metres in front of you. On the other hand, you are connected to a vast hallucinogenic web of broadband media connection, constantly.

    That is, of course, provided the electricity doesn't go out.

    In London, the electricity doesn't tend to go out. It is hooked into the all-powerful National Grid, a company I used to try sell financial derivatives to. In South Africa though, we experienced the ‘rolling blackouts’ of 2007. I remember how, for hours at a time, the electricity supply was shut off and cities were left in darkness. It was an embarrassing failure for the electricity giant Eskom, but the crisis had a strange silver lining. In the absence of electricity to watch television or browse the internet, people wondered outside, sitting on the front steps of their houses, talking with passers-by, watching the stars that were normally drowned out by the glare of the city.

    It was as if, for a moment, a broader illusion had been turned off with the television sets. The bubble of streetlight security control disappeared, but instead of uneasy discomfort, it brought for some a sense of calm. The speed slowed down. People suddenly realised how much they took for granted.


    Stars and horizons


    In their natural setting, stars and horizons serve to remind you of your context. Seeing them helps to brings home the point that you are on a giant rolling planet, suspended within an enormous galactic system.

    That’s something that doesn’t actually sit well with the implicit ideology of the city. Forget being on a planet. You are in LONDON, a uniquely important place in a uniquely important time, a control tower from which to master destiny and the external elements. Indeed, in the city, horizons and stars are not real things. Rather they are the basis for kitsch inspirational quotes (‘look to the horizon, reach for the stars’), pasted on the cubicle walls of wannabe high-flying young urban professionals, representing abstract places you cannot really reach.

    And herein lies a central tension in the modern global mega-city. It might be a dynamic hub of glamorous entertainment, high-stakes commerce and edgy artistic sophistication, but it is also an engine of alienation, distancing us from the reality of our context, the land where food is grown, the ground in which fossil fuels and metals are dredged from the earth, and the ecological systems that underpin it all. In the city, you are divorced from that broader context, and placed into a different one – an exciting one perhaps – but a disconnected one nevertheless.

    The disturbing possibility therefore, is that urban elites – whether in London, Brussels, Tokyo, Mumbai or New York – wield the greatest political and cultural trendsetting power, and yet may retain the least knowledge of the actual basis of their own survival. Those who do understand such realities – such as copper mine workers in Peru, or oil workers in the Niger Delta – are politically marginalised, and frequently looked down upon as backward objects of pity, or faces on charity aid brochures.

    And urbanisation is not slowing down. So, in an era of hyper-consuming global metropolises, we face a crucial question with deep consequences: How does one live in the city whilst somehow retaining a grip on ecological reality?


    The quest


    This essay is my opening foray into that question. It doesn't quite answer it, but it sets out a map of what conceptual and practical territories need to be covered. I'm then going to use that map over the next few months as I undertake something of a techno-shamanic adventure into the mire of the city as part of collective called Wisdomhackers. There are 26 of us, all immersively exploring different aspects of modern life (which, let’s face it, is often a catchphrase for urban life), coordinated by the ‘Amish Futurist’ and explorer of informal pirate economies, Alexa Clay.

    The collective includes Aina Abiodun, grappling with the implications of techno-utopianism, Anna Stothard, rethinking our relationship with physical objects in a throwaway consumer culture obsessed with change, Antoine Sakho, exploring technology consumption philosophy, Nathan Schneider, working on new social contracts, Lee-Sean Huang, exploring the disembodied experience of ‘knowledge work’, and Brock leMieux, experimenting with digital learning infrastructures.

    In delving into city life and technology, I'm departing somewhat from my normal writings focused on the financial sector. There is a deep link though. The financial sector, after all, is intensely urban, and intensely technological, and I have a suspicion that some of the roots of financial crisis, and broader economic crisis, are inextricably linked to city life itself.


