Bitcoin, the original cryptocurrency, seeks to do for money what the internet did for information—expand access, decentralize ownership and management, and limit mediating third parties. Instead of a bank keeping a record of your transactions, this information is encrypted and recorded on a distributed ledger, or blockchain. A copy of the blockchain is then dispersed to all users of the cryptocurrency. The open source nature of Bitcoin makes fraudulent tampering with the transaction record, or “double spending,” nearly impossible. Cryptocurrency evangelists claim that the technology is “trustless,” arguing that its integrity is preserved by an incorruptible ledger instead of a government or institution. In reality, trust has not been removed from the equation but shifted from faceless institutions to blockchain technology.
It’s generally unwise to trust what one does not really understand.
Trust in cryptocurrency is far from absolute, however, and with good reason. The value of cryptocurrency is susceptible to wild fluctuations; in 2017, the value of bitcoins shot up 10-fold between April and December, and then plummeted to half its peak value over the next three months. In 2010, a developer bought two pizzas for 10,000 bitcoins; today those coins would be worth more than US$74 million dollars.
It’s tempting to assume that cryptocurrencies like Bitcoin will succeed because social media did. But digital doesn’t mean magic. Cryptocurrencies will work if the needs met are more significant to most people than the problems created are.
One of the most interesting questions for anthropologists is how cryptocurrency will shape the cultural symbolism and rituals surrounding money.
Sara Ceraldi, “Can Cryptocurrency Revolutionize the Rituals of Money?” at Sapiens
For sure we can expect many new entries in the Urban Dictionary.
See also: Is Bitcoin Safe? Why the human side of security is critical. Software engineer Jonathan Bartlett: Bitcoin solves a lot of tough problems in very ingenious ways. Unfortunately, however, those benefits don’t tend to translate well for end users, who are not nearly as ingenious as the people developing the system.