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Greetings citizens of ASOMOCO! Occasionally I like to wade into a more complex topic, and today’s piece is a long-read that might appeal to the more finance-minded among you. I’d encourage non-experts to give it a go, because it has real implications for our lives, and also because it concludes with predictions about the Trump administration’s future relationship to crypto. Enjoy!

When I used to work in finance, we’d talk about two different types of trading -fundamental and technical.

A fundamental trader is someone who looks out into the world to assess something. Picture yourself as a 14th century merchant on the Silk Road in Central Asia. Imagine closely studying the farmlands you pass, or asking local innkeepers what their patrons are saying about the quality of the cotton harvests. You’re a detective, speaking to people on the frontlines of production. You verify stuff.

In the financial markets, the fundamental trader is represented by someone like Warren Buffet. Ok, he’s not really considered a ‘trader’, because he holds investments for the long term (and ‘trader’ tends to refer to a shorter-term mindset), but he’s the kind of guy who’d actually study what a company is doing. He’d assess how many widgets they’re selling in what country, how profitable that’s likely to be in the future, and whether that future profitability is reflecting itself in the present price of their shares.

A trader using ‘technical analysis’, by contrast, is someone who watches other traders to make assessments. It’s like a guy on the Silk Road who studies the other camel caravans for clues. How many of them are heading in what direction to what market, and what are they carrying in what volume?

In the financial markets, watching other traders takes the form of studying graphs that show volume of trading, price changes, market depth and various other metrics. Generic stock photography of traders always shows this. Type ‘trading’ into a Google image search and you’ll be inundated with images of people at computers staring at ‘candlestick’ graphs.

Analysing such a graph is, de facto, the process of watching other traders on the financial Silk Road, but this practice is rife with pseudo-scientific jargon that attempts to present this as akin to studying physics. If you ever hear a person using terms like ‘resistance levels’, ‘moving averages’, ‘oscillators’ or ‘on balance volume’, they’re doing technical analysis.

A typical financial market - whether blue chip shares, corporate bonds or oil futures - will have both of these types of traders. They will, however, rely upon a foundation of fundamental analysis.

For example, in a stock market, it’s going to be assumed that all the ‘whales’ - aka. the huge institutional buyers of huge chunks of shares, such as the giant pension funds - are going to be doing fundamental analysis. The technical traders are assuming that at least some of these players that they’re watching are watching the real world, imparting some rationality into the market.

In fact, if the level of pure technical analysis gets too high, your market can lapse into circular self-reflexivity. Imagine if every single trader on the Silk Road was simply watching the other traders, leading them all to wander aimlessly in the desert. If technical traders are basing their actions off other technical traders, who is to say that they’re not drifting into mirages of delusion?

Typically, we call those mirages bubbles.

Now, I’m not saying that every technical trader is an idiotic herd-follower - some are indeed very sophisticated. If, however, too many traders have entered markets for reasons other than rational assessment of what’s actually happening on the ground, share prices can detach from what their ‘fundamentals’ actually suggest.

Historically, though, this detachment from reality provides lucrative opportunities for more cool-headed traders to come in and bet against the delusional market. For an entertaining example, watch Steve Carrell’s portrayal of Steve Eisman in The Big Short, who bets against the mortgage-backed securities market after investigating the underlying loans, housing and tenants.

Alternatively, when prices drop through panic to levels not justified, people like Warren Buffet come swooping in to pick up cheap deals at fire-sale prices. Theoretically, bubbles and busts will be moderated by these more sane investors, who pride themselves in seeing through the irrational exuberance or depression.

The fundamental-less market

This brings us to Bitcoin. Perhaps the most notable feature of the Bitcoin market since its inception has been the almost total absence of a class of true fundamental traders.

When Bitcoin was first released, there was no ‘market’ for it. It was simply a branded digital token that could be moved around. If you tried to sell it, most people would look at you and ask ‘what is it?’ It took a while for a dollar price to form, but even when that happened, few buyers had any strong idea of how to justify the specific price they bought at.

As the cultural hype around it grew, newly established crypto traders tried to figure out models that could explain - from a fundamental perspective - why Bitcoin was priced at X, Y or Z. Was there some deep fundamental reason it suddenly went up by 34%, and then crashed by 18% the week after? Were these price changes driven by a class of market detectives who were investigating the real world conditions that would rationally point to such sudden changes?

Well, the answer is no. It was mostly random, driven by guess-work and surges in market hysteria or depression.

Prices in any market go up if buying pressure is higher than selling pressure. In fundamental analysis, though, it’s assumed those pressures have some external referent that can be studied. For example, if a share goes up or down by 40%, it should mean some very big event has happened in the real world to affect the company’s future.

When asked to account for the price change, you cannot just say ‘prices are going up because more people are buying’. You have to account for why they are buying, and saying something like ‘they are buying in anticipation of others buying’ is highly dubious, because you’ll in turn have to account for why these others are buying. If those others are buying in anticipation of that same thing, your market is in a state of self-referential delusion or faith. That’s not a rational model.

So what is a rational model? Well, a financial contract like a share or bond has a theoretical ‘fair’ price, because it’s a legal contract that guarantees the holder a cut of a whole series of future cash flows. In the case of bonds these are interest payments, and in the case of shares they’re dividends.

The Finance 101 method to work out the fair value of a share, for example, is to guess the future revenues of a company and subtract from that the predicted future expenses, which leaves you with a whole series of estimated future profits. You then take those and ‘discount’ them, which is like shrink-wrapping them into the present to account for the time and risk it will take to reach them. This leaves you with a theoretical ‘fair’ price, which you can then compare to the actual price in the market, so that you can make your trading decision.

Now, this isn’t perfect, because the world is chaotic and you cannot perfectly guess what the future profits will be - hence the wide divergence of opinion on the correct price of a share - but at least there’s a theoretical model. The arguments about the share price of mining giant Rio Tinto, for example, will involve real world things, like what the global demand for aluminium will be in future, which in turn requires estimates of aluminium consumption in - say - the construction and aerospace industry.

What, though, is the theoretical model for pricing something like Bitcoin?

Well, the reality is that there’s really no ‘rational’ model for assessing whether a Bitcoin token is under or overpriced. The reason for this is that a Bitcoin token is a limited edition digital object, not a financial contract.

The fundamentals of Bitcoin

The job of a fundamental analyst is to ignore the hype being pushed out by promoters, and to assess something from scratch. For someone like Warren Buffet, it’s not good enough to say something like Bitcoin represents freedom from oppressive states, or Bitcoin will save us from inflation. Taking those statements at face value is just a form of faith (just like a person might uncritically accept a sales pitch from some dodgy stockbroker in The Wolf of Wall Street). I mean, it hypothetically is possible that the pitches are true, but you can’t just assume that.

So, let’s ignore the Bitcoin hype-machine for a moment and ask some very basic questions.

Firstly, what does holding a bitcoin token give you? Hmm, in itself, kinda nothing. I’ve held Bitcoin, and I can vouch for the fact that it just sits there in your digital wallet. There are no dividend or interest payments attached to it, and it gives you no voting rights in any enterprise. It’s like holding a bar of copper, except that Bitcoin is a digital object with no industrial use.

Ok, so what can we say about the object? Well, it’s a digital collectible that has a limited supply, a decentralised transport system for moving it around, metallic branding pasted over it, and a highly vocal community that chants stuff about it. I’m going to ignore that latter community for now, because they are - at least initially - just a distraction to the fundamental trader.

Let’s delve deeper into those somewhat sparse fundamentals. The digital collectible itself is just a number written out after the decentralised clerks (‘miners’) that maintain the transport system expend energy (technical note: unlike the numbers written out in the banking sector, these numbers don’t represent a liability to an issuer - aka. they are not a form of ‘voucher’ that can be redeemed).

There’s a hard limit placed on how many of these numbers can be written out in total (21 million), but once ‘mined’ or ‘minted’, you can perform mathematical operations on them, like splitting them and passing a piece to someone else. These movable numbers are attributed to particular addresses and woven into a timeline that acts like a massive account database. Once replicated and distributed across a network of peers, this timeline becomes largely unchangeable by central parties, giving the numbers the feeling of being ‘censorship resistant’.

These numbers get called ‘tokens’, and they have come to have a US dollar price, and given that you can pass them around, you can use their dollar price to engage in something called countertrade. Countertrade is the process whereby you use the resale price of one thing to ‘buy’ something else of equivalent price. You can do this with any priced good in the entire world - from bags of wheat to vintage records - but Bitcoin happens to be highly countertradable (see The Art of Crypto Kayfabe).

This is what people are doing when they claim to ‘buy’ goods and services with Bitcoin. They’re paying for, let’s say, a camera, with the US dollar resale price of Bitcoin (to see why this is easily empirically verifiable, see this footnote1).

Given that the token is highly movable and branded with monetary imagery, however, countertrading it loosely feels ‘money-like’ (unlike, for example, if you were using vintage records to engage in the same process, which would feel more like ‘barter’).

This, however, is totally dependent on the dollar system in order to work: if Bitcoin was priced at $0, it would cease to have counter-tradeability (aka. nobody is giving you a camera for a digital object that cannot be resold for dollars).

Circular faith as a source of strength?

Many people have tried to use the above fundamental features of Bitcoin to make claims about its fundamental strength. This, however, often leads them into tangled webs of circularity.

For example, a person believes that Bitcoin should have a US dollar price because its exchangeability (aka. counter-tradability) is useful for bypassing the bank payments system. From one angle they are correct - countertrade is indeed useful. But, Bitcoin’s counter-tradability is an emergent phenomenon based on its US dollar price, so relying on appeals to that phenomenon to justify that price is circular and shaky as hell.

Here’s another example. Someone says that it’s the censorship resistant nature of the transport system that gives the tokens value. This is like saying that it’s the train tracks that give the cargo on a train carriage value. They’re basically saying: the thing I’m moving has value because it can be moved securely without interruption from authorities. What is that supposed to mean? I’d agree that, without the train tracks, a cargo might not end up being useful to an end user who needs it somewhere, but it’s not the tracks that are imparting the value.

Here’s another classic: Bitcoin is valuable because we use loads of energy to produce and secure it. This is like saying that a car, a water bottle, a haircut, or a giant statue of Stalin is valuable because people had to use energy during the production of those things. Every act of production in the world uses energy, not just Bitcoin. I could expend an enormous amount of energy creating nuclear waste, and I might build a highly secure system for moving it around, but that does not imbue it with use value. For more on why this argument is bullshit, see this footnote2.

Ok, but what about using more cultural factors as a basis for strength? For example, gold has a huge and resilient market, and a large part of that is based on a historic fetish for the colour and texture of the polished metal. In fact, actually useful metals tend to get called ‘base metals’ and are less culturally valued, while ‘precious’ metals are associated with vanity, status and religious ritual.

Could Bitcoin be like a ‘precious’ digital object?

Hmm… well beyond its branding, Bitcoin is of course colourless and textureless binary code, so it’s not going to compete on sensory desirability. Could it, however, come to have cultural weight through - for instance - its edgy story? Could it be that some see a certain beauty in the elegance of the cryptography it utilises? Perhaps people feel a sense of mystique around it due to its mysterious founder? Certainly, politicised mysticism could be the basis for a strong community to form, and they might attach their self-identity to the object, and - in turn - have an ongoing desire to buy it in order to affirm that identity.

So, my fundamental analysis must eventually lead me to that chanting community that surrounds the object. I might, for example, study the phenomenon of HODL culture in Bitcoin. HODL is a contraction of ‘hold on for dear life’ (and originally a misspelling of the word HOLD). HODLers are a cultural group who dedicate themselves to never selling Bitcoin, and to only buy it. HODL culture comes along with memes about the strength of the hands that hold on - such as ‘diamond hands’ to refer to exemplary HODLs who hold at all costs.

To a typical financial trader, such behaviour is very alien. HODLing, as a cultural principle, involves no fundamental analysis, or even technical analysis. It’s just a pure faith that the price will go up as long as you hold on. Of course, if such a cultural movement embeds itself, and begins to grow, that becomes a self-fulfilling prophecy, because every new HODLer is taking supply off the market, putting upwards pressure on the price.

So, if I had some metric to measure the spread of this memetic movement, I might be able to calculate how this would affect the overall price over time. That would be a form of ‘fundamental’ analysis… or at least analysis of fanatical fundamentalists.

In reality, though, that’s a weak metric. Bitcoin has no sensory characteristics (i.e. it doesn’t look, taste, smell or sound like anything, and cannot be stroked), so to build a strong culture out of it the community either has to resort to quasi-religious imagery (as if it were a supernatural entity), or political appeals. After all, most religions are based on an ineffable empty centre, an article of faith that can never be proven or disproven, and religions can be very strong and lasting.

The appeals being made in HODL culture, though, aren’t really about spiritual transcendence. They’re about US dollar gains, which kinda takes away from the sense of reverence. Those gains can be given a political spin, but I suspect that a lot of the supposed HODLers are actually quite flaky. Given this lack of true fanaticism, our fundamental analysis must assume that HODL culture could very well collapse into DRPO - ditch, run, pull out - culture very quickly.

HODL vs. FOMO culture

Beyond HODL culture, though, what is the model most people are using when they buy Bitcoin? Well, it’s pretty simple. Their model is ‘I’m assuming that many more people will be trying to buy it in future when I’m trying to resell it’.

This is a flawed model, because those people in the future are going to be thinking the same thing. There’s very little recourse to fundamentals, and this is the reason why Bitcoin sometimes gets accused of being a ‘Ponzi scheme’.

In reality, Bitcoin is not a Ponzi scheme. A true Ponzi scheme involves a sham investment company telling you that you’ll get great returns if you invest your money with them, but then taking your money and giving it to earlier investors (which then appears to fulfil the sales pitch in the eyes of those early investors).

The vibe of a Ponzi scheme, though, is one in which new people are required to give older investors their returns, and this vibe does correspond with a lot of the behaviour of the crypto industry. Given that there’s no true ‘fundamental’ way to convince people of what the price of the tokens should be, the only thing the industry can do is assure us that ever more people will be coming in, and that we must get in before them, lest we miss out. Below, for example, is an ad I saw in Berlin earlier this year. Translated, it means ‘why didn’t I invest in Bitcoin?’

From a fundamental analysis perspective, this marketing approach is worrying. It tells me that the industry is relying on FOMO, rather than appealing to some real world fundamentals.

Perhaps, however, the spread of FOMO can be treated as a kind of measurable ‘fundamental’ cultural factor, much like the spread of HODL culture. It’s certainly very possible that the price of Bitcoin could be pushed up a lot more if ever more waves of people are convinced to come in through FOMO.