    Exploring urban ambiguity


    Cities are deeply ambiguous, even contradictory places. On the one hand, they can be exuberant crucibles of cosmopolitan culture, liberating one from oppressive social bonds and bigotries, leaving you free to join loose floating groups of like-minded people. If you’re an ostracised gay person in rural Mpumalanga, or an aspiring tech entrepreneur in the Australian outback, or Billy Elliot in a coal-mining town, are you going to stick around? Hell no! You go to Johannesburg, Brisbane, the Royal Ballet School in London. You become a city dweller, just like me.

    And if there is one thing that we know about cities, it’s that they are veritable hives of technology, and the physical host for the ghostly force of innovation. That’s as true today as it was during the Middle Ages, when people from distant small village towns needed to buy their church bells from specialist smiths in London. Cities host economies of agglomeration, and small towns frequently have too few people to support the capital and labour requirements of high tech industries. The same thing can be said about opera. Not enough people to support a big specialist theatre in the Ausi outback. Got to go to Sydney.

    And this indeed is an engine of ‘progress’, if defined in terms of material and cultural output levels. The city churns out new ideas, new music, new sub-cultures, new technology, new everything, all the time.

    On the other hand, cities also churn out an extraordinary amount of bullshit. It crawls with superficial phonies (so despised in Catcher in the Rye), asshole businessmen, aggressive drivers, chancers and purveyors of meaningless fads. Pampered high-life culture meets low-life crime. Blinkered positive-thinking optimism meshes with hard-edged cynicism. And all the time, giant piles of material and cultural waste accumulate, last month's fashion magazines shuttled out of sight into the landfill.

    Part of this dynamic is due to the fact that newness itself starts to feel old after a while, so people become jaded in the city, demanding and hard to please. In a sense, city culture becomes a prisoner of its own success, as once-innovative breakthroughs become stultifying producers of casual boredom. As a South African in London, I arrived wide-eyed and gawking at the incredible underground transportation system. A year later I was bitching about it. Oh my god, it’s five minutes late!

    Cities have also long had a reputation for inspiring self-serving individualistic decadence and moral corruption. I’ve experienced my fair share of it, from the nauseating overpriced cocktail culture of Mayfair, to the self-destructive mindfuck of bankrupt Withnail & I melancholia. I lived with a guy who had such a drug problem that he couldn’t bring himself to buy toilet paper, and started using the pages of an old Stephen King novel to wipe his ass. The shocking thing though, wasn't that he was doing that, but that I didn't care. If you’re in that mode for long enough, it breeds a kind of anarchic disdain for convention, a Down and out in Paris and London haze which is both terrifying and liberating, incredibly deep, or incredibly shallow, depending on who you are.


    There is also a long history of people lamenting these dynamics, from the Book of Revelation reviling the depravation of Babylon, to Rousseau scolding city dwellers ‘depraved by sloth, inactivity, [and] the love of pleasure’, to Utopian Socialists leaving to start intentional communities in the countryside, to Gauguin leaving for Tahiti. Recently, even Micah White of Occupy Wall Street began berating the cadres of urban activists and moved to Nehalem to launch a rural revolution (albeit one less demanding than the rural revolution demanded under Maoism).

    Perhaps urban ambiguity is rooted in the fact that the same loose bonds that can unlock empowering forms of freedom, can simultaneously create disempowering forms of disassociation. Take, for example, early proletarianisation, whereby people disenfranchised from the land drifted into wage labour in cities. The loosening of rural bonds was associated with the emergence of the ‘free’ human labour market, the ability to voluntarily detach oneself from social – and ecological – ties, eerily similar to how a marketised product detaches from those who produce it. The open-minded and expansive search for self is always prone to being twisted into the service of corporate power, taking the commoditised, shallow form of the fun-seeking consumer shopping for identity.


