Bitcoin has been around for six-and-a-half years, but questions still remain when it comes to defining this new, decentralized system for money and payments. Some say that bitcoin is a currency, while others seem to believe it is nothing more than fairy dust. While there are many different definitions of bitcoin floating around right now, the reality is that some people are already treating it as money. One of those individuals is noted Bitcoin proponent Andreas Antonopoulos.
Money is Based on a Shared Hallucination
Antonopoulos recently gave a talk on Bitcoin at the Harvard i-lab, and much of his presentation surrounded the basic concept of money and how bitcoin fits into the bigger picture. Early in the talk, Antonopoulos focused on the concept that money is a shared delusion that continues partly because people believe the money will have the same value tomorrow as it does today:
“Money is a shared, cultural hallucination. It’s a shared delusion. We walk around and associate with other people on the basis of germ-ridden pieces of cotton printed with green ink. If you were to observe that as an alien anthropologist who landed on earth, you’d think it was very, very weird that just by exchanging these pieces of cotton you could create social relationships and transactions and trade — feed yourself, shelter yourself, etc. It doesn’t make much sense, but it’s based on a shared hallucination. It’s based on the assumption that if you give me a dollar today, someone else will accept that dollar in exchange for something of value tomorrow.”
People Don’t Like New Forms of Money
The general public is still somewhat skeptical when it comes to viewing bitcoin as money, but Antonopoulos claimed that this is nothing new. The author of Mastering Bitcoin noted that this was also the case when paper money first became widely used as a replacement for gold and silver:
“Go back and look at what happened with the introduction of coins stamped onto non-precious metal, and then eventually paper notes. When paper notes were first circulated, no one believed that they had value. The shared hallucination had not taken hold yet. It was very difficult to persuade people to exchange real gold coins or silver coins for pieces of paper that said that they had gold in a vault. And then, take it a step further — disappear the gold from the vault and say, ‘Turns out it’s just the paper.”
Antonopoulos then went on to joke about the claims people make when they try to tell him bitcoin is not money. He noted that many individuals still believe the dollar is at least partially backed by gold, which was completely abandoned as part of US monetary policy in 1971 by Richard Nixon.
Bitcoin is Money Because Other People Think It’s Money
One last note that Antonopoulos made in terms of defining bitcoin as a money had to do with the economists who tend to poke fun at the digital commodity. Antonopoulos explained that people can come up for many theoretical reasons as to why bitcoin is not money, but that hasn’t stopped thousands of people from using it as money over the past few years:
“Why is bitcoin money? Because other people think it’s money. You can write a dozen PhD dissertations explaining exactly why bitcoin is not money, [but] I have lived on it for two years. Therefore, it doesn’t matter what your dissertation says because to me it is money — because I have lived on it for two years. And so have thousands of other people.”
It’s clear that bitcoin has created more questions than it’s answered when it comes to money and economics. Many well-respected financial experts were convinced that Satoshi Nakamoto’s invention could not work in the early days of its development, but they are now all likely kicking themselves for not taking a chance on this new phenomenon when bitcoins were trading for pennies. There are still plenty of people out there who think bitcoin will fail, but there is also an increasingly large number of people who think the experiment can work. If Andreas Antonopoulos is to be believed, that belief that the system can work may turn into a self-fulfilling prophecy.