That said, even in a global population of eight billion people there are ecosystemic limits to how many people are prepared to expose themselves to this object for any length of time. After all, most people need to live, and even if they do hold fragments of Bitcoin as a FOMO ‘investment’ for a period, they need to liquidate it at some point to pay for groceries.

To predict the effect of FOMO, a fundamental analyst needs five pieces of empirical evidence, as follows: what percentage of the world has been exposed to the viral narrative, how susceptible are they to it, what are their savings, what percentage of those savings are they ever likely to put towards buying up Bitcoin, and how long will they hold it before they start selling?

Understanding those metrics over time might start to give you some basis for mapping the price, but FOMO always relies on at least some vague sense of an underlying story, so understanding this shifting buyer base also involves mapping how the story has shifted over time.

Choose your own crypto-adventure

I was involved in the early Bitcoin community, and at that time they were still using the original story, which was that Bitcoin was a monetary system designed to destroy the US dollar and the financial sector. There were limitations to the appeal of that story, but those were soon overcome by re-characterising Bitcoin as a money-priced asset you could invest in to get better US dollar returns than shares.

Over time a whole proliferation of new justifications came out. It’s been cast as a way to save people in weaker countries from inflation, or to bring about a new golden age for powerful countries like the USA. It’s been pitched as a way to solve climate change by regulating the energy grid, and as an anti-woke way to stick-it to social justice warriors who care about climate change. It’s been imagined as the ultimate attack on states, and as the ultimate securer of America First state power.

The narrative is inherently flexible - like a ‘choose your own adventure’ book - because the thing you’re dealing with is a limited edition movable secure digital object that has no characteristics other than the fact that it’s limited edition, movable and secure. All the claims made about it are essentially unfalsifiable, because they can always just be deferred into the future - in future it’s going to be the new currency.

This cargo-cultish vibe originally irritated elite financial sector traders. To get a job as a Goldman Sachs trader, for example, you had to actually prove that you could do some form of rational analysis. Simply jeering and ranting didn’t cut it. The crypto industry, though, has heavily showcased its scruffy ‘unprofessional’ story, to prove that it’s a kind of ‘everyman’ form of populist finance that stands in contrast to the elites. Ha, those investment bankers and university professors are scoffing at you. This means you’re on the right track!

The crypto industry has always relied on appealing to the proverbial ‘man in the street’ rather than the professional trader, and this is why it borrows heavily from the day-trading industry, which uses exactly the same marketing strategy. The most interesting political moment for that industry was the meme-stock manias of 2021, in which armies of small day-traders were imagined to take on the giant hedge funds that really control the financial markets.

Needless to say, the crypto industry has leaned into both the libertarian political philosophy embedded in Bitcoin’s design, and a nihilistic ‘degen’ culture which sneers at sophistication. It turns out that this combo is quite appealing to a certain young male psyche, and that same psyche was also susceptible to being pulled into the rhetoric of the Trump campaign, with its seemingly rebellious and revolutionary middle finger up to the ‘liberal elite’. This is why the crypto industry and Trump entered into an alliance. To use YouTube language, they did a collab to expand their respective subscriber bases.

Unrealized gains from unrealized patronage

Trump is a political entrepreneur, and if entrepreneurs like to create new markets, political entrepreneurs like to create new constituencies. He (and advisors like Bannon) has been skilled at tapping into various feelings of discontent among disparate groups, and focusing them all on an apparent common enemy.

This enemy - which we might generically label the ‘liberal elite’ - is some strange Frankenstein that can unite a motley crew of anti-woke social conservatives, very online young men, rust-belt workers, Christian evangelicals, old anti-corporate activists, anti-vax wellness influencers, anti-environmentalist oil industry execs, anti-immigration nationalists, and so on.

The ‘liberal elite’ ranges from journalists investigating corporate abuse through to big tech shareholders, broke university students, Roman history professors, neoliberal financiers, musicians, actors and corporate execs. The Trump administration includes many of the latter, but this inconsistency doesn’t matter because it’s the spectacle that counts. It’s the kayfabe, the staged extravaganza that people enjoy.

The point though, is that a movement built in opposition to a Frankenstein enemy will be a Frankenstein in itself, and Trump has to feed it because he wants his creation to love him. To achieve this he hands out patronage. Since taking office he’s been ticking through a laundry list of actions designed to try to please each constituency.

This is tricky, given that automation lords like Musk are diametrically opposed to, for example, transport workers threatened by automation. Part of the thrill of ‘deal-making’, however, is somehow to align all these groups through a series of hacks. Trump takes pleasure in attempting to centrally plan the global economy, like getting the Chinese government to agree to buy soybeans from his farming base in exchange for being released from certain tariffs, and so on.

The crypto industry is a Trump constituency that has yet to fully receive its reward, and it also offers potential for those hacks that Trump enjoys. For example, the crypto industry has long pitched crypto speculation as a way for the everyman to get rich, and this is a convenient story for a conservative government that wants to gut the social security system that the everyman might also rely upon.

This goes a long way to explaining the alliance between Trump and the crypto industry, who poured a huge amount of money into his campaign. This alliance has been strengthened by the fact that Trump’s sons have been staking out a heavy position in the industry (avoiding claims of gross nepotism by claiming that they’ve been blocked by the liberal elite from other means of getting enormously wealthy).

Trump and Melania also cashed in on their crypto supporters by selling them memecoins, but - beyond some sense of euphoria at an impending new golden age - people are buying into such coins because they believe that Trump will order a massive liberalisation of the crypto industry, and one that will indirectly hand out patronage in the form of higher prices.

This promise was explicitly built into Trump’s election strategy. He touted the idea of the so-called ‘Crypto Strategic Reserve’. This would involve the biggest whale of them all - the US government - strategically manipulating the crypto market by buying up the limited edition tokens, under the pretence of securing national interest (as if Bitcoin was like oil).

That plan hasn’t materialised in any meaningful sense yet. In fact, there’s a latent sense among the crypto community that not enough patronage has been handed out, and that more actions are probably forthcoming once Trump is done with his other projects. Big investors are strategically lining up in anticipation.

Some see as an example Michael Saylor, the tech exec who largely dropped the idea of focussing on productive enterprise, and simply pivoted to buying up huge amounts of Bitcoin. His company MicroStrategy is now the biggest corporate holder of Bitcoin in the world. It still runs as a software business, but de facto has become a giant Bitcoin ETF, as witnessed by the correlation of its share price with the Bitcoin price.

In fact, Saylor has now become a role model for a whole bunch of copy-cat corporate execs. Rather than investing their profits into new production or employment, we’re seeing hotel chains, healthcare companies, biotech companies, vape manufacturers, and electric car producers direct their funds to buying up tokens. As the Financial Times reports:

In the year to August 5, some 154 public companies have either raised or committed to raise a combined total of $98.4bn in order to buy crypto, according to crypto advisory firm Architect Partners. Before this year, $33.6bn had been raised by just 10 companies…. Even Trump himself is getting in on the action — his family media company raised $2bn in July to buy bitcoin and related assets.”

These new whales will obviously welcome the arrival of more buying pressure into the scene, and that’s currently being helped by the fact that Trump just passed orders to open up the gigantic US 401k pension fund sector to ‘alternative investments’, which includes crypto.

Americans with 401k pensions are normally steered towards lower risk asset classes, but the new measures are designed to bring them into crypto speculation. This mainstreaming is all the rage. For example, J.P. Morgan Chase is now getting into bed with Coinbase, to give Chase customers access to the crypto platform via their bank accounts.

When watching this, you might sense that perhaps all these players know something about the future that you don’t, but the reason they’re leaning in isn’t due to fundamental analysis. It’s not because J.P. Morgan truly believes that Bitcoin will become a global currency or the basis of the financial system. It’s because they’re doing technical ‘trend-following’ on a vast scale, watching the actions of the enormous whale that is the US government, and seeing how deeply embroiled its new ruling dynasty is getting within the crypto markets. They don’t want to miss out when new patronage is handed out. The fact that so many people are predicting this is why Bitcoin hit its highest ever price last week.

The whale in the air

So, let’s say Trump uses the power of the US state to push up the token price by 100%. His average follower, who might have had a couple thousand dollars invested, makes a couple thousand bucks profit. Maybe that helps ease the financial strain on them for a couple months. Michael Saylor, though, makes about $71 billion in that same move.

At that point, people like him may well think about cashing out. After all, what’s the point in holding this object if you’re not ever going to sell to realise your gains?

But, what would begin to happen if he, and other whales, start selling? Well, that’s going to push down on the market, and this is where the lack of fundamentals really starts to get dangerous. In a typical market, the actions of a whale pushing down the price might create good deals, in which case a whole class of fundamental ‘value’ investors and traders come swinging in to act as circuitbreakers.

In a market without these players, though, that drop can very quickly escalate into a precipitous free-fall. After all, the vast majority of people are using a crude model that says ‘I buy Bitcoin because I believe I’ll be able to sell it to others for a higher price later’. A big price drop dents that belief, and - in the absence of ‘fair value’ models that can tell you if the price has gone way below its fundamentals - faith can quickly evaporate…. or else slowly weaken over time as the story gets stale.

Now, here’s a rather amusing irony. One of the big crypto-libertarian lines for supporting the Trump government was that the US government could build up a Crypto Strategic Reserve to hoard tokens that would then appreciate, and enable the government to pay off the US debt.

Let’s think that through. Let’s imagine that the US government builds a huge crypto position. To pay off debt, it would have to go into the markets to begin selling those holdings for dollars, like a colossal whale coming in. But what happens when the biggest whale of them all begins selling into a market that’s full to the brim with not only fickle technical traders, but also precarious pensioners who’ve been encouraged to steer their savings into it?

Well, I’ll tell you. Those traders shit themselves, drop their holdings and run like hell, sending the price plummeting downwards with no emergency brake to stop it. As the US government tries to liberate itself from its national debt, Bitcoin falls by say, 70-90% in a single day. That would be very bad for not only the retail traders and 401k pensioners, but also Michael Saylor, all the corporate treasuries, and the financial sector players. As the market evaporates, the US government is left holding a bunch of deprecated tokens that it cannot sell without crashing the market more.

On the other hand, if the US government isn’t planning to wade into the market, what exactly are all the other whales lining up for? What is their model for the future appreciation? After all, big institutional investors don’t HODL out of some kind of faith or belief in populist finance. They are Harvard-educated neo-liberal elites. No, I think they’re betting on another four-letter acronym. TBTF.

Too big too fail.

I suspect their investment thesis is as follows. They believe that, having hitched itself to the crypto industry, and pushed the market to a new high while exposing vulnerable savers to crypto, the US government will become too enmeshed to retreat. It will be left in a position in which it cannot tolerate a huge crash. Stuck in a state of capture, it will take on a new permanent role in propping up the markets.

Of course, I could be totally wrong. I could be one of those ‘no-coiners’ who is just bitter and jealous. But hey, here I am predicting the ongoing appreciation of the price through government manipulation, so all the coiners should be happy.

Unless of course the manipulation stops.

One the earliest slogans of the Bitcoin community was, ‘don’t trust, verify’. And yet, hoping that the massive whale stays there, suspended out of water, is one helluva leap of blind faith.

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A warm memory from my young childhood was watching World Wide Wrestling Federation battles with my grandmother on her TV in the dusty town of Masvingo in Zimbabwe. One of the stars of the Federation (which is now called WWE) was The Undertaker. He scared the crap out of me, but I was dazzled by him. He’d stare down his challenger with demonic eyes. He’d even be carried onto stage in a coffin, and by the end of the fight he’d try to lock his opponent into it.

He also had this sidekick called Paul Bearer, who’d accompany him as a slithering hype man.

Paul’s job was to ‘summon’ The Undertaker and release him like a hell-hound against his opponents…

I was vaguely aware that this team was engaged in a gimmick of some sort, especially because all the other wrestlers also had their own hype-men, unique character and costume. They weren’t just fighters. They were stories.

In fact, ‘Gimmick’ is an official piece of wrestling jargon used to describe the creation of these unique personas.

As a kid, I was partially aware that the characters were acting a bit, but I did actually think the fights were real. In wrestling jargon, they’d call my young self a ‘mark’, someone who doesn’t see through the ‘Kayfabe’ - the fact that it’s all staged.

For a long time there was a big taboo in wrestling against breaking kayfabe. An old-school guy like The Undertaker would never break character, but last year I was delighted to see him finally do it. He removed his Gimmick, and appeared as his true self on the YouTube hit show Hot Ones. The terrifying Undertaker is actually a guy called Mark Calaway, and he seems very sweet and thoughtful.

In practice, kayfabe is hard to pull off, and it takes real skill to fake a fight without hurting yourself. If you’d like to get a sense for this, watch Calaway and Mankind - Mick Foley - do this fascinating and hilarious breakdown of their notorious 1998 Hell in a Cell Match, which went badly off-script: after being accidentally thrown through the roof of a cage, Foley’s tooth was stuck up his nose, and Calaway was whispering to him to call off the fight, while pretending to smash him with a set of metal stairs.

The instability of kayfabe, though, is also why it’s important for the industry to lean in on Gimmicks. If the crowd is vaguely aware that the fight isn’t entirely real, they at least need enough storyline to suspend disbelief, like they might while watching a film. The fact that we enjoy plays and novels shows that we don’t mind things being not entirely ‘true’, provided that they’re entertaining and tell us something about ourselves. In fact, as a wrestling spectator, you can experience yourself as part of the performance, getting caught up in mock horror and elation as part of a group.

So, that leads to another key piece of wrestling jargon - The Feud. This is a long-running staged battle between two fighters that intersects with other storylines, and creates dramatic tension for the fighting soap opera. A Feud might take place between a ‘face’ - a good guy - and a ‘heel’, a villain deliberately set up to be disliked by the fans. The organisers might have a ‘plant’ in the audience, a paid actor who taunts the heel and gets attacked, thereby attracting ‘heat’ - anger and disapproval from the audience, who might boo and hiss like rowdy theatre-goers in 16th century England yelling at a bad guy in one of Shakespeare’s plays.

The World Wide Wrestling Federation rebranded to World Wrestling Entertainment (WWE) following a legal dispute, and in doing so decided to tell people that it wasn’t an actual sports federation - it was entertainment. If you wanted to watch actual fighting, you could go to UFC - the Ultimate Fighting Championship - where people actually do beat the hell out of each other. WWE and UFC actually went through a merger in 2023, and are now owned by the same parent company.

The World Wide Investment Championship

I’m telling you about this, because in many ways the investment world is also like a fighting league, in which different investment assets battle it out. The assets range from the sober, dull, and solid - like bonds in a blue chip corporation - to the extreme and clownish, such as lottery tickets and roulette gambling, which nobody truly believes are serious contenders, but are fun nevertheless. It’s a bit like UFC and WWE merged into one, so let’s call it the WWIC - the World Wide Investment Championship.