    Urban dynamic 1: Illusions of access in a world of interfaces

    DON'T MIND ME

    Many things are indeed very shallow in a city. Consider a simple plug socket, a two-dimensional interface discreetly inset within the wall. Somewhere, elsewhere, natural gas from the North Sea is being burned in turbines to produce a generic, seemingly invisible form of all-purpose energy called electricity, which is channelled via the electrical grid and now waits innocently for me at the plug. The wall blocks the outside reality while the plug presents a new one. We might say our experience of energy begins at the plug. Everything that happened before this is blocked out.

    Most interfaces are like this. One part blocks you from something, while another part invites you into something else. In the city we’re faced with a myriad of such interfaces. Consider the supermarket. The simple Tesco aisle is a sanitised interface. It presents us with free-floating consumption items whilst simultaneously blocking awareness of their prior production processes that happened elsewhere. It’s a key institution of modern psychological disconnection, doubling as an exemplar of modern sophistication.

    And what about the ATM? It's an interface into the banking system, a machine of convenience replicating what a human bank teller used to do. They're often placed next to physical bank branches, giving the impression that the money coming out of the wall came from 'inside' the bank. Given that the majority of our money is in fact electronic, ‘stored’ in a bank's datacentre-based IT system, nowhere remotely close to the ATM, this is something of an illusion. And what about my debit card? Is the money in the plastic card, or elsewhere? Maybe you see a taxi displaying an advert for a share-trading account. The account is just an interface into an underlying stockmarket, and the shares there are just interfaces too, channelling returns generated elsewhere.

    But even the seemingly down-to-earth world of physical buildings frequently represents a kind of interface. For all the rhetoric of city freedom, the average person experiences the city as a zone of things that you can see but that you will never actually interact with, a collection of human and physical objects, many of them out of bounds. The streets might be free to all, but the buildings are a series of locks and gates, or rather, paywalls, and differential access to them abounds. I can look at the two-dimensional frontage of the Ritz, but can I experience the three dimensional space beyond the facade?

    You can of course use wealth to unlock these paywalls. Wealth brings a kind of universal freedom of the city access card (albeit, ironically, if you’re very poor, you may be so marginalised that you gain a different sort of freedom to use parts of the city that many people wilfully shut themselves off from, the parallel world of trashcan alleys, shacks and derelict squats, hauntingly captured here by photographer Chris Arnade). For the average person though, the city expresses itself to you as a kind of aspiration, things you maybe one day will get to do.

    This phenomenon applies to human relations too. In the city you’re faced with a constant stream of people you will never meet. Have you heard of the term sonder? It’s a neologism from the Dictionary of Obscure Sorrows, referring to the realisation that every person that passes you by is living a life as intense as your own, but that you’ll never have access to it, with you perhaps appearing “only once, as an extra sipping coffee in the background, as a blur of traffic passing on the highway, as a lighted window at dusk.”


    Urban dynamic 2: FOMO meets YOLO in the buzz of constant surveillance




    The ironic consequence of this is that you’re almost never alone in a city, but are surrounded by people who often don’t offer much in the way of sympathy either. This is part of that hard-edged, bittersweet symphony city vibe that some people get a big kick off, blitzing down the road shoulder-barging people out the way, leaving kind-hearted romantics feeling deeply isolated, wanting to escape to the countryside. Of course, the endless stream of people offer potential for interaction, a tantalizing potential for sex, fun, intellectual debate, and experience. It culminates in the ever-present fear-of-missing-out (FOMO) complex, breathlessly (and tragically) set against the ticking timebomb of the you-only-live-once (YOLO) complex.

    The sense of never being alone is part of the city buzz, but it also doubles as an element of a peculiar urban surveillance complex, joining the interconnected web of visible policing, endless lights, and, if you glance upwards, CCTV cameras, all meshing together to give the subsconscious awareness of always potentially being on someone’s radar. Here’s an experiment: Walk down a city pavement and then make an abrupt stop and stand frozen still. Can you hold it for more than 20 seconds? An invisible force hits you. You feel the weight of people potentially watching you (maybe you can call it the panopticon). Why have you stopped for no reason?

