"The South Sea Bubble, a Scene in 'Change Alley in 1720," (Robert Vernon/Creative Commons)
Shiv Malik is the author of two books, the co-founder of the Intergenerational Foundation think tank and a former investigative journalist for the Guardian. He currently evangelizes about a new decentralized data economy for the open source project Streamr.
Last week, the eminent anthropologist and co-founder of the Occupy movement, David Graeber, passed away aged just 59. His tome on the origins of money and finance, should be required reading for anyone involved in crypto. Ranging from Mesopotamia to Manhattan, just about every page is filled with a salutary lesson or insightful parable on how over the millennia value came to be represented in either physical form or on a credit and debit ledger.
Take this from Page 348. Detailing Londoner’s stock mania following the meteoric rise of the of the early 1700s, Graeber quotes this contemporary account of one of the many very profitable start-up stock swindles that followed in its wake.
“The most absurd and preposterous of all [the schemes] which showed more completely than any other, the utter madness of the people, was one started by an unknown adventurer entitled, ‘A company for the carrying on of an undertaking of great advantage but nobody to know what it is’.“
The entrepreneur promised that for 100 British pounds (GBP) a share, investors would earn dividends of 100 GBP per year thereafter – an amazing return, which in theory should have left everyone incredulous.
And yet, by the first morning of the “IPO” in London’s Cornhill (its original financial center) the man had raised deposits of 2,000 GBP to secure a fifth of all the stock – the fear of missing out was simply too great. Of course, by that evening, the entrepreneur had gotten on a boat to Europe and was never heard from again.
Graeber writes that if the story is true then “the entire population of London conceived the simultaneous delusion, not that money could really be manufactured out of nothing, but that other people were foolish to believe that it could – and that by that very fact, they actually could make money out of nothing after all.”