In all cases, the ‘fighters’ in this championship want you to back them by putting money in. They parade around, showcasing their feud with some other asset - stocks vs. bonds, bonds vs. real estate, real estate vs. fine art, fine art vs. fine wine, fine wine vs. shares in a restaurants that sells fine wine, shares in restaurants vs. shares in games companies, shares in games companies and restaurants vs. emerging market bonds, emerging market bonds versus gold, and so on.

They’re all there for you to choose, like selecting a fighter in an arcade game…

Each fighter will attempt to attract you with their Gimmick, and each will have its own unique story and hype-men.

For example, financial assets like shares and bonds are united in being ‘productive’ - in the sense that you’re handing over money for a financial contract (see my Lego Model of Financial Capitalism), and that money will theoretically be used to build new productive enterprises in the world, which can give rise to new products that get sold, leading to interest and dividend streams coming back to you via the contract.

So, a hype-man for shares might go around telling you how ingenious a particular plan for extracting profit like this might be: Invest in Australian bauxite mining! Big global demand for aluminium but big shortage of bauxite to extract it = big sales! Major opportunity!

Something like gold, by contrast, is essentially ‘unproductive’. It’s just metal that was already mined. If you buy it, it does nothing. It just sits there, but you can try to resell it later for more. That’s the only way you’re going to extract profit out of it. Share hype-men would probably diss this as ‘unproductive speculation’ rather than ‘productive investment’, but gold’s hype-men will say hedge yourself against risk and inflation! When everything else goes to shit people want shiny yellowish metal! Buy gold!

These stories seem very diverse, but they’re united in one thing. The hype-men and fighters are all parading around in the same investment universe. Much like UFC and WWE host a stable of players who fight each other under that league’s banner in a shared fighting ring with shared referees, so all these investment assets turn up in ‘the markets’, competing for your money. You hand that money over for the asset, and then hope to extract money out later, either by reselling the asset (capital gains) or by receiving an income stream from it (dividends, interest, royalties etc).

Switching between WWIC sub-leagues

For the average person, ‘investment’ means letting go of money and hoping that it will come back later in a greater amount, but - with some contortions of language - some professional traders claim to ‘invest in currency’. This is a confusing concept, but it emerges due to a little glitch in reality: we live in a global economy with a global monetary system, but experience that within national borders. There are two things to understand about this:

1. The global economy is a meta-system made up of a whole series of subsystems called ‘national economies’

2. And, the global monetary system is a meta-system made up of a mesh of national currencies woven together through the US dollar (hence it being called the global ‘reserve currency’). Think of this mesh as a network-of-networks

So, if you’re one of the tiny percentage of people who is a professional currency trader - someone who professionally occupies the borderlands between each interconnected currency network - you can attempt to secure profit by switching between sub-system currencies (‘FX trading’).

In our metaphor, FX trading is not the process of ‘selecting a fighter’. Rather, it’s more like selecting a sub-league, like switching between Latin American UFC and Australasian UFC, all of which are part of Global UFC. So, in the image below, you’ll see that all the assets are fighting each other under the Dollar WWIC.

The WSMOSC

For the vast majority of people, money is not an optional ‘asset’ that you ‘invest’ in. Rather, it’s literally how you survive in a market economy where everything is priced in money. In this sense, investment assets - the fighters competing above - are actually also competing with everything else priced in money, like baked beans, smartphones, and packaged holidays to Greece.

In fact, when you zoom out, you’ll see that the WWIC is itself part of a much bigger league-of-leagues called the WSMOSC - the World Wide Spend Money On Stuff Championship. If you want to get a sense for the scope of that, see the image below. The WWIC is on the right, but one of its biggest competitor leagues is the WWCC - the World Wide Consumption Competition, where things like baked beans compete. If people are throwing money into that ring to buy groceries or cars, they’re not buying shares, or bonds.

In the end, all these leagues fold into each other, and the main slogan of the WSMOSC is Spend Money on Stuff Priced in Money. The easiest way to see this basic distinction is by walking into a supermarket. You see lots of diverse goods on the shelves, but they’re all priced in the same currency. When you zoom out, and abstract that to a global level, we have a giant ‘supermarket’ of Stuff, with millions of different things (‘fighters’) competing to get bought with the global monetary system, which is that network-of-networks dominated by the US dollar.

The dynamics of the ring

So let’s return to the WWIC. In our metaphor, the US dollar system is a core part of the main ‘ring’ where the investment assets get in and fight each other. The reason a particular share price on the New York Stock Exchange is going down is because more people are trying to sell it for dollars than are buying it, and the reason that another share is going up might be because those same people are redirecting their dollars to buy that instead.

In any case, the dollar remains unaffected, much like WWE or UFC remains intact after one fighter wins and another loses. It’s true that the dollar itself might be affected if everyone piles out of the NYSE and into the Tokyo Stock exchange - switching sub-leagues - but the overall monetary system, the network-of-networks, remains unaffected.

By contrast, something like inflation is a system-wide phenomenon that comes to affect everything that’s priced in a currency. It’s a bit like the UFC or WWE being unstable as a whole. It might have impacts on the individual fighters within those leagues, but it’s not necessarily the core part of their individual feuds. It’s more like they’re trying to fight each other in a shaky or shifting ring.

It’s true though that some of them are better than others at doing that, hence Gold’s hype-men will shout out ‘Gold excels when the ring is shaky!’ Share hype-men, Real Estate hype-men, and Fine Art hype-men all make the same claim though. In fact, when I worked in high finance, there were genetically-engineered fighters called Inflation-Linked Bonds designed specially for that.

The Contestant from Parts Unknown, and the Meta-Feud

Now here’s a little bit of wrestling lore. There’s an old practice of obscuring a fighter’s actual place of origin and labelling them as coming from ‘parts unknown’. This was done to increase the sense of mystery around who and what they were.

Perhaps the fighter also concealed their identity behind a mask, allowing for audience members to project their own hopes, dreams, and imaginations into the character. My favourite masked wrestler was Ray Mysterio. He was actually from California, but he appeared in wrestling culture as the mysterious guy from south of the border, taking on the all-American boys.

These ‘mystery man’ Gimmicks have always been popular, but another enticing storyline in wrestling culture is the ‘meta’ feud, battles that take place for management of the league. One variant is the ‘authority storyline’, in which big bosses struggle for control of the business. Here’s an iconic example: Ric Flair battling Vince McMahon, the long time boss of WWE, for 100% ownership of the company.

At other times, it might be a defiant fighter that has a beef with the league bosses. This can be staged as part of the other storylines: for example, maybe the management won’t let the fighter take on his rival, so he’s going to take down the system. Maybe the management does corrupt ‘hand of God’ interventions to favour one player over the other, leading the player to seek vengeance and bring justice. Maybe he smacks the referee with a chair, because the latter is biased. Imagine The Undertaker walking into the ring, challenging the big bosses to a duel and shouting “I’m going to bury you WWE!”

So, what do we get when we combine these two storylines - the Contestant From Parts Unknown, and The Meta-Feud - and place them into the WWIC?

That’s right. Bitcoin.

Picture this scene. A procession of hype-men leads a mysterious robed figure towards the ring. They shout slogans, like: Hailing from parts unknown! Scarce! Limited Edition! Unstopppppabbllle! Censorship resistant! Destroyer of corruption. Breaker of empires. Bringer of order. Maker of fortunes! Introduuuuuuuuuucinggggg, the Greeeeeaaaaaaat DOLLAR-KILLAH!

The figure gets into the ring, and tears off their robes. The first thing you notice is that they’re dressed like a referee.

The dual storyline

Bitcoin probably has the loudest hype-men in the history of the WWIC. I’ve even been among them. In the very first article I wrote about Bitcoin in June 2012, I said this:

More than anything, I have the sense that Bitcoin is a cult. A cybernetic cult. An anarchic techno-pirate, quasi-mystical collective on a mission to subvert the global monetary system. I guess that’s why it attracts me.

That’s the original storyline. Bitcoin’s entire reason-for-being, apparently, is to tear down the current establishment, and in particular to tear down the biggest management faction in The League, the US dollar system. In this story, Bitcoin is uninterested in the other fighters. Rather, it wants to be the currency for all the others. In other words, it wants to put the WWIC, and the WSMOSC for that matter, under new management.

In this storyline, the hype-men talk about the corruption, coercion, debasement and generalised hedonism of the world’s central banking establishment. In this story Bitcoin appears as a pure-hearted seeker of justice, like Galahad in King Arthur’s legends.

But wait, it gets more complex. Such a Galahad risks being seen as a naive romantic, so Bitcoin’s hype-men actually have a second storyline too. In this one, Bitcoin is a dickish brat that wants to destroy the other fighters while staying in the Dollar WWIC. The hype-men swagger about bragging about how it’s ‘going to the moon’, doing much better than all the other assets, as measured by dollar returns.

The Tag-Team

These two storylines are in fact incompatible, but the Bitcoin hype-men are very skilled at mix-and-matching them. In fact, they get them to operate as a tag-team.

You probably know the term ‘tag-team’ because it’s one of wrestling’s most famous buzzwords. You have a team of two people, but only one is able to fight at any particular point. The other has to stay outside the ring until the other ‘tags’ them by slapping their hand and allowing them to jump into the action. So, Bitcoin’s great power is it’s ability to tag between it’s two separate characters:

1. The first is The Great Dollar-Killah, which is that character with the meta-feud storyline in which they want to replace the management

2. The second is The Mighty Hodlr, the cocky fighter that disses all the other fighters, and brags about how high its dollar-returns are

Tagging between these characters shifts the interpretation of any particular sequence of action. For example, when Bitcoin is in Hodlr mode, a rise in its price is called asset-price appreciation. It’s beating the crap out of the other dollar-denominated fighters. The same thing in Dollar-Killah mode, though, is - apparently - ‘deflation’: it runs a more stable ring, or something like that.

If the price is going down, though, the hype-men very quickly tag the storyline out to Hodlr mode. That’s because they don’t want to say that a 30% drop in the price is 30% ‘inflation’. Rather, they turn it into a defeat-and-comeback storyline, in which the Mighty Hodlr is down but not out, and will return in greater force in the future.

More generally, this switchability is important ideologically, because it enables the hype-men to confuse the crowd with all sorts of mind-bending gaslighting. They keep fluctuating between characterising their champion as sometimes a fighter, sometimes a referee, or sometimes simultaneously both.

The Signature Move: Countertrade

This tag-team action comes together in Bitcoin’s signature move. Here’s the sequence:

1. It arrives in the ring as The Great Dollar Killah. It comes branded with all sorts of ‘money’ bling, garb that makes it look like a referee. The hype men build the Meta-Feud storyline to get the interest of the crowd, but then encourage the crowd to throw their dollars at it (rather than throwing their dollars at - for example - shares in the stock market)

2. In doing this, Bitcoin transforms into The Mighty Hodlr, an asset with a dollar price, fighting other assets while the true referee - the US dollar - looks on

3. Then, in the final twist, it uses the dollar price to reappear as The Great Dollar Killah. But how?

The key to understanding this transformation act is to understand the subtle concept of countertrade: if an object has a price, it also has a resale price, and a resale price can be used as payment to buy something. You can do this with anything priced in money, like baked beans, vintage wines, gold bars, real estate or anything that’s sitting on your desk right now. Let me give you some examples of countertrade:

1. You have a vintage vase on your desk that costs $100. You owe your boiler-repair guy $100, but don’t have cash on you, so you say, “hey, do you want to take this vase in payment. You’ll be able to resell for $100”

2. You buy a jacket for $100, but decide to return it. The shop-keeper says “if you’d like, you can swap it for something else of equivalent price”. So, you swap the jacket for a $100 handbag

3. You’re on holiday with your friend and you spend $100 on accommodation. They’re about to pay you half of that, but you say, “don’t worry, just get us $100 of fuel for the car and we’ll call it quits”

4. You’re an international mining company and you receive $50,000 worth of fuel from a petroleum company. You’re going to pay, but they say “we actually owe our cement manufacturer $50,000, so can you just give them $50,000 worth of crushed stone for their cement?”

In all these examples, you have different goods and services - all priced in dollars - that are being swapped with each other via their dollar resale price. In all these cases, the dollar could be used instead. For example:

1. You could sell the vase for $100 and then give it to your boiler-repair guy (or, they take the vase and resell for $100)

2. You could get a refund of $100 for your jacket, and then hand it back to buy the bag

3. Your friend could pay you $50 for their half of the accommodation and then you pay it back to them to cover your half of the fuel

4. You could pay $50,000 to the petroleum company, who then pays it to the cement company (who may then pay it to you for crushed stone)

So, what was actually happening in all the original scenarios were disguised dollar transactions that took the form of objects moving around without dollars. This is countertrading.

In typical cases of countertrade, we can see that it’s happening. Nobody thinks that you used a jacket as ‘money’ to buy that bag, or that you’re ‘paying’ for accommodation with fuel, or that crushed stone is a ‘currency’ on the FX market that can be used to get fuel. You’re just doing clearing, cancelling out dollar-denominated debts by moving dollar-priced goods around.

Bitcoin, though, has a surprisingly basic tactic that confuses everyone. It dresses up as money, thereby making countertrade look like monetary exchange. It’s really that simple.

Most people experience money as ‘numbered object that moves and then goods come’. On the surface, Bitcoin looks and feels like that. It appears to you as numbers that have a little symbol next to them. In fact, if you strip away all the branding, and zoom into what Bitcoin is at a deep level, you’ll see that it’s a protocol in which numbers get written out after energy is expended. That’s what Bitcoin ‘mining’ and ‘minting’ is.

These numbers get called ‘tokens’, but it’s a bit like etching the number ‘50’ into a rock after struggling to the top of Mount Everest, and hoping that somehow the arduous journey to get the top imbues some ‘thingness’ into those numbers. In reality, in the early days of Bitcoin, there was no thingness. I know, because I was there. Nobody had any idea as to what they were, other than tokens - numbered digital objects that could be moved around.

In subsequent years, as the hype-man army was built, this fundamentally simple reality got disguised by a whole marketing apparatus. In essence, the numbers became gilded, plated in ‘metallic’ imagery and surrounded by monetary language like ‘deflationary digital currency’. The acronym BTC was put after them, so you could say ‘who wants to buy 50 BTC’. They started getting a price, and if you can get a price for them, you can get a resale price, and a resale price can be used for countertrade. I know this, because I used to ‘sell’ things for Bitcoin, and ‘buy’ things with it, and in all cases it was actually countertrade.

Countertrading Medallions

To get a sense for this, picture yourself walking into an antique shop, and seeing all sorts of old goods with prices on them. In one corner, though, there’s a gilded medallion, engraved with attractive symbols. On the surface, a medallion sort of looks like money, but - like all the other goods - it has a price tag, in this case $100.