    There are ways to escape the surveillance complex, and at any one moment in central London you’ll find people existing in pockets of unmonitored space, feeling the wild tinge of alone-ness in a toilet cubicle, in old elevators, behind pillars in underground parking lots, in back alleys. We intuitively know where to find these places. One just need imagine where you would go if you were trying to find a place to piss in the city, or to have sex, or basically to do anything slightly illicit.


    Urban dynamic 3: In control of freedom


    But even in the toilet cubicle you are not entirely alone. There are always the attempts to use the physical space to communicate with you, drunken messages plastered on the walls, and then, of course, there is the ADVERTISEMENT on the back of the door. Just like old communist cities were dotted with socialist realist artworks depicting idealised visions of humanity working towards common goals, so the surrealist corporate propaganda urges you to act on the goal of becoming something slightly different to what you are, to give in to vague fears or aspirations (reaching dystopian proportions in the sci-fi imagination of Minority Report).

    Advertising is part of an obvious ongoing attempt to influence thought, to control to some end, but it tends to cloak it within the banner of either freedom, or of security. Under the hedonistic exterior of the Calvin Klein billboard there is clearly some highly-strung anal executive trying to orchestrate a well-oiled campaign. It’s the same with the friendly pleas for civility on the London Underground, or the Mayor’s cycling campaign, or the health and safety warning signs, the traffic lights and rules. They're all reflective of perhaps the deepest ambiguity of a city, that between freedom and control, and between control and its confusingly similar echo, security. Levi's makes me feel secure.

    The perception of power and control as security is a hallmark of ‘mainstream’ status quo thought, constituting what we can call, loosely, hegemony, the way that powerful institutions appear in popular consciousness as reassuringly normal. The police represent security to those in the mainstream, control to those outside, just like the smiling faces of corporate executives appear respectably professional to some, and as exploitative masks of manipulation to others.

    We have a long tradition of critiquing adverts, corporate executives and police violence, isolating the exploitative strands found within the comfortable security. Perhaps the most pervasive control complex of the city though, is the most subtle, and we take it so for granted that it’s almost invisible. If there is one thing that most social classes implicitly agree on, it’s that wilderness is not allowed to flourish in the city. We have developed technologies of control like concrete to resist the chaotic wiles of weeds. We have pest removal companies and poisons to remove pockets of alternative life as they form, and tree surgeons assassinating rogue branches that don’t obey council rules. We might allow carefully tended parks, but wilderness, NO!


    Urban dynamic 4: The echo-chamber of urban elitism


    The silent bulwarks of concrete control tend to get forgotten, or hidden, amidst the loud buzz of urban creativity, and it's in this contradictory setting that a covert cultural agreement emerges. It runs across the political spectrum, and across national boundaries. It is the tacit agreement that the City is where everything important happens, where policies get made, where trends get set. It’s wired into urban mentality, and above all it finds expression in people who consider themselves global jet-setters – the transnational urban elite – and in our favourite technology, the internet.

    The internet, when taken in aggregate, does not reflect ‘the world’. It reflects the relentless content production of large global cities, and the transnational aspirations of transnational urbanites. There are up to 3 billion Google search results for New York. How many for the entire country of Angola? Around 126 million.

    Urbanites have long be criticised for having their feet off the ground, for lacking an earthy connection to the soil, but the sheer scale of this potential disconnection has increased as the sources of distraction have become richer than ever, a commercial media complex interwoven ever more closely into experience, the mobile internet streaming data from urban trendsetters around the world, music videos from San Francisco, stock prices from Hong Kong. This is the distraction complex, pointed out in Guy Debord’s Society of the Spectacle, the basis of Jean Baudrillard’s concept of hyperreality. You can live an entire life in this cultural echo-chamber, surrounded by others doing the same. Base level awareness of things like soil and rain merely distract from more important upper level realities. Who cares about watersheds when we can discuss vinyl, technology, business?

