Ludwig Wittgenstein once asked a friend, “tell me, why do people say it is more natural to think that the Sun rotates around the Earth than that the earth is rotating?” The friend said, “well, obviously, because it just seems like the Sun is going around the Earth.” Wittgenstein replied, “well, what would it seem like if it did seem like the earth were rotating?”
As Bitcoin begins its quadrennial bull run, we must brace ourselves for the wider world’s sudden and ill-informed interest. A great many newcomers will arrive with an open mind — as we all did once — but so too will many representatives of the incumbents emerge to insist that what we can see with our very own eyes isn’t actually happening because, according to their theory, it can’t.
Bitcoin can’t be a store of value because it has no intrinsic value. It can’t be a unit of account because it is too volatile. It can’t be a medium of exchange because it is not widely used to price goods and services. These are the three properties of money. Therefore, Bitcoin can’t be money. But Bitcoin has no other basis for being valued, therefore it is valueless. QED.
I call this argument, semantics therefore reality. What could possibly falsify this? It is, at root, a claim about the material world; about what will, or in this case won’t, happen in real life. And yet it looks rather like it relies entirely on the meanings of words. In — the instructive process of an “official” money being spontaneously replaced by a simpler superior money — Larry White says of those who deny by definition that such a thing can even happen that they, “are only looking at the blackboard and not at what is happening outside the window.” This is a curious approach to understanding novel phenomena, that, in general, I would not recommend. Reality doesn’t care how you describe it.
But there is also a softer, slipperier, more agnostic form of the semantic theory that acknowledges that something is happening: that Bitcoin is not nothing, but that it surely cannot be money because it is so dissimilar to the standard (semantic) conception of what money should be and how it should behave that the proposition is too uncomfortable to accept. It certainly seems like a network of some kind: it is global, digital, sound, open, and programmable. And it has undeniably increased in value from a point in the past when it was worth nothing at all. But does this distinguish it from a regular old financial bubble? Can “money” be reconciled with bubble-like behavior? And is Bitcoin’s digital nature such a plus? Doesn’t the Internet enable a speed and potency of virality that is arguably finely tuned to inflate a bubble in anything deemed openly, programmably digital? Bitcoin may be something — maybe the “blockchain technology” it runs on? — but, obviously, it just seems like Bitcoin isn’t money.
Wittgenstein would be most unimpressed. He would likely ask, “What would it seem like if it did seem like a global, digital, sound, open, programmable money was monetizing from absolute zero?“
Let us ask that too.