Next to the medallion is a lovely vintage hip flask that also costs $100, so you decide to buy them both. Now let’s imagine a weird twist. The shopkeeper tells you that the price of the flask is $100, but in the case of the medallion he calls its price an ‘exchange rate’, and - as you buy it - he says it’s an ‘FX transaction’.

But it’s not an FX transaction. You’re not a currency trader occupying the membrane between two currency networks. You’re a person buying a hip flask and a medallion with dollars. It appears that the antique dealer has been confused and taken in by the surface appeance of the medallion looking like ‘money’, and so has characterised it as an ‘FX transaction’.

Now imagine you place these two objects on your desk at home, as your boiler-repair guy fixes your heating. You realise that you don’t have cash on you, so you tell your boiler repair-guy, “hey, I just got this engraved hip flask for $100. Do you want to take it and call it quits?” He eyes it out, and says ‘nah, it will be a hassle to resell that’. You hesitate a moment, before reaching for the gilded medallion. You say “ok, how about I pay you with this… coin?”

The Trembling Dollar-Killah

Bitcoin happens to be highly counter-tradable, because it’s digital and easy to move around. To the untrained eye, that gives it the superficial appearance of the Great Dollar-Killah - you can use it in place of dollars. In reality, though, The Mighty Hodlr is in a constant speculative battle in the US dollar ring with other goods, which means its dollar price is constantly rising and falling, which causes problems for it’s alter-ego’s attempt to maintain the appearance of being money.

The easiest way to see this is to go to El Salvador, and turn up to a restaurant in Bitcoin Beach. You enter at 7pm, and look at the menu. The first thing that you’ll notice is that - actually - the menu is in US dollars, but the management is happy to accept Bitcoin. Three things then happen:

1. You order a group meal that costs $100. As you order, the Mighty Hodlr has reached a career high of $100,000, so - in its Great Dollar Killah form - Bitcoin appears as a ‘price’ for the meal of ‘0.001 BTC’. In other words, if you gave the restaurant owner 0.001 BTC, they’d be able to resell it for $100

2. Of course, in a restaurant you don’t normally pay up front. You pay at the end. You begin eating, but by 8pm the Mighty Hodlr has had a set-back in the US dollar ring. People are selling it, and buying GameStop shares instead, so it’s knocked to $90,000. This means, The Great Dollar Killah must reset to ‘0.001111 BTC’ to maintain the resale price of $100 for the restaurant

3. By the end of the meal at 9pm, you call for the bill. By this time, Hodlr has recovered to $95,000, meaning that the restaurant owner presents you with a bill for 0.0010526 BTC. Great Dollar Killah was trembling the entire meal, while Dollar - the actual price of $100 - stayed constant.

The Split Personality: The True Story of Parts Unknown

In the WWIC ring, what was actually happening above is that the true referee - the US Dollar - was standing still on the sidelines, watching a fight between, for example, Gamestop shares and the Mighty Hodlr. But here’s the big reveal. In reality, this fighter isn’t actually part of a real tag team. Rather, they fantasise this.

In fact, the true dark storyline is one of a tortured but lovable character - like Don Quixote - who has a split personality and who talks to an imaginary alter-ego that they tag in and out of the ring. As they grapple with various fighters - such as gold, bonds, rare artwork, or baked beans - they image these fights as battles against the big bosses, but there’s no meta-feud going on. Bitcoin’s price isn’t due to action on the FX markets. It’s due to people deciding that they’d rather spend their spare $1000 on a holiday to Greece, or to not spend it on a mountain bike and get crypto instead.

What’s crazy - and intriguing - about this character, is that it always arrives in the ring calling itself the Great Dollar-Killah, with hype men that use that to pump the price, relying on the crowd’s inability - or perhaps unwillingness - to tell the difference between a true referee and a false one. The battle then ensues, with the US dollar referee watching from the sidelines while Hodlr beats up other fighters, and then tags in its imaginary alter-ego via that mechanism of counter-trade that’s hard to distinguish from actual monetary exchange, because - well - the player is dressed up as money, wearing that referee bling.

But this split personality act is vulnerable, because it’s circular: to appear as the Great Dollar-Killah it must succeed as Hodlr, but to succeed as Hodlr it needs to appear at the Great Dollar-Killah. After all, Bitcoin has no other option. It’s not real estate, or fine wine, or an Australian bauxite mine. It’s literally limited edition numbers written out, and then fragmented into pieces.

But wait, isn’t all money ‘just numbers’?

This is the point where the Bitcoin hype-men will almost certainly counter-attack by shouting: all money is just numbers!

That’s where I call hard bullshit on them. The actual monetary system is a coercive and extractive credit vortex underpinned by powerful legal structures, military and the commercial banking sector around the world. That’s why it works, and that’s how the entire WSMOSC League functions. Capitalism isn’t some merry ye olde market. It’s a gigantic global organism built upon state foundations that uphold private property laws, allows corporations to exist, and hold the reins of a transnational money system that both expands and contracts.

Money isn’t ‘just numbers’, even if it appears with numbers, and the mere fact that Bitcoin is a movable numbered digital object means nothing. A flattened bottle cap found on the road, or a highly rare ornate amulet, or a piece of round plastic, could also have numbers etched into them. They could also be moved. They could also be countertraded. That doesn’t make them anything like the dollar.

Hodlr’s Achilles Heel

The real problem faced by The Mighty Hodlr is the circularity of its story. Counter-tradability is an emergent property of something that gets a price through some other rationale, but when you pierce through - and translate - the surface story of Bitcoin, you’ll see that the rationale offered is: you can countertrade this.

This circularity of course cannot be admitted, because then the story collapses. So, no wonder Bitcoin needs so many hype-men. No wonder it needs an entire industry of theologians who spin mystery around it and warp its story in all directions. I’ve seen so many of the stories over time. Some of the promoters are out there claiming it will solve climate change and poverty. Apparently it’s going to regulate the power grid. Some present it as a symbol of defiance to wokeism. Others hold onto the classic story of it being a deflationary currency to save you from the US dollar by making you rich in US dollars.

There’s something in that last argument. Something dark. Perhaps the darkest of all the secret storylines.

Here it is. The primary management faction in WSMOSC is actually called AmericaFirst Denominator Dominator. They are an old, violent and coercive faction who supports the US dollar as the dominant global currency in that big network-of-networks.

To these people, Bitcoin is a useful clown-fighter to have in their league. They like the fact that Bitcoin dresses up as a rebellious rogue referee, which the crowd love, while promising the crowd dollar returns. They know full well that this fighter doesn’t have the power to overthrow The League with its army of bouncers, enforcers and lawyers.

They also love the fact that Bitcoin promoters will do anything to avoid admitting this. The latter even have special arguments to defend against this line of attack. They say: Maybe it’s true right now that Bitcoin is just the Mighty Hodlr, but if its price increases enough, it means that it’s getting closer to being the Dollar-Killah. Somehow, provided that Bitcoin gets ever higher, it will become the management. Really? That’s like saying if fine wine gets more expensive its getting closer to being the US dollar.

No, the most it can actually hope for is to become a culturally entrenched fighter like gold. Note that gold isn’t a currency. It’s one of the contestants. Unlike gold though, which has thousands of years of cultural history behind it, Bitcoin is a shaky star fighter, because when you take the mask off, the fighter looks a helluva lot like someone being propped up by US dollar counter-trade, and a lot of people look a helluva lot like marks, taken in by the kayfabe of the Feud.

The Final Gimmick

Ah. But that’s where I’m probably the mark. After all, the WWE isn’t supposed to be real. At some deep recess in even the most hardcore Bitcoiner’s mind, there’s some awareness that they’re taking part in a performance, and it’s a fun and exciting one, in which you get to be an audience member who is in on the Gimmick, part of the grand story, part of the action.

In that meta-meta storyline, someone like me, who is pointing out the contradictions, appears as the one who is taking it too seriously. We all know it’s a joke Brett. It’s just that we suspend disbelief and enjoy the ride.

There’s a reason why Trump and Musk have partnered with the crypto industry. All three specialise in selling dreams, and many people enjoy buying those.

But, in a special cage fight edition of the WSMOSC, the very same administration that trumpets the The Great Dollar-Killah also reveals that they’re fighting for the AmericaFirst Denominator Dominator faction.

So, that leads us to our last piece of wrestling jargon. The Double Team is where two imagined enemies join forces and reveal themselves to be on the same side. It's the ultimate Gimmick, and the crowd goes wild.

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Since I began this newsletter I’ve produced a number of pieces intended to help readers see through the topsy-turvy mythologies that surround crypto-tokens. I don’t do this to ‘diss’ crypto projects*, or to mock the people who believe in their potential. A person who ‘calls a spade a spade’ is not dissing spades, but they are a threat to those who call a spade a golden sword. Likewise, the fact that I wish to call a spade a spade when it comes to crypto-tokens does not make me a crypto sceptic. I have respect for the actual capabilities of various crypto systems, but my work can threaten those those who spend their days presenting crypto-tokens as a golden sword that will slay the incumbent monetary system.

So, in the spirit of celebrating the spade-ness of spades, let’s dive into this new piece. I’m going to show how the promoters of many crypto projects try to mix categories that are typically discreet from each other in a capitalist system, and to pass off the resultant confusion as a positive zone of emergence from which new innovative hybrids will emerge. I will also show how this can all be resolved by understanding the phenomenon of countertrade.

(*Quick note: by ‘crypto’ I am referring generically to a wide range of projects that specialise in selling crypto-tokens to the public for money (or in selling tokens for other tokens that can be sold for money). I am aware that there are nuanced differences between crypto platforms, but this piece is intended to provide a general model that can be adapted to different scenarios.)

The status quo formula vs. the crypto formula

Many ordinary companies start off with a mismatch between their vision and their reality. If you launch a start-up, you might explain your vision to a group of venture capitalists, after which you might issue shares to raise money from them. The deal is simple: You give me money now to build out my vision, and I give you a legally enforceable contract that gives you a claim upon the future profits of the reality.

Once this is done, investors might sell their shares on a second-hand market, exploiting the fluctuating gap between the vision and the reality. The price of the share will change as investors guess how the product will turn out, whether customers will buy it, how much money will be earned in the process, and therefore how valuable it is to be holding a share that entitles them to a future cut.

There is a very low chance of category errors being made by the different players, because everyone knows what they are getting: the founders are getting money by giving the investors shares, and the public are getting a product. We do not find investors who believe that their shares are in fact the product or the money, and we do not find product buyers believing they have acquired money or shares.

There is little such clarity in the crypto world. The launch of a typical crypto enterprise looks roughly like the launch of a normal start-up. You start by explaining your vision, but rather than issuing legally-binding shares, you obtain money by selling ‘tokens’ to the public, but these tokens are often then characterised as the ‘money’ of a future platform being built. Rather than ending up with money in the hands of founders and a financial instrument in the hand of investors, we end up with money in the hands of the founders and… well... a sort of ‘future money’ in the hands of people who may or may not perceive themselves to be investors.

Furthermore, the token is – in many cases – presented as the product being developed. More often than not, I’m paying the founders dollars (or euros or pounds), so that they can hire developers and pay for marketing teams to build a platform that will turn my token into some kind of ‘money’. In my next Unboxing piece (available to Subscribers) I will be looking at a project does exactly this: they sell tokens to raise dollars to build out an infrastructure that is supposed to subsequently turn those tokens into a ‘regenerative crypto-currency’ to be used in a future ecologically sustainable society.

That’s but one example of this model, which has now been used countless times in the crypto world. The model causes all manner of confusion because it mixes previously discreet financial identities, but presents this as an innovation that will allow a person to fluctuate between different personas, as follows:

• The Investor Persona: The token is seldom overtly presented as a financial instrument, and has no legal rights attached to it, but I buy it with money and I’m told that I can see myself as an ‘investor’. I’m also aware that the primary way I’m supposed to exit my investment is to resell the token to others for money. This is, at an experiential level at least, vaguely similar to how a shareholder experiences themselves, watching the price of a share go up and down, and deciding whether to hold on or to exit.

• The Money-holder Persona: Unlike a shareholder, though, I’m simultaneously encouraged to experience the token as ‘money’ that I’m supposed to use for exchange. It’s a curious money, because it’s always quoted in terms of dollars (which the investor persona requires to make sense of it).

To me it is clear that these personas are antagonistic to each other, but I am told they can harmoniously co-exist. Typical narratives used by crypto promoters to explain how include:

1. Simply insisting that a movable token priced in money is the same as money. I can easily explain that it is in fact a countertrade object (see next section), but to crypto promoters the fact that the investment can be exchanged for things makes it ‘money’, because it is a ‘medium of exchange’ (see also How the ‘Functions of Money’ blind us to the Structure of Money)

2. Insisting that pricing is purely in your head, rather than an actual network phenomenon that transcends individual people. This is a complex topic, but the gist of it is that crypto promoters often say that the reason I use dollars to price things is not because the dollar system is a vast network vortex, but rather because I’m personally ‘choosing’ to see things in terms of dollars, and that I could also just choose to see the world in terms of this-or-that crypto token (this is a bit like arguing that national borders are imaginary, and that all I need to do to override them is to imagine a different border). This is how they then switch between the Investor Persona (who sees the tokens in terms of dollars), and the Money-holder Persona (who - apparently - sees everything in terms of the tokens)

More generally, there is an appeal to the unknown. When challenged about the tense stand-off between crypto tokens as investments and as ‘money’, the last resort is to insist that the crypto scene is in a transition period, that the technology is still young, and that there is some hitherto unknown hybrid form that will reveal itself in future. For a representative example of this line of reasoning, see this tweet from Bitcoin philosopher Troy Cross (he focusses on Bitcoin, but this could be applied to many different crypto tokens):

This vision of an emergent-yet-still-unknowable novel form is often pitted against any person who expresses any doubts about typical crypto narratives. It casts them as unimaginative, bound by convention, and ‘stuck in the old system’. But it is also true that someone who calls a spade a golden sword is likely to label someone who calls a spade a spade unimaginative.

In the tweet above, Troy complains that his favoured crypto-token is seen as ‘incoherent’, but crypto-tokens, like spades, are very coherent. What is incoherent is the golden sword brigade. And if there is one concept that the golden sword brigade really does not want to know about, it is countertrade, because it breaks the illusion of the apparent simultaneity of the investor persona and the money-holder persona. It does this by showing that an investor can use their investment for exchange, without that investment being money. I already did one whole piece on countertrade, but let’s go through it from a different angle.