    So let’s talk business then. All business, in the final analysis, comes down to raw human labour (physical or intellectual), which is supported by agriculture and augmented by technology (made with materials dug out of the earth) that's fuelled by energy sources. That's a formula captured in everything from large-scale construction of highways to the simple act of using a photocopier after lunch (labour + food + technology + electricity). The pinnacle of city business though, is finance, the portal for amplifying and steering previously accumulated capital into businesses of the future. The headquarters of global financial institutions are profoundly urban, and it’s in this setting that professionals make daily decisions about financing destructive projects in far-away places. The disconnected mentality of the city feeds into disconnected notions of economic life. Forest destruction is reduced to a series of numeric cash flow projections in excel spreadsheets.


    The quest part 1: Getting behind the interfaces


    So let's imagine it's evening in the city. You close down the spreadsheet, and pull on your suit jacket to head across town to a bar, walking along the controlled space of the pavement, making a pit-stop in a shop to pick up a disassociated pack of cigarettes piped in from some unknown location, petroleum-powered cars blurring past.

    If you were, however, to look down the back alley you pass, or through the sewer grilles under your feet, or behind the billboards, you’d see that there are strange piping systems, ventilation shafts, bundles of wires, mechanical pulleys, delivery docks, waste management systems, storage depots, dirt and grease compounds. The world of interfaces is kept illuminated and co-ordinated via a vast, elaborate network of manual workers who will undertake all the steps necessary to seamlessly deliver a glass of cider down on a table in a Shoreditch bar.

    This is the back-end, the spaces behind the interfaces. These are the only spaces in a city like London that you won’t find adverts.

    It is here then, that I will begin a search for the deeper soul of the city. The first part of my quest over the next few months is to go behind the interfaces. The back end is, for some, a zone of resistance. It is where the urban foxes live. It is where squatters make homes in abandoned old pubs. It is where community gardens are started. It is where graffiti artists practice their craft. It is where weeds grow untended, little outposts of ecological resistance against concrete control. There are wild tomatoes growing on the banks of Thames, if you know where to look.

    It's in this space also that the urban exploration subculture emerges, explorers of abandoned buildings and places you’re not supposed to see. The urban exploration crew is drawn to all that is designed to be out of bounds, which happens to include most key elements of city infrastructure, the underground train systems, the telecommunications towers, the electrical power yards, the warehouse complexes, the sewerage systems, the logistics nodes in the shadows or on the outskirts. They are back-end adventurers, on the one hand rebellious, but perhaps also seeking solace in places that nobody expects to find you in. It's a strand of the underground tradition of psychogeography, the attempt to defy or redefine the hegemonic logic of city spaces.

    If there is one thing that fascinates me in the city, it’s the food system. How the hell does all the food get in? How many kebab shops are there in London and how much meat do they go through in a day, and where does that come from? Where are the warehouses that Tesco uses to restock its imperial army of store fronts? How many steps are there between a fishing boat pulling a tuna out of the ocean and it ending up in a Yo! Sushi outlet in Soho?


    The quest part 2: Bringing the back end to the front end


    The crux of the quest though, is to explore how these vast back end systems, and the ecological systems they drawn upon, can be brought to awareness within the very space that hides them. There are already urban movements that attempt to do this. The urban agriculture movements, for example, try to bring farm life right into the physical space of the city, creating rooftop plantations and city farms. In a more rebellious vein, there are guerilla gardeners seedbombing the stilted rows of public parks and manicured gardens with reckless wildflowers.

    The key question for me though, is what part new high technology can play in all this. We are faced with a dilemma here. Technology historically has been used to cushion us from external realities. The streaming media capabilities of smart-phones have seemingly obvious potential to open our eyes to things, but they've also created an information bubble which appears on a day-to-day basis to mostly dull the senses, not make them alive to unseen realities.

