In some weird twist, my Usury article actually got a decent amount of traction on Steemmaker, as well as a thoughtful comment from Semiotic Animal about cryptocurrencies…and a few suggested links.
For anyone wanting to visit the rabbit hole and see what other Catholic bloggers have written on this, check here and here. Some of this gets into pretty serious inside baseball in Catholic moral theology, but I hope my non-Catholic readers will stick around for my discussion on cryptocurrencies that is a response to the above bloggers.
I don’t want to speak for Zippy Catholic or Semiotic Animal, but the former has written a lot about economics and has a dismal view of Bitcoin (although I’m not certain on his position of other cryptocurrencies and tokens) while the latter wrote to me in an email the following: “Cryptocurrencies that don’t terminate in or securitize some real property are essentially worthless and are related to the same financial anti-realism as usury.”
I’m interested in this line of thinking, as both writers share a respect for traditional, realist thinking beyond the casual buzz of oft repeated slogans and tribalism in the pro- or anti- bitcoin camps. The angle these two take when approaching cryptocurrency is rooted in a fundamentally different mindset than the modern one, and that makes their arguments interesting.
You should check them out before reading.
My Response to Semiotic Animal
SA’s comment, “Cryptocurrencies that don’t terminate in or securitize some real property are essentially worthless and are related to the same financial anti-realism as usury.” is a fair one. I think it is incorrect. Let’s compare two cryptocurrencies, one that meets his requirement for realism, and one that does not: Digix Gold Tokens, and Monero.
Digix Gold Tokens (DGX) each represent one gram of actual gold that is stored in a safe in Singapore. DGX tokens are digital bearer notes that can be traded on the Ethereum blockchain. DGX can be bought and sold, and if returned to Digix Global, can be turned in for the physical gold they represent. DGX tokens securitize real property, and it is doubtful either blogger would object to their existence and use.
On the other hand, Monero (XMR) does not securitize real property as DGX does. Holders of XMR have the ability to (anonymously) transfer XMR tokens to other accounts, just as Bitcoin holders can transfer BTC to other accounts. The utility of XMR is its anonymity; while price slippage can result in a change in value as compared to USD during transaction times, XMR does offer a service or good that is valuable: anonymous value exchange. This was Bitcoin’s original value proposition, which has diminished as new players have entered the market with more privacy and faster transaction times.
My understanding-and I’ll stand to correction if proven wrong-is that the idea that money began as gold and silver is an anthropological error made by many economists in the past century. As a somewhat hard money guy myself, who doesn’t love the fiat system the US uses (although it seems to be the best looking horse in the glue factory), I have believed this in the past. But there is more evidence showing that humans have used many items as means of exchange throughout history, including rocks as shared ledgers or even community scrip. These organic developments seem to not have involved fraud, but were a community driven way to ensure exchange of unlike goods was done fairly.
Gold and silver came later, and coinage was invented.
( I would contrast the above examples as innately different from the US government’s ditching the gold standard, which was not done for the good of the public and has greatly accelerated a usurious system.)
Bitcoin, Monero, and other “non real property” cryptocurrencies are essentially community driven scrip, done as open beta tests that anyone can take part in. The fact that there is massive speculation on their value does not detract from their utility, although I would argue that Bitcoin’s utility is dropping fast and cryptocurrencies that have more concrete uses, like Ethereum, will last much longer. I also find the “store of value” argument for Bitcoin ridiculous, as it will only have value if it is useful, which it generally isn’t (see r/btc for more reasons why).
To be continued…where I’ll explain why DAI is a real property
Disclaimer: I am long all of the above, except Bitcoin and DAI.
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