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Learning to see countertrade

Imagine an investor holding a share in a company, and that the share has a market price of $100. They can exit their investment by selling it to someone else for that amount. We can summarise it like this:

1. $100 dollars goes to the investor that is exiting

2. Share goes to the new investor

There is, however, another – unusual – way for them to exit: they could swap their share for something of equivalent price. Imagine their friend has a jacket that costs $100, and that they desire it. Rather than offering their friend money, the investor could offer a $100 share as compensation. If the friend agrees, a share will go one way, while a jacket will go the other way. It looks like this:

1. Jacket (costing $100) to the investor that is exiting

2. Share (costing $100) to the friend

This is an act of countertrade. Two non-monetary objects have been exchanged with each other, but only by using their monetary price ($100) to decide upon the exchange ratio. Countertrade is the act of abbreviating two offsetting monetary transactions into one seemingly non-monetary ‘barter’. To see this, consider the alternative scenario to the scene above:

1. The exiting investor could have sold their share for $100

2. And then given the $100 to their friend to buy the jacket

3. And then let their friend use the $100 to buy a share

They could have done that three-part process, but it is far simpler for them to collapse the three parts into one by just handing over the share for the jacket.

Swapping vs. buying

Normally we are easily able to recognise countertrade, and it turns up in our language in words like swap. In this scenario above, the investor is not going to say ‘I am buying a jacket with my share’. They will say ‘I swapped my share for a jacket’. They intuitively steer away from monetary language because they recognise that neither object used in the exchange was money, and that the money was rather a hidden force in the background.

Much of the category-bending and cognitive dissonance found in the crypto world results from the inability (or refusal) to recognise that this same phenomenon is occurring with crypto-tokens. If I take a crypto-token with a price of $100 and swap it for a jacket that costs $100, it is exactly the same process as I described above. What I should say is ‘I swapped a $100 crypto-token for a $100 jacket’. Implicitly, I am selling my token for $100, using the $100 to buy the jacket from my friend, and then letting my friend use the $100 to buy a token.

The actual money in this transaction is in the background. It is the $100, but it is invisibilised, because:

1. Countertrade in general makes money fade from sight

2. In the case of crypto countertrade in particular, one of the goods involved in the swap has the superficial appearance of money, so falsely gets credited for the role through its higher visibility than the actual money that has faded from sight

Let’s hone in on Point 2 above. Crypto-tokens are limited-edition branded digital objects with a price, but are very good at avoiding been recognised as countertrade objects, because:

1. They are almost always initially marketed as ‘money’, and are often coated in monetary branding, with monetary symbols and imagery of coins, and so on

2. They often appear as positive numbers on a screen, which is visually superficially similar to the numbers in a bank account (see my piece I-Token for a deep dive on this)

3. They have high movability, but low specificity: most countertrade is undertaken with slow-moving physical objects that have a clear non-monetary identity, and this makes the process highly visible. If I swap some obviously useful specific object (like a backpack), via its monetary price, with another obviously useful object, we immediately characterise it as ‘swapping’. It is also going to be hard for me to do that instantaneously across borders, because the backpack is a large physical object, so its countertradability (ability to be easily countertraded) is quite low. A digital token with a price, by contrast, has high countertradability (it can be countertraded rapidly with someone on the other side of the world), but it simultaneoulsy has no usefulness in itself, and no legal rights that would identify it as a financial contract. Given that it is covered in money-like branding, and that no other category of object will accept it, it will get shoehorned by default into the ‘money’ category, especially in situations where people already have a vague picture of the monetary system

This is how the tokens slip past of countertrade radar, and why a case of crypto countertrade ends up being described as an act of ‘buying’ rather than an act of swapping. This is how crypto promoters construct a vision of the tokens somehow competing against the monetary system, even though the tokens cannot be countertraded unless they have a price derived from the existing monetary system. This is extremely frustrating for anyone who can see through this, such as John Paul Koning, who vents his frustration here:

He points out, like I have many times before, that really crypto tokens compete against other money-priced investments (like shares, and so on), rather than the money used to price those investments. The only reason this is not recognised is due to the confusion caused by the high countertradability of crypto tokens relative to normal investments.

This is how we end up with the imagined simultaneity of the Investor Persona and Money-holder persona in crypto. We would all be better off if we recognised that the two real personas are actually the Investor Persona and the Investor-using-their-investment-for-countertrade Persona.

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The ‘vision-makes-reality’ problem

Crypto promoters have one major advantage though. Their vague narratives can get past our bullshit radars by catching a ride on existing weaknesses in the public understanding of money. Much of my newsletter is dedicated to revealing those weaknesses, and helping people move past them. If you’ve been following this newsletter you should hopefully be able to identify the prevalent commodity orientation to money in our society (see, for example, Money through the eyes of Mowgli), in which people imagine money as some kind of movable ‘substance of value’, that in turn performs a series of vague functions. In its modern context, the commodity orientation results in people imagining money as a kind of ‘fictitious substance’ created through social agreement or belief, and this in turn leads to the idea that money can be created by getting enough people to believe (how many times have you heard someone say something along the lines of ‘money is just a belief system’).

It is this which gives crypto marketers a perfect opportunity to imagine that a countertrade object is on its way to ‘becoming money’, provided that more people start to believe in it. Start-ups often use a fake-it-until-you-make-it attitude, presenting a brave face to the public while they frantically scramble around in the background trying to turn their product into a reality. Crypto projects, on the other hand, often adopt a ‘faking-it-is-what-makes-it’ attitude, encouraging token-holders to put on a brave face and believe the system into reality.

Break away from the Cult of the Golden Sword

This would all just be so much easier if we called spades spades. Really what we have in the crypto ecosystem are thousands of sets of limited edition digital collectibles, often branded as money, but all sold for money, and traded on speculative markets for money. This is what gives them a monetary price, and the price is what gives them countertradability, which in turn allows them (in an ironic twist of fate) to be mistaken for money.

But isn’t it amazing what a spade can do? Just like the ability to dig holes is a useful capability, the ability for crypto-tokens to be quickly and easily countertraded across borders is an authentically useful property of crypto-tokens. There is no shame in being a countertrade object. In fact, I believe there is a new age of countertrade emerging (watch this space for a big piece on this). Indeed, the only people who refuse to see this are the Cult of the Golden Sword, but the future of spades should not be in their hands.

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Dear Subscribers. Get your popcorn out, because below you’ll find a video - an hour-and-a-half long - in which I explain my overall perspective on Bitcoin (there is also an audio version of this on Soundcloud if you prefer to listen to this on the go). I summarise the major Bitcoin pieces I’ve produced, describe why I have produced them, and showcase fu…

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Picture this scene. You are a weary 12th century traveller quietly sipping an ale at a tavern. A man approaches you. “I have something that’s in very limited supply,” he whispers to you conspiratorially, before asking, “would you like it?” You look at him suspiciously, and, over the drone of bard music, reply with, “depends on what it is”.

He sits down and continues. “It’s something that can be split into pieces and moved around”. You shrug and say, “I’m already carrying a lot of stuff, so tell me what it is first”. “It’s almost weightless,” he adds with a wink, “and cannot be seized from you”. Now you feel irritated. “Listen, can you actually tell me what this split-able, moveable, lightweight, unseizeable thing is?”

He seems offended. “Surely those are features enough my friend?” You growl back with “look, syphilis is lightweight, movable and cannot be taken away either, but that doesn’t mean I want it.” “Come on!” he shouts out, “I’m offering you something scarce that can be passed to others across borders!” You slam your drink down: “Tell me what the thing is and then I’ll tell whether I care. Are you trying to hand me gems, bubonic plague, seeds?”

He backs off, saying, “It’s an object”. You retort with, “I don’t want a random object”. “What if it were beautiful?” he asks. You give him one final chance, replying with, “Is this object you have beautiful?” His final response is, “Ah, no... but it has a beautiful emblem. Let’s just say it is… um… a token. Many have been buying it. I’ll sell it to you for two ducats”.

The moral of the story

There is a simple reason why the man in the story above is so frustrating. He insists on describing features around the object he is promoting, rather than describing the inner essence of the object itself. This same practice is extremely common within the Bitcoin community. This essay will explain why, and in doing so will reveal a hole hidden in the heart of Bitcoin. 

I will lay this out in five parts, as follows:

1. Part 1 will explore the use of nouns versus adjectives in our descriptions of things, and how they are used to convey primary and secondary features of things.

2. Part 2 will explore how to describe the noun ‘money’, but without resorting to vague and evasive ‘functions of money’.

3. Part 3 will explore the surface level numbers that accompany a monetary system, and question to what extent they are nouns or adjectives, before applying this analysis to Bitcoin. This will reveal that the numbers that accompany normal money are numerical adjectives, whilst those that accompany Bitcoin are numerical nouns.

4. Part 4 will show how the numerical adjectives of normal money are fusing to the limited-edition numerical nouns of Bitcoin, and how this creates havoc in the psychology of the tokens.

5. Part 5 will offer suggestions for how to fill in the hole in the heart of Bitcoin.

Part 1: An evasive noun beneath an adjective armour

Bitcoins are digital objects, issued out and moved within an elegant technological system. They are borderless, cannot (in theory) be seized, and are ‘scarce’ in the sense that there are a known number of them released predictably, rather than a fluctuating number released unpredictably. They also have a logo and a brand name. These objects get called ‘tokens’, but manifest as numbers on a screen, which is the only sensory information about them that a person can experience (they cannot be touched, tasted, smelled, or heard).

I have been involved in the scene around these tokens since 2011, and promoted them in the early years. I used to receive them in exchange for my first book, and would try to exchange them for actual goods and services when possible. In the early Bitcoin community the tokens were somewhat mysterious, but we initially ignored this because we were fascinated by the innovative way of issuing them and moving them around. But, like a baby moves from fixation upon the mere appearance of an object to eventually questioning what it is, the question for me became what are these tokens being issued and moved? What is a digital ‘token’ supposed to be anyway? 

From early on, however, I noticed that many Bitcoin enthusiasts would avoid deeply addressing this question, or would simply bypass it by calling the tokens ‘coins’, as if that were description enough. I remember speaking at a big Bitcoin event where countless talks described how to move the tokens around securely, or speed them up, or protect them, whilst my talk was the only one asking what they were. Some of the audience looked irritated at this, as if it were obvious what they were, and as if such introspection was distracting from the serious business of building the technical systems around the tokens. This ‘introspection’, however, was directed towards by far the most serious question, and one that continues to be avoided. Let me illustrate.

1.1. The blind man and the token

Imagine a one-of-a-kind chair, hand-carved into the shape of an elephant. A blind companion that I am leading around asks me to describe it, so I say, “the thing before you is one-of-a-kind, movable and costs $800”. Did I capture the essence of this object with that description? No. I merely described ancillary features and adjectives that surround it. Adjectives are words that imply a noun, so when I use them without a specific noun being present they feel evasive, as if something is being avoided.

Now imagine the same person asking me to describe bitcoins. I say “they are scarce, borderless, censorship-resistant, movable tokens”. Did this truly capture their essence? In the mind of a blind person I conjured an image of some resilient limited-quantity thing moving around. All the adjectives point to this object, but what if the person tries to zoom in on this ‘token’ in their mind? Imagine them trying to visualise it, but finding it surrounded by an armour of adjectives with names like Scarce, Borderless, Unseizable, and Movable, and wanting to push beyond those. Imagine them trying to make contact with the tokens by saying “I know that you tokens are limited in quantity, and that you can move, but who are you?” My companion is seeking out the essence of the noun ‘token’.

1.2. Zooming in on essences

Generally speaking, adjectives and nouns form two classes of description. A noun is a primary symbol invoking imagery of the deep core of something, whereas adjectives are modifiers that add to or alter that. In the popular parlour game 20 Questions, people often work backwards from the latter to converge upon the former. Imagine an answerer being probed with queries like “is the thing you are imagining movable?” Upon receiving the answer “yes”, the questioners are a little closer to glimpsing the essence of the thing being imagined, but not that much closer, because movability is common to many things. Perhaps the answerer has a Projector in mind, but the core feature of a projector is held in its noun: being an actual projector is its essence, and no amount of referring to it as “a movable thing made in China that costs $350” is going to capture that.

It may be philosophically slippery, but we find it rather easy to feel out and describe these primary and secondary characteristics of most everyday things (albeit different objects inspire different levels of fixation upon either). For example, rum is movable and divisible, but – in general – I do not need to showcase that fact. If a bottle of rum is on a table, and will initially just describe it by pointing at it and saying “it is rum”. If the person I am saying that to has no primary experience of that noun, they will then ask me “what is rum?”, which will force me to ‘explode’ the noun out into a network of new words unpinned by new nouns, such as “an alcoholic spirit made from molasses”. The essence of rum can be sensed in the intersections of these new words, whereas pointing out its movability and divisibility would not capture that essence.

Secondary features – such as movability and divisibility – are not only characterised by the fact that they are too vague to allow me to hone in on something, but also by the fact that they do not generally tell me whether I should desire the thing. Consider, for example, this question:

“Do you want a scarce, long-lasting thing?” 

This is a tricky question, because things like nuclear waste and a huge statue of Mao Tse Tung are scarce and long-lasting, and yet it is not obvious that those are desirable. The statement “do you want a beautiful long-lasting thing” can be more compelling, but what about “do you want a scarce beautiful thing that will perish almost immediately?” That is complex, because the duration and scarcity may modify how we perceive the thing, but can never in themselves say enough. Thus, sentences like “gold is scarce and long-lasting” do not convey any primary information to someone who is not already familiar with the primary essence of gold. Similarly, saying something like “Bitcoin is scarce, long-lasting, borderless, unseizable and movable” conveys no primary information to my blind companion, who has no pre-existing familiarity with the essence of the Bitcoin ‘token’.

Thus, before they can make sense of whether scarcity, movability and unseizability are desirable, my companion must first grasp the primary essence, which requires them to ask me “what is this token?” This in turn will require me to ‘explode’ the term ‘token’ into a network of new words with richer meaning. We will get to that, but let us first go through an example of how I would do that with a different type of token.

1.3: Tickets vs. printing material

Imagine I handed my blind companion a train ticket. It is a physical token, so they can feel its contours, but imagine them asking me to describe it more fully for them. In this case, I would explode the term ‘token’ out by saying “the token you hold is a legally enforceable promise, issued out by a company, that will guarantee access to a train”. I could also add in secondary information, such as “it is one of 500 printed on card, and you can transfer it by handing it to someone else”.

Imagine, however, if I flipped this ordering and began by describing those secondary features, saying “the token you hold is one of 500 transferable pieces of card”. If I stopped at that point, the definition would be useless, because a ticket is a legal promise printed on card, and it is the legal promise that is its primary essence, rather than the material it is recorded on (indeed, you could record a ticket on any material, or record it digitally). In the case of a physical train ticket then, the term ‘token’ refers to two sub-nouns – the body of the token might be card, but the essence of the token is legal promise. It is not mere card.