    But it's worth a try, so I will explore different approaches to using such communications technology. Firstly, it is worth looking at abstraction techniques, technologies that take a complex external reality and attempt to make it into something understandable, or present it in the form of an analogy. For example, think of big data visualisation of internet usage, or mapping projects, transforming the global subsidiaries of Goldman Sachs into a digestible form. It's an approach that really attempts to compress the disorientating scale of modern life into bite-sized chunks.

    Secondly, there are humanising techniques, ways of taking something that is currently abstracted or obscured, and showing the story behind it. For example, can we build open data maps of supply chains, populate them with personal stories and data on resource usage, and feed them into augmented reality apps operating within the paradigm of the ‘internet-of-things’? Maybe even Google maps can be used: I’ve used StreetView to virtually drive the back streets of Hong Kong to get a glimpse of Shenzhen where my iPhone is assembled. And can I use the technological interface of the iPhone to breach its own branded façade and see the vast, intricate web of its own production?

    And then there is the mother of all abstract façades, the financial sector, entrenched behind a firewall of political power and technical obfuscation. How might we breach the slick shell of financial instruments to view the gritty real world beneath? Is there a way to read the Financial Times that will make me alive to the deep human and ecological dynamics embedded in cold financial abstractions? Can we take a flat story about stockmarket regulation and see it for what it is, a network of urban politicians interacting with a network of urban businesspeople, battling it out amidst cultural constructions of risk, debt and the perceived potential of ‘assets’ in far flung, probably marginalised, production centres?


    The battle for holistic fusion


    Maybe none of this works without people being willing to adopt a certain critical orientation towards surface appearances. Groups like BankTrack do try to show the human and environmental stories behind major bank deals, but getting those stories into the public domain is tough. How do you bring marginalised voices into the city, to the ears of people who implicitly benefit by remaining ignorant. Out of sight, out of mind.

    It's a crucial battle for holistic fusion. Because, the countryside and the city appear to me like the imagined split between body and mind, physicality and intellectuality, hard labour and innovation. And, in the same way that the artificial distinction between body and mind needs to be fought, the consciousness of the city needs to be fused with the consciousness of all those vast tracts of the earth’s surface that feed into it.



    Read on! Part 2


    To read Part 2 of this quest, please do sign up to Wisdomhackers on the Pigeonhole, where it is being released as part of an awesome group book. The book comes out in weekly installments for the nominal sum of £5, which goes to help us struggling writers. My essay in the new collection is a 7000 word deep dive into the questions raised above, and it's a lot of fun. It includes critical explorations of the technological smart city narrative, cyborgs, LSD and the battle to reinvent political economy in the city



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    Tuesday, 12 August 2014

    Much soul, very emotion: Why I buy into the cult of Dogecoin



    Please note: This piece was originally commissioned by the magazine MCD, and will be appearing in French in their December edition.


    I use Dogecoin because I’m emotionally drawn to the dog. Unlike the distant, fossil-like Queen on the Pound banknote, the Shiba Inu is at once transcendent and approachable, self-contained but cuddly, looking into my eyes with a sideways glance, as if it just noticed me and is wondering whether I want to play or be left alone. It’s not an aggressive dog, or for that matter, a bouncy dog trying to lick me. It has self-directed, quirky soul, and it’s almost impossible to imagine this dog being an asshole.

    Some people in the crypto-currency community have written Dogecoin off as a joke, or even a scam.  Maybe it’s both, but does this matter? All currency in the final analysis is really a scam, and the real question is which of those scams we want to agree to. I for one would rather pledge allegiance to a mystical pooch than to worship the image of a redundant monarch.

    Indeed, Dogecoin, to me, is the best of all of the so-called ‘alt-coins’, the alternative crypto-currencies that have emerged as offshoots from the original Bitcoin source-code. Here is why.