Consider now this sentence: “the Bitcoin token you hold is one of 21 million transferable digital tokens”. Such a statement is conceptually equivalent to saying “you are holding one of 500 pieces of card”, and conveys nothing to my blind companion. Just like holding a random piece of card is largely meaningless, holding a random digital token is meaningless too, unless we can give an account of its primary essence. But while it is easy to explode out the definition of a train ticket, how does one explode out that term ‘Bitcoin token’ into something more meaningful? 

One option is to avoid such exploding, and to simply ‘kick the can down the road’ by upgrading the noun ‘token’ into a more evocative noun, such as ‘coin’, or ‘money’. My blind companion probably has some primary experience of what those terms are supposed to mean, but let us say – for the sake of argument – that they do not, and that they thus direct a new request to me, asking me “well what is money?” In Part 2 we will see how to explode that term out into a more evocative network of words.

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Part 2: Describing the structure of money without resorting to functions

There is a rigorous way to describe money, and a lazy way. The rigorous way requires us to describe the structure of money, whilst the lazy way is built upon describing so-called ‘functions of money’.

This bifurcation between structural and functional definitions is not unique to money, and can be applied to any usable thing. Consider, for example, this description: 

A solid horizontal square of wood of human bum-size, secured by screws to multiple vertical legs arranged perpendicular to it, accompanied by a vertical wooden back-rest.

This is a rough but relatively rigorous structural definition of a certain type of chair. Its accompanying functional definition might be “something to sit on”. By itself, however, that functional description is lazy, because you can sit on many things, such as the roof of a barn, the boot of a car, the edge of a volcano, your mother’s lap, or a yoga ball. Under the lazy definition then, all manner of structurally different things could be collapsed into the idea of a ‘chair’, simply by using that zone of functional overlap.

This causes the degradation of language, because while it is true that I can sit on a yoga ball, it is meaningfully different to a chair in structure, and there are things that either can do that the other cannot. For example, it is widely understood that you can stand on a chair to reach the top of a shelf, but try to do the same thing on a ball. Similarly, you cannot roll around on a chair to do ab exercises.

To describe a ball as a ‘chair’ you have to ignore the structure of each object and exploit the vagueness of a functional definition stripped of a structural accompaniment. Put differently, when a functional definition is separated from structural definition, it becomes floating and ‘disassociated’, and thus allows all manner of imposters to cloak themselves in it.

It turns out that using disassociated functional descriptions is the predominant way to describe ‘money’. When asked ‘what is money?’, many economists resort to a vague functional description which says money is a means-of-exchange, store-of-value and unit-of- account. This definition is literally useless unless it is accompanied by an actual account of a structure that is able to induce those so-called functions. This is why I refuse to use disassociated functional definitions of money by themselves, and why I always begin with structural definitions that can subsequently give an account for how certain ‘functions’ are enacted.

Monetary systems, like chairs, have an actual structure, but we struggle to see it because the structure so fully enmeshes us (much like a fish struggles to see water). We are small beings immersed in a totalizing system, and we tend to only notice its surface-level artefacts, like physical cash tokens, cards, or the numbers shown in our bank account. But a cash token is not mere paper, and the numbers we see in bank accounts are not mere numbers. They are accounting records of legally-enforceable promises held in play within a vast coercive network vortex that is almost impossible to think or act outside of, and which has core architectures that can be described like engineering schematics. Thus, if my blind companion was to ask me “what is money?”, I would begin like this:

A vast network structure, at the centre of which lies three sets of issuers issuing out three chained layers of legal IOUs – in physical and digital form – which will later return to the issuers to be destroyed, but which in the interim entrench themselves as economic network access tokens that circulate around an interdependent web of people who cannot mobilise each other’s labour without them. These tokens are activated in the context of legal systems set within political systems set within social systems set within ecological systems, and this mesh structure underpins modern capitalism and is etched into the very fabric of our being.

It is quite possible that, upon hearing this initial description, my companion will not fully grasp the nuances of what I have said. Indeed, most people would not, because it can take years of effort to glimpse the structure of monetary systems, but this does not mean the structure does not exist. I could go on to nuance this – showcasing the role of the state and the banking sector, and elaborating upon various internal battles, contradictions and instabilities within the structure – but that would take thousands of words, as I have to describe an entire complex system rather than a simple object like a chair.

The point of this essay, however, is not to describe the structure of modern money. For our purposes right now it suffices to say that there is a bifurcation between the ontological reality of the monetary system (what it actually is) versus the phenomenological experience of it (how a person encounters it and experiences it). The structure is simply too big to experience in full, which is one reason why people uncritically go along with those disassociated functional descriptions of money tokens. Thus, lurking in the back of many people’s minds is the idea that a monetary system is nothing but a mysterious set of numbered objects that mysteriously fulfil the task of ‘means of exchange’, ‘store of value’ and ‘unit of account’.

In reality, however, it is only the last of those ‘functions’ that is unique to money. The former two are so vague as to allow many non-monetary objects in (much like ‘a thing to sit on’ allows balls and guitar amplifiers to invade the definition of a chair). In refusing to cut directly to the core structure of money, the functional definition directs attention towards the surface-level artefacts of the monetary system – such as those numbers in an account, or cash tokens – but without describing how they work. This in turn leaves people susceptible to believing that those are ‘mere numbers’, or ‘mere paper’ held up by nothing but belief.

And, it is precisely this weakness in understanding normal money that allows Bitcoin’s adjective armour to not be pierced through, and which allows someone – upon seeing that Bitcoin tokens are movable numbered objects – to glibly say ‘Bitcoin tokens are money’ without being challenged. In Part 3 we will do some challenging.

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Part 3: Numbers as adjectives versus numbers as nouns

In the realm of phenomenological experience, money appears with numbers. Put differently, we associate movable numbered objects with money. Numbers, however, have a very intriguing linguistic property, in that they can be either nouns or adjectives. In the pristine world of mathematics they are nouns, whereas in the practical world of accounting they are adjectives. Consider this sentence.

There were fifteen horses in the third edition of the Kansas Derby, and this time only four warnings were given to contenders in the eight races. One was fined $150.

Now consider this sentence, which contains all the same numbers.

Fifteen divided by three is less than four multiplied by eight, which is greater than one minus one-hundred-and-fifty.

In this second sentence the numbers are nouns. They are the main stars, rather than the supporting actors, and this only occurs in sentences pertaining to pure mathematics, where numbers appear as abstract essences-in-themselves. In mathematics, ‘4’ carries the essence of four-ness, and may be pitted against an ‘8’ that carries the essence of eight-ness.

By contrast, it is highly unusual to speak of numbers as agents or essences-in-themselves in ordinary language. We see this in our our first example sentence above, where all the numbers act as adjectives pointing to something beyond themselves – horses, editions, warnings, races, dollars. The essence of a phrase like ‘fifteen horses’ is a large quantity of horse-ness, rather than ‘fifteen-ness’. This is why nobody would ever claim that fifteen horses are ‘mere numbers’. 

Nevertheless, due to the aforementioned problem of seeing the structure of money, there is a strong tendency amongst some people to say that 150 dollars are in fact ‘mere numbers’, as if the phrase ‘$150’ was a numerical noun with the dollar symbol affixed to it. This, though, is but a side-effect of partial vision. Monetary numbers, whether affixed to a cash token or written out in a bank account, are accounting records pointing to something beyond themselves. In the case of a bank account, the numbers point to a quantity of legal promises – IOUs – issued out by a bank, which grant access to legal promises issued out by the state. They are numerical adjectives, and the only way to render them as mere numbers (aka. numerical nouns) would be to destroy the banking and legal system, and the system of state IOUs that bank IOUs give you access to.

The act of writing out numbers in the normal monetary system is the act of granting access to a network vortex. For a simpler example of this phenomenon, consider our earlier example of the train ticket. The act of writing out numbers on a train ticket (such as ‘Admit 1’) is an act of granting access to an underlying train network. It is only if the trains, rail lines and train company was wiped out (perhaps in a freak apocalypse), that the ticket would be rendered into a mere piece of card with the numerical noun ‘1’ on it. It is only when the legal promise is wrenched away that the number ceases to be an adjective.

3.1. What are the numbers in Bitcoin?

Bitcoin, like the dollar system, comes with numbers. The top right of the image below, for example, shows 7.205 being attributed to someone’s address on the Bitcoin system. It certainly looks quite similar to something you might see in a bank account, but are these numbers adjectives or nouns? 

For them to be adjectives, they would need to be accounting records pointing to something beyond themselves. From a technical perspective, however, a Bitcoin mining rig wrote out the number 7.205 and transmitted it to everyone else in the system after exerting a large amount of energy getting through Bitcoin’s ‘proof of work’ system. Was the mining rig accounting for something, or was it just writing out numbers after exerting energy? It is the latter. It just wrote out numbers. 

These numbers do not point to anything beyond themselves, which means that in the Bitcoin world the numbers are numerical nouns. Nowhere is this more apparent than in the so-called ‘genesis block’ of Bitcoin. In the beginning, Satoshi Nakamoto’s computer wrote out the number ‘50’, which was the first numerical noun in the system.

The key nuance, however, is that the system participants later added a linguistic overlay to the numerical nouns by affixing the acronym ‘BTC’ to them, and describing those numbers as ‘Newly Generated Coins’. Turn your eyes to the left corner of the images above, where you will be able to see that phrase. The system places limits on how fast new numerical nouns can be written out, and how many can be written out, and also allows you to perform operations on them (splitting them and reassigning them and so on), but rather than speaking about the numbers directly, the community has developed an indirect proxy language in which the numbers are spoken of as ‘BTC’, ‘tokens’, ‘coins’, and ‘digital currency’.

3.2. Visualising limited edition numerical nouns

I have now got a little closer to being able to ‘explode’ the term ‘Bitcoin token’ out for my blind companion. I say “the tokens are numerical nouns – pure numbers – that have been printed within a network of computers after energy was expended, but which are controlled by a rule-set that places strict limits on how many numbers can be printed. These numbers are casually referred to as ‘coins’, and can be reassigned around the system.”

What exactly will go through my companion’s mind upon hearing this? Remember that they cannot see the system’s logo or branding, so will be free of any irrelevant secondary imagery that might otherwise serve as a distraction. They are trying to visualize ‘coins’ as numbers that took energy to write out, but does it really matter to them how much energy was required? Imagine finding the number ‘50’ etched out on a rock on the summit of Mount Everest. Someone had to crawl a long way before they could write that, but does it affect what the number is? Put differently, is a number written out with difficulty fundamentally different in essence to a number written out easily?

Even within the Bitcoin system the amount of energy required to write these numbers out has radically changed over time – the original ‘50’ written in the genesis block took almost no energy to write out, whereas that later ‘7.205’ took huge amounts of energy (there is no scope here to explain why, but let us take it for granted). To my blind companion, however, all tokens in the system – regardless of when they were created – appear the same.

3.3. Numbers as collectibles

It is possible that numbers found etched on the top of Mount Everest could be seen as novelty collectibles. Maybe someone could remove the piece of rock, take it to the bottom of the mountain and sell it to tourists, marketing them as limited edition numbers written out by adventurers in a faraway place!

Similarly, it is obvious that energy is required before a Bitcoin miner is allowed to write ‘7.205’ in the system – and thus the number can be presented as having a type of ‘digital scarcity’ – but that number cannot be held like a piece of rock can. My blind companion will have to imagine a set of ‘limited edition’ numbers, but – unlike a person with sight – does not have the ability to cover those over with logos and colourful imagery of metallic coins. The latter images are normally required to distract from the otherwise colourless reality of a pure number, and fill in the blank implied by the presence of all those adjectives.

This takes me back to the early days of Bitcoin. As mentioned, the early community was excited by the ability to write out limited-edition numbers and reassign them around the system whilst calling them ‘tokens’, but my original question – “what are these tokens?” – really can be rephrased as “what do these numbers point to?” The answer is simple. They do not point to anything. This can subsequently be interpreted in two ways: they are either pure numerical nouns (7.205), or they are numerical adjectives that point only to an absence (7.205 units of nothingness). This is the hole in the heart of Bitcoin. The only reason we fail to see this is that most of us have sight, and there is an entire industry that specialises in filling our view with images of coins, along with images of ‘mining’ and extraction. In Part 4 we will explore how this marketing apparatus works.

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Part 4: Marketing ‘Mount Everest Money’

To present a numerical noun as money is not – in the first instance – very difficult, because of the prior weakness we have for seeing movable numbered objects as money. Just like a counterfeit note simply mimics the surface appearance of physical cash, so too can a number on a screen mimic the surface appearance of a bank account.

Nevertheless, to hide the hole in the heart of Bitcoin, the Bitcoin community cannot afford to fully associate its numbers with bank-account imagery – because it will be found wanting – so rather attempt to associate the numbers with metallic gold imagery. This returns us to our Mount Everest analogy above: the entire marketing apparatus relies upon the idea that the exertion of energy somehow makes the numbers into a ‘commodity’, which in turn enables the industry to pitch Bitcoin tokens as a ‘commodity alternative to fiat money’, despite the fact that numbers cannot be felt, smelled or tasted like gold might be.

Briefly imagine a scenario in which someone sets up a ledger on the top of Mount Everest, and allows those who have hiked up there to write one number into it. We could playfully refer to that number as ‘Mount Everest Money’, but – as mentioned – what is more likely to happen is for those numbers to be sold to tourists as limited edition collectibles. Tourists at a special base-camp market could buy them from people who have hiked up to the summit to harvest them, and this is exactly what has happened in the Bitcoin system: there is now a vigorous market for buying and selling arduously created limited-edition numerical nouns.

4.1. A numerical adjective for a numerical noun

This has created a very peculiar situation, because the numerical nouns have come to have a price, which is a numerical adjective denoting the quantity of dollars that a person must hand over to get a branded 1. This is the famed Bitcoin price that the media pays so much attention to.

It is at this point that the disassociated functions of money paradigm (described in Part 2) comes to Bitcoin’s aid. In a situation where someone is not trained to see the structure of the monetary system, and is rather encouraged to focus on vaguely defined functions, they can very easily begin to conflate priced numbered collectibles (pasted over with money-like branding) as being ‘money’. This is in contrast to, for example, a priced chocolate cake (pasted over with cake-like branding), which is seldom presented as money.

Actual monetary systems – as described in my structural definition in Part 2 – form the foundational setting within which markets unfold, and money tokens are not – in the primary instance – objects to be traded upon the markets they underpin. To test this, you need only walk into a supermarket with £20 in your hand. Upon looking at the money, your mind will project itself towards thinking about what you can buy with it, rather than what you can ‘sell’ it for (similarly, a supermarket owner does not experience themselves ‘buying’ your money with all those different goods on their shelves).