    Money isn’t ‘rational’


    Run this question through your brain: Why did people invent pottery?

    The response from many people is ‘because it must have been useful to store food and water’, an answer which chimes well with our prevailing rationalistic world view. Nevertheless, not only is the assumption that pottery was explicitly ‘invented’ problematic, but evidence suggests that it was originally used to create abstract religious figurines. The details of such archaeological debates don't matter here - what matters is to realise that we often have an automatic bias towards thinking about history in terms of what we're used to in the present.

    ANCIENT POTTERY: TOTALLY FUNCTIONAL
    Why do I bring this up? I do so because there is a similar problem among many economists who attempt to peddle ahistorical narratives about ‘why people invented money’. Their story normally involves people ‘rationally’ designing money as an alternative to ‘barter’. There is very little immediately rational about exchanging real goods for pieces of paper or shiny bits of metal though. Sure, once the social convention of monetary exchange is set up, it’s useful, but the imagined process in which bakers and butchers ‘invent’ money to deal with the awkwardness of exchanging meat for sourdough loaves is an attempt to reverse-engineer history from the perspective of present dogma.

    Money is not an object that can be invented. It is a social convention that has to be culturally constructed. The use of monetary tokens only appears rational once we’re party to a collective agreement (or delusion) to imbue those tokens with value, and that collective agreement needs to be constantly maintained.

    State power, local trust, meta-national mysticism and labour



    In the case of our normal fiat currency, the collective agreement is given strength by the psychological (and real) force of official authorities. Most of our fiat currency is created by commercial banks, but derives much of its ‘reality’ from state endorsement of its legal status.

    In the absence of a state championing a currency, you need other factors to induce collective acceptance. For example, a very small community might be able to create and maintain a local currency backed by nothing but the preexisting communal trust network, woven together from mutual friendships, ties of honour and anxiety at facing exclusion from the social group.

    To create belief in a non-national currency that is not located in a small community though, is especially hard. Bitcoin provides a fascinating case study of the process. When it first started, Bitcoin commanded almost no value. It had one crucial feature though. At its heart was a mysterious, almost immaterial figure called Satoshi Nakomoto, a focal point for a community to rally around.

    The mystique of Satoshi was vital, imbuing what was otherwise a clever but cold piece of cryptography with a soul that people could believe in. Satoshi was the holy ghost in the machine, and the act of mining resembled a ritualistic quest to build on the blockchain started by the ghost. It’s through this process that the imagined value of Bitcoin came to life, and started taking on a reality.

    By contrast, imagine if a well-known person, like Stephen Hawking, invented Bitcoin. It would be devoid of all mystery, resembling a science project or a corporate product, rather than an underground movement. The specifics of Stephen’s personality would replace the cryptic symbol that the Satoshi figure once stood for, and what would you have left? A clever piece of cryptography, and a somewhat banal act of using up energy in running computers.

    That said, there is something about the pointless nature of randomly churning algorithms through a computer that is psychologically powerful. If you want to imagine that something essentially ephemeral is a useful commodity, it helps if you expend labour in creating it, because labour implies scarcity (you only need to work for things that are scarce), and scarcity implies a potential for an exchange value (if something is abundant there is no need to exchange anything for it).

    The computing power (‘labour’) put into the Bitcoin network does not create value in itself, but is a further psychological backer to Bitcoin tokens’ imagined value. If they weren’t valuable we wouldn’t exert all this labour would we, and because we exert this labour they must be valuable, right?

    The emergent myth of Bitcoin’s rationality

    'WE WOULDN'T BUILD IT IF IT WASN'T VALUABLE... RIGHT?'
    Interestingly, as the ritualistic process of mining has become increasingly competitive, and the commercialisation of Bitcoin has steamed ahead, new narratives have formed to explain why Bitcoin tokens ‘rationally’ have value.

    Chief among these is the idea, touted by the Bitcoin foundation itself, that bitcoins have value ‘because they are useful’. It is part of a broader trend among the Bitcoin elite to rewrite history and claim, in hindsight, that the value of Bitcoin was always self-apparent, and that early adopters were just getting involved due to rational future expectations of increasing societal recognition of Bitcoin’s use value as a secure means of exchange.

    In this formulation, Bitcoin tokens derive their value by being part of a potentially useful system, the value of each bitcoin reflecting the aggregate market assessment of how useful it is to have a secure means of exchange. It’s kind of like arguing that containers on train carriages derive the entirety of their value from the usefulness of the rail network. The implicit narrative is this: Hey, these things are useful as transmitters of value for exchange, so let’s compete over them, and in so doing create their market value, which can now be used for exchange.

    Circular no? There may be a glimmer of truth in it, but it’s mostly an attempt to describe the essentially emotional and social process of currency creation with the language of cold individual rationality.

    Tin-man currencies ain’t got no heart

    This thinking has subsequently influenced the way that a lot of alternative crypto-coins have attempted to market themselves. Rather than embracing their own absurdity, many alt-coins have marketed their efficiency, their security, or their application to some specialist use case, as if the usefulness and competitiveness of the design was the most important aspect of why a person accepts a currency.


    The crypto-conference has thus become the realm of ‘serious people’ discussing ‘serious business’, not wishy-washing mysticism and emotion. They appeal to rational functionality, rather than inspiring people to use them. They are techno-fetishistic. A guy with a PowerPoint presentation calmly explains the business case for why his crypto-currency is valuable because it uses a state-of-the-art turbo hashing system, but for fuck’s sake, tell me why I should BELIEVE in it!

    It’s true that this strategy has worked to some extent for some alt-coins like Lightcoin, Quarkcoin and Peercoin, which have gained some popularity based on design, but think about this question: Why do you use British Pounds or Yen? The answer to that is never, ‘because they’re well designed’, and neither is it ‘because I rationally see how useful it is for me to have a medium of exchange’, and neither is it ‘because I’m intimidated by the state and they force me to use it’.

    Our answer is mostly just ‘because everyone else seems to use it and I was taught to use it’. We are born into currencies just like we are born into languages, and we learn to use them in a social context. If you want to convince a person to accept ephemeral electronic records as a currency, you need a story for people to hold on to. You need heart.

    Dogecoin is a cult, and that’s how it should be


    Which brings us to Dogecoin. I can believe in Dogecoin because it gives me something to believe in. It’s a direct appeal to irrationality, a direct appeal to transcend the banal world of individual utility calculation and submit to something hilariously absurd. It is, above all, a cult, and that is infinitely more attractive than any cold appeal to robust design.

    It is the peaceful, playful gaze of the Doge itself that is the mystical foundation of the currency. It doesn’t matter who invented it, because Dogecoin is not experienced as a narcissistic project of a particular person, and it’s the symbol itself that is the leader. The Doge is a figure without ego, with cross-cultural, cross-gender, and yes, even cross-species appeal. We can all get something from the gaze of the Shibu.

    This is reflected in the resultant community that has emerged around Dogecoin, people who refer to themselves as ‘shibes’ and give each other gifts of Doge. While the Bitcoin subreddit has turned into a moshpit of aggressive trolling, Dogecoin forums feel inclusive and accepting, cohering around a surreal world of esoteric slogans and acts of goodwill.


    In closing then, a word on design. If there has ever been any clever design in Dogecoin, it’s been in the way the core members have focused on creating a culture from the bottom-up, rather than fetishising currency creation as a technical solution to be marketed from above. The Dogecoin community has grown rapidly in response to community acts that establish a reason to believe in the currency, such as the sponsorship of underdogs like the Jamaican bobsleigh team, and oddball stunts like backing a Nascar racer. 

    These are things you can sit in a pub and laugh about, outside conference halls, and that makes all the difference.


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