The reason for this is that everything in that local market is routing through the monetary system, and this is why the only functional definition of money that is worth paying attention to is the ‘unit of account’ concept, which recognises this distinction between money tokens and the goods they are used to price. This is a network concept, and while there may be multiple currency networks in the world, when you are within one of them you are subsumed by it. Thus, within the UK network there is a structural separation between, firstly, the British pound and, secondly, everything priced within the pound ecosystem. You cannot ‘price’ British pounds in Bentley cars or Tetley’s Tea any more than you can claim a tornado is being ‘sucked in’ by the pieces of debris flying around it.

One reason people get confused, however, is that there is one very specific ‘market for money’ that forms on the boundaries between these networks, where the vortexes meet. It is called the foreign exchange market, and it is actually a zone of swapping one form of money – which reigns supreme as the primary pricing vortex in one geographic area – for another, which reigns supreme somewhere else. We can easily see that a chocolate cake is not part of the FX market, but a numbered collectible pasted over with money-like branding – such as Bitcoin (or the ‘Mount Everest Money’) – can use its numerical appearance and adjective armour to try pass as a contender there, even though there is no supermarket in the world that uses it as its primary pricing vortex.

The ‘unit of account’ is the strongest of the functional descriptions of money, but Bitcoin tokens fare the worst on this, precisely because – in structure – they are far from being money. Nevertheless, Bitcoin promoters are able to combine the ‘money-like’ visual appearance of Bitcoin’s branding with the linguistic ambiguity of the other two ‘functions’ of money – the so-called ‘store of value’ and ‘medium of exchange’ functions – to partially brute-force the token into the idea of money (in a kind of ‘two out of three ain’t bad’ fashion).

4.2. Exploiting the ‘store of value’ concept

They can do this because the collectibles have a price, and ‘price’ is often conflated with the much broader concept of ‘value’. In reality, however, the phrase ‘Bitcoin is a store of value’ just means ‘Bitcoin collectibles can be bought for money and maybe resold for more money’. This is a feature common to many non-monetary items within a monetary pricing vortex, such as houses or Radiohead vinyls, which also take energy to produce.

Similarly, a phrase like ‘Bitcoin’s purchasing power is increasing’ just means ‘the price is increasing’ (much like when a house price increases we do not claim its ‘purchasing power’ is increasing). Similarly, given that Bitcoin is not actually in the FX market, the phrase ‘Bitcoin’s exchange rate to the dollar is increasing’, just means ‘Bitcoin’s market price is increasing’ (much like you do not characterise an increase in your house price as an exchange rate movement). The phrase ‘Bitcoin is a deflationary currency’ translates to ‘Bitcoin collectibles sometimes increase in price’ (albeit Bitcoin promoters will seldom label a decrease in its price as ‘inflation’, which they would have to do if they were to maintain linguistic consistency).

4.3. Exploiting the ‘medium of exchange’ concept

It takes a little practice, but after a while it becomes easy to tear away the monetary language that is pasted over Bitcoin tokens, and to replace it with the actual underlying collectibles language. Perhaps the most difficult phrase to translate, however, is ‘Bitcoin is a means of exchange’, which translates to ‘Bitcoin tokens are priced objects that can be swapped for other priced objects’. 

To understand this you need to understand the concept of countertrade (see this article for a detailed description). If you analyse a Bitcoin ‘payment’ for say, a book, you will notice there is not – in the primary instance – a price for the book in Bitcoin. Rather, there is a money price for the book, and a money price for Bitcoin, and you superimpose those over each other to work out a residual exchange ratio between the two objects. You are not ‘buying’ the book with Bitcoin. You are countertrading, which is a practice possible with any object: consider, for example, two friends entering a clothes shop and each buying a jacket for $50. Upon returning home, they decide that they each prefer the other’s jacket, so decide to simply swap them. The friends do not claim to be ‘buying’ each other’s jackets. They just say, ‘the jackets cost the same, so we swapped them and called it quits’. 

This process of clearing off money-priced objects against each other is called countertrade, and Bitcoin is notable for being very easy to countertrade, because it is highly movable. This is where its adjective armour actually does matter. Objects with high movability can become highly countertradable, which in turn can induce a certain degree of ‘moneyness’ in them. This is the strongest claim Bitcoin has to being a ‘quasi-money’, but note that its countertradability is a secondary feature induced by its primary nature as a speculative digital collectible with a price. Without that price it has no swap-ability, which means anyone who attempts to use Bitcoin’s swap-ability as a justification for its price (‘value’) has got the polarity of the situation the wrong way around.

4.4. The digital tavern

Like any priced good, Bitcoin tokens compete against other objects in the market, but – uniquely – they depend upon the Bitcoin industry promoting them as if they were competing against the dollar that underpins the markets they are traded on. The story sort of holds up because their high counter-tradability can give the illusion of them being ‘moneylike’, but make no mistake: the (sometimes) rising price of Bitcoin just means that, rather than giving dollars to a seller of some other object, a person gave them to a seller of Bitcoin collectibles, resulting in their price rising relative to the things that were not bought. 

Recall the story we began with. The man in the 12th century tavern sought to give you an ambiguous ‘token’ whilst taking your ducats. If you gave him your ducats, the net effect would not be an attack on the ducat system. It would be an attack on the tavern owner, who might otherwise have got those ducats from you for board and beer. To use a more recent example, it is the promoters of Gamestop shares that lose out when people start using their disposable income to buy Bitcoin tokens from crypto promoters instead. The decision to buy either of those might be a response to an uncertain environment affected by monetary policy, but neither action is a direct ‘attack’ on the dollar, because the dollar system is the pricing hub for both objects, rather than the thing being traded.

Part 5: Giving Bitcoin a soul

Right now Bitcoin’s greatest success lies in the fact that it has mimicked the numerical surface appearance of a monetary system (whilst its promoters exploit our weakness in understanding the structure of money), whilst accompanied by a mythology that presents it as an antithesis to the monetary system. This allows it to parasite off the fears and emotions we have around the actual monetary system, whilst simultaneously tapping into people’s desire to get actual money in a ‘get rich quick’ fashion.

The deeper you look into it, however, the more circular this appears. The ‘moneylike’ nature of Bitcoin tokens depends upon their countertradability, which in turn depends upon them not actually being money, but they cannot be promoted as collectibles unless they have a monetary backstory, because in reality they are just limited edition numerical nouns with no utility in themselves.

The structure is both psychologically ingenious but deeply flawed, because – in the first instance – there is no way for anyone to come to any account of why numerical nouns will have the ability to supersede the numerical adjectives of actual money. Indeed, the main technique to do that right now is to simply make a circular appeal to the fact that the numerical nouns have a price: consider, for example, the almost messianic fixation in the Bitcoin community about how the rising price of Bitcoin tokens somehow signals a future in which those tokens will become the monetary system (rather than a thing being priced in the monetary system). The Bitcoin industry tries to convey this point by claiming that Bitcoin is undergoing ‘monetisation’, a process by which the numbers will somehow become money as people get used to them. In reality, though, they are just talking about the increase in Bitcoin countertrade.

5.1. Everyone look away

The money price of chairs stays roughly constant from one day to the next, because their utility relative to other goods stays roughly constant. Bitcoin collectibles, however, are subject to quite random alterations in price because they are numerical nouns with no inner essence, and must maintain constant buying pressure from people who do not see them as essential goods, and who mostly buy them because they see other people buying them. Much like it is easy to push a liquid up a constrained straw, and watch it drop the moment you stop blowing, limited supply Bitcoin tokens are held up in price not by any fundamental reflection on their essence, but rather by a calculated effort to pump them up whilst avoiding any reflection upon their essence. 

Thus, everyone who buys in has a vested interest in not staring too hard at the object they are buying. This is why there is an army of Bitcoin promoters who focus solely on its adjectives and its rising price, whilst spinning a ‘Bitcoin as future money’ story as a marketing pitch. The promoters are not interested in describing the complex details of how such a future would unfold, any more than Coca Cola is interested in providing the emotional backstory to the characters who find themselves in its adverts. Indeed, all the promoters need to do is sustain and expand the buying pressure, which is easy to do when the media constantly helps them perpetuate the FOMO that surrounds the speculative collectibles. As they do so, those in the early buyer circles get richer in dollars by selling expensive fragments of their cheaply acquired numerical nouns to the new entrants.

In this context, the price of Bitcoin tokens will almost certainly continue to rise, and these inner holders will get extremely rich, and will continue to be big influencers. The use of Bitcoin for countertrade will continue, and crypto-capitalist promoters with humanitarian credentials will use that to pump the story in developing world contexts. As middle-class entrepreneurs in the latter countries become invested, they will attempt to sustain the buying pressure by pulling in poorer people with the ‘get-rich-quick’ narrative. Those poorer people will buy into the tokens under the belief that they offer economic liberation, and will do so under the risk of losing significant parts of their already tiny savings.

5.2. Saving Bitcoin’s inner child

Having noted this, it is important to separate Bitcoin tokens from big Bitcoin promoters. The latter are much like priests evangelising a prosperity gospel, and their entire industry rests on building two things – a trading infrastructure and a recruitment infrastructure – whilst ignoring one thing: the inner essence of the token itself. Bitcoin mining rigs always birth the same thing – numerical nouns – but the industry specialises in dolling them up with all manner of makeup to disguise that, and selling them off.

Thus, one way to metaphorically visualise a Bitcoin token is to imagine it as being akin to a lonely and orphaned child actor, pushed onto stage by managers, publicists and booking agents that surround it with a macho shell to hide its neglected child-like interior (which can collapse at a moment’s notice). But how exactly would you fill in this ‘hole in the heart of Bitcoin’, and save it from these pimps? How would my blind compatriot come to believe that a limited edition numerical noun is in fact something with a glowing inner soul, not reliant upon all that branding and pumping?

One approach is fetishisation. In anthropology, ‘fetish objects’ are objects that are granted a social power that far exceeds the utility of their body. They are created when a community generates a cultural field, within which the actual characteristics of an object are ignored, and in which it rather becomes a symbolic stand-in for social relations. Many early forms of pre-capitalist ceremonial ‘money’ (or ‘cere-money’), such as Papua New Guinean ‘shell money’, are fetish objects like this. They operate as ‘power tokens’ only when placed in the context of a community that has enchanted them (to all outsiders they just look like meaningless trinkets). Contrary to popular belief, such ceremonial ‘money’ was seldom used for commerce, but – hypothetically – fetishisation of this sort could produce a crude but unstable form of capitalist money, provided that huge amounts of effort was put into mythologising Bitcoin in the eyes of ordinary people.

There is a second approach. Some Bitcoiners are betting that the ‘inner soul’ of the numbers can be reverse-engineered by building the outer, surrounding infrastructure for moving them around. To use our earlier train system metaphor, this is like issuing out pieces of card with ‘1’ written on them, investing effort into telling everyone that they are ‘train tickets’, and then hoping that a train system will slowly appear and subsequently induce a ‘train ticket-ness’ into the card. In this way, an otherwise empty object can be ‘captured’ by a system that comes after it. Similarly, if the industry around Bitcoin loudly proclaims that it is ‘money’, whilst simultaneously heavily investing in convincing real businesses to price things in it, and real people to use it for commerce, they could – hypothetically – create a situation in which the numerical nouns become surrounded by a network that ‘captures’ them and locks them into a real economy. This remains extremely difficult, because in order to do this the entire speculative mentality (in which Bitcoin tokens generate imagery of the dollars you can sell them for) would have to be discarded, and replaced by imagery of the tokens somehow ‘anchored’ in some stable form into actual goods and services.

Right now the Bitcoiners’ greatest hope for that lies in El Salvador, where a Bitcoiner president has passed state laws trying to force its acceptance in shops. I wonder perhaps if the president himself may be heavily invested in the limited edition collectibles that his government is now promoting, but – regardless – their logic still works on countertrade. Bitcoin tokens are nowhere close to being ‘El Salvadorian currency’. They are still primarily global collectibles, predominantly priced via dollars and other major currencies, being forced by law into countertrade in El Salvador.

The hole in the heart of every Bitcoin token remains, and shows little sign of being filled in any time soon. Perhaps, however, this is a source of strength. The sheer emptiness of the token, alongside the strength of its adjective armour, allows it to carve out a shapeshifting existence in the shadows of the actual capitalist monetary system. In the end, the question that my blind friend directed towards the token – who are you? – can be answered with, I, token, am whatever fantasy you want me to be.

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I created the image above to illustrate the concept of ‘countertrade’, which is crucial to understand if you wish to see how crypto-tokens like Bitcoin work. The image is intended to show that someone who apparently ‘pays’ with Bitcoin for something like a camera is actually - in the final analysis - paying with US dollars.

I will explain this in the post below, but I have been motivated to write this because of the enormous amount of misinformation that is flooding the media about Bitcoin right now. If you follow the news you will have undoubtedly come across many excitable pundits claiming that the ‘digital currency’ is being adopted in place of normal currencies. This post is designed to help you see through that by introducing you to the phenomenon of countertrade. This will put you in a far better position than the vast majority of these analysts, but before we can do that I must ask you to imagine yourself as a small child wandering around a supermarket with your parents.

The supermarket distinction

From an early age a child learns to distinguish between money tokens, on the one hand, and everything on the supermarket shelves on the other.

Imagine yourself as a kid entering a supermarket after being given pocket-money of $25 from your parents. You hold the money in your hand, but as you look at it your mind leaps to things beyond money. Perhaps you think of sweets, or toys, or children’s magazines that you might find on the shelves. You recognise that those are all different objects with different uses made by different companies, but you also recognise that they are accompanied by prices, all of which carry a common symbol, and which enables a comparison between the goods.

As you wander through the shop aisles, you make calculations of possible combos of goods you can capture with your $25. Perhaps you can get five packs of sweets for $5 each, or a toy for $15 along with a magazine for $10. Perhaps you should use the whole $25 for a football. The psychological process is not so much one in which you compare the money against the goods. Rather, you are sizing up the goods against each other, via the money.

The monetary system has a very intriguing property of being all-present - all the goods carry prices - and yet curiously invisible: your mind is preoccupied with calculations about which goods are the best value relative to other goods. When you are assessing the price of a good, you are - subconsciously at least - actually comparing that good to other goods via a common measure (this is sometimes referred to as the ‘unit of account’ function of money). Indeed, it is almost impossible to assess a price without having pre-established notions of what you might expect other things to cost. For example, the reason why you know that a price of $500 for a cup of coffee is absurd is simply because you can see that bread can be obtained for $5, and pricing is a relational concept in which goods tied under a common monetary web are compared. Your spidy senses will automatically reject such an excessive coffee price purely through an intuitive awareness of how the other goods are measured.

Thus, when you - as a kid in a supermarket - ask yourself a question like ‘Is this football really worth my $25’, you are implicitly processing background thoughts like ‘Is this football truly equivalent to five sweets, or a toy and magazine’.

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How countertrade works

Imagine yourself mulling over these options in the supermarket but then being told by your parents to hurry up. They wish to leave the store, so you need to make a choice in a hurry. Flustered under pressure, you rashly choose to spend the entire $25 on the football. As you run out, though, you are suddenly overcome with buyer’s remorse, realising that you don’t really like football, and would really prefer some other combination of goods. You suddenly turn around, rush back into the store and tearfully try to explain the situation to the cashier, holding up the ball and pointing to the toy and sweets section. The cashier understands what has happened, smiles and says, ‘oh, so you want a toy and sweets instead?’

At this point the cashier has two options. They can either take the ball back and refund $25 to you, thereby putting you back into your starting position. You can then dash around the store with the money, like before, and collect up the new goods to take back to the check-out. Alternatively, the cashier can take the ball back, but hold onto the $25, and just tell you to go collect goods of equivalent combined price. Let’s say the cashier goes for the latter option. You hand back the ball, and go collect a toy and two sweets.

Let’s now add a curveball element to our thought-experiment. Imagine an alien is watching this interaction from outer space through a powerful telescope. What do they see? They see you handing over a ball to the cashier, and then getting a toy and sweets. If the alien was lazy in their analysis, they might come to believe that the ball is a form of ‘currency’, and that you just used it to to ‘buy’ a toy and sweets.

Of course, we know that what was really happening here was not a process of ‘buying’ toys and sweets with a ball. Rather, this was a process of swapping one good that cost $25, for other goods that cost $25. The technical term for this is countertrade. There are many forms of countertrade, but they all involve offsetting (or ‘clearing’, or netting off) money-priced goods against each other. A single act of countertrade is actually two monetary transactions squashed into the form of one non-monetary transaction: technically speaking, what is happening is that the child ‘resells’ the ball to the cashier for $25, and then uses the money credit to get new stuff, but it ends up looking like a ball being handed over for new stuff. The currency is still US dollars, not balls, but no US dollars need to be overtly handed over.

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Digital countertrade

Let’s now change the scenario. Imagine yourself as an adult in the present day, and winning a lottery of $25,000. You are very happy about this, but now face a similar choice to the one you faced as a small child upon receiving pocket money. In the grand ‘supermarket’ of the overall economy there are many diverse goods being priced under a common monetary system. Should you spend the $25k on a combo of goods - for example, a holiday, a second-hand motorbike, some Apple shares, a high-quality camera and a vintage guitar? Or should you spend it on bigger items, like a car and a renovation of your house? Or should you throw it all into buying up one of those limited-edition Bitcoin tokens your trading buddies keep talking about? Here are three possible combos.

Let’s say on an impulse you do the latter. You go onto a site called Coinbase, which is like an online supermarket for digital collectibles. You hand over $25k for one Bitcoin token. Ten minutes later, however, you have a sudden moment of buyer’s remorse, realising that you really would prefer a vintage guitar and camera, along with a car.

There is no overt ‘cashier’ to run back to like when you were a kid. You can, however, go back to Coinbase and resell the Bitcoin to get roughly $25k back (assuming the price hasn’t changed dramatically since you logged on). You can then take that 25k and use it to buy the things you actually want.

Imagine, though, that you hold onto the Bitcoin, but find an online camera store that ‘accepts Bitcoin’ for cameras. You find the camera you want, but also notice that the online store has an option to toggle between US dollar prices and Bitcoin ‘prices’ for the object. The US dollar toggle tells you that the price is $5k. The Bitcoin toggle, however, says the camera is ‘0.2 BTC’. You browse around the site for a little, before returning to the camera, but upon returning see that the BTC ‘price’ for it has reset. It now says ‘0.21’. Five minutes later it says ‘0.19’. You toggle back to the US dollar. It still says $5k.

The reason for this is simple. The camera actually costs $5k. This is the real price. The store, however, constantly queries a Bitcoin exchange like Coinbase, asking how much Bitcoin would need to be sold to get $5k. This amount fluctuates as the dollar price for Bitcoin changes (reflecting Bitcoin’s relationship to all other goods, via the monetary system). If you opt to hand over Bitcoin for the camera, the store will take it and immediately sell it for $5k on Coinbase.

The alternative way to do exactly the same thing would be to just sell some of your Bitcoin for $5k and then hand it over to the store. What’s going on here is that the store is offering to do the selling of the Bitcoin for you, which is why they ask you for $5k worth of it. This is countertrade. The reason why the dollar price for the camera stays constant while the supposed Bitcoin ‘price’ for the camera doesn’t, is that the latter is not a price: it is a countertrade ratio. The money price for a camera is being offset against the money price of a Bitcoin collectible, leaving a residual swapping ratio between them. Because Bitcoin’s money price constantly changes through the speculative market upon which it is traded, the online store has to constantly change the ratio to maintain the $5k selling price.

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Why this matters

Much of the rhetoric around Bitcoin is predicated upon the idea that it is challenging the monetary system. From a certain limited angle, it is. If a large number of people begin indirectly countertrading with dollar-priced digital collectibles, rather than directly purchasing things with dollars, it could affect the surface level of the monetary system. I myself have used Bitcoin for countertrade on many occasions.

But make no mistake. Just like a kid swapping a ball for toys does not undermine the Federal Reserve (which issues dollars that both are priced in), swapping a dollar-priced Bitcoin collectible for dollar-priced goods does not fundamentally alter the structure of the monetary system.

Indeed, crypto countertrade only works if Bitcoin first gets a dollar price in a speculative market, which in turn will enable it to be swapped with other things with prices in consumer goods markets. This is fundamentally different to an actual monetary system that is used to establish relative value between different goods in all those markets. What we can say, however, is that Bitcoin collectibles have very high countertradability, which is not a trivial property, and can be useful.

It is very important, however, to be able to distinguish between a countertrade object and a money token, but the ability to do this is very poorly developed right now, which is why the media is constantly full of stories of Bitcoin as ‘money’. Unlike a ball, which very clearly is not money, Bitcoin collectibles are surrounded by monetary language and branding, and come pre-packaged with monetary mythology (imagine a movable digital ball pasted over with images of coins). This makes them very easy to confuse with actual money tokens.

Bitcoin will only become a true currency at the point at which a kid (or adult) holding the tokens thinks about goods in a supermarket, rather than thinking of how much they can sell it for. The key hallmark of money is that when you hold it in your hand, your mind does not wander off to think of money, but rather thinks of goods on shelves. Right now, Bitcoin tokens do the opposite. They come from the digital ‘shelves’ of digital markets, and make people think about US dollars (or whatever other currency they're using). This means they can be used for countertrade, but not for ‘buying’.

To conclude, let’s use this to make sense of the recent news from El Salvador, in which President Nayib Bukele claims that Bitcoin is now a ‘national currency’ there. This is absolutely not true. Bukele is simple pushing his citizens to use Bitcoin for countertrade. Their actions are not going to establish ‘prices’ for goods in Bitcoin. Rather the money price of Bitcoin will still be established in a global speculative market (very far away from El Salvador and largely detached from the activities going on there), but will be available to use to calculate countertrade ratios for dollar-priced goods in an El Salvadorian store (El Salvador uses the US dollar).

Once you learn to see this, many more statements about Bitcoin will become much clearer. I will be publishing more guides like this to help you navigate through the language games the crypto community plays, so please do sign up if you’d like to hear more.

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This meme is designed to exploit a number of weaknesses in our understanding of money, and to play on our fears. I’m going to show you how it does it, and why.

Now it’s story time.

The Time-Traveller

Imagine you’re a worker in 1929. You’ve spent a week labouring, and get paid a wage of $20. You’re a low-paid worker - others in the car factories are making up to $30 a week.

Every Friday evening, after you clock off work, you walk tiredly to the store and exchange it for a basket of goods to feed yourself for the next week. You get porridge, cigarettes, bread and so on.

You don’t spend it all, because you’re also slowly saving up for a piece of high-tech equipment. You see it in the window of an upmarket store each day, and it costs an outrageous $150! It’s taken you almost a year to save up, but you’re edging your way towards having enough. Here it is, a beautiful Victor Gramaphone.

One Friday you have to work later than normal. You clock off and get paid your $20 for the week. Exhausted, you slowly trudge your way through empty streets towards the last open night store. Suddenly you feel static electricity crackling in the air around you. A strange light appears in sky above, and a weird whooshing sound comes screaming out of the night. A terrifying time portal from the future opens up, and - before you know it - sucks you in!

You find yourself projected through a harrowing vortex that feels like this. It hurls you forward 91 years into the future and dumps you outside a mall in 2020, still holding your $20.

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You raise yourself to your knees and find yourself in a parking lot. Some stoned teenagers are staring at you whilst playing strange music out of boxes. They hold rectangular gadgets with shining lights that they tap with their fingers. Impossibly advanced automobiles race down a highway to your side. You’re in a frightening landscape of steel, glass and concrete.

You scream and run to hide in the shadows under an enormous billboard of someone called Rihanna. You slowly calm down, and discover you’re absolutely famished - the time-travel really depleted your energy. You smell a delicious aroma wafting from a hipster food van selling burgers outside the mall. You cautiously approach it, but scream again: to your dismay you see that a single gourmet burger COSTS $20!

In the world you just came from, you laboured for an ENTIRE WEEK for that $20, but in this new world you’re now supposed to hand it over to someone who spends no more than 10 minutes frying up a burger?!

A few hours later some cops find you wondering the streets in a daze, and they take you to a hostel for the homeless. This becomes your temporary home while you try adjust to your new society. You begin to learn things about this strange world. For example, it dawns on you that other people seem happy to buy the burgers from that van because they seem to get paid much higher weekly wages than you used to, so in relative terms the burger seems less expensive to them than it does to you.

You also begin to notice that they have a lot more stuff than you had in 1920. Even the janitor in your shelter has one of those magic gadgets with a screen.

The shelter organises for you to get some part-time work as a removals worker. The company will pay you $75 a day. Wow! That’s more than three times what you used to get paid in a week. One day, you’re passing an antiques dealer, and you see your beloved gramaphone! Miraculously, it still costs $150, although it does look a little more beaten up than it used to. Still, you scream with excitement. Oh sweet lord, I can get the gramaphone for just TWO DAYS OF WORK! You run into the shop looking like this…

What does this story tell us about the Bitcoin meme?

Look back at the supermarket trolley meme we started with. It tells the exact same story as I just did, but with a different spin.

The top half of the meme tells a story of a person in 1929 with 20 dollars in their pocket, who is suddenly projected forward into 2014 to discover that the 20 dollars they earned from their’s week’s labour only buys them a tiny amount of stuff.

Weird. How did this person end up in 2014 with only 20 dollars? Time travel? Cryogenic freezing? Really good genes but really crap pension?

A financial advisor in 1929 probably should have told this person to invest their money into financial instruments like shares, so that when they froze themselves for 85 years they could have taken a percentage cut of the economic activities of the people who kept working.

The bottom half of the meme, though, tells another story.

In this story, someone in 2012 apparently earns something called 1BTC, but then finds that the store will only give them a small amount of stuff for that. Two years later, however, their wage hasn’t changed, but the store will now sell them an overloaded trolley for exactly the same price. Miraculous. How did that happen? Where did all that extra stuff come from? Isn’t it amazing that a week’s labour in 2012 earns you the right to command many months worth of labour from other people in 2014? I mean, somebody made that stuff in the trolley right?

Imagine if all our salaries just kept multiplying in power in this amount of time. We’d all be getting so much more stuff from… well… all those people who are making that stuff.

Wait a moment. Something is suspicious here…

This meme is designed to make you feel angry about your loss of purchasing power as a small saver, and it does this by decontextualising the act of spending money from the act of earning it. When you place its images into a more holistic context, and recontextualise them, this meme not only falls apart, but reveals three secret messages hidden within its structure. They are like an payload waiting to be delivered into your consciousness by a Trojan Horse. Here are the three messages.

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Secret Message 1: Creditors are your friends

If you walk into a supermarket, you are easily able to make a distinction between the diverse range of goods you see on the shelves, and the money you use to buy them. You can in fact abstract from that to imagine an entire society: at any one point, there is a diverse pool of goods and services in a society, and a pool of money being passed around to claim those goods.

Back in 1920, your $20 claims a certain percentage of those goods. In 2020, though, it doesn’t claim the same percentage.

This is not actually that surprising, because there were 100 years between 1920 and 2020, and in that time vast changes occurred within the economic system. These changes include such things as:

• Billions more people entering the global economy

• Massive expansion of economic production

• Massive changes in technology

To visualise this, imagine the economic system as an interconnected network of people producing things, but expanding outwards, like this:

The world of 1920 is like the opening phase of this image, when there are far fewer people, far fewer connections, and far fewer things. The world of 2020, on the other hand, is a far denser and bigger network. This is by no means always positive - for example, there are very serious environmental consequences to an expanding economy.

Nevertheless, for the purposes of our meme analysis, the first question you want to ask yourself is this: Does the average person in 1920 have more stuff than a person in 2020? I mean, that’s what the meme is trying to imply. They show your trolley getting emptier and emptier. You’re losing something, right?

Do a quick reality check on this one at the supermarket. Imagine a 1920s general store. Compare it to a modern Wallmart on Black Friday. Whose getting more stuff?

The second question you need to ask is this. In what world would you expect a money unit to remain stable for 100 years?

I’ll tell you. A static, frozen world. Let me show you an example of such a world.

You can play Monopoly in 1960, and then store it away for 60 years and discover that nothing changes. This is because the game designers have simply assumed away all the actual dynamism of an organic human economy and created a static rule set in which the money units will always claim the same amount of stuff no matter what (see my in-depth analysis of Monopoly Money if you wish to explore this).

The Monopoly world is frozen in time (like a paused version of the network animation above). There are no students entering into the labour force trying to find new jobs. There’s no population growth. There’s no life. There’s no fluctuating pricing. There is, in fact, no actual capitalist system with a growth imperative trying to expand the economic network to ever greater scales. It’s almost… well… a steady-state centrally-planned economy with no people.

Regardless of how you describe it, you can be sure that if you earn $20 in the Monopoly world, and then come back decades later, that $20 will still do exactly the same thing.

Organic economies do not work like the Monopoly world. Imagine a bear hibernating for 85 years and then waking up into an expanded population of younger bears before charging around and angrily demanding the exact same percentage of the berry-patches he was used to when he went to sleep decades ago. Oh the injustice of his loss of power. These lazy young bears should have been keeping his patches intact!

The equivalent behaviour for our time-traveller would be for him to rough up the stoned teenagers in the parking lot, demanding that they hand him more purchasing power in the form of their wallets, so that he can claim a burger without losing his own purchasing power. Give me my rightful share of this society’s goods!

So, yes, it is true that 1920 credits do not do what they used to do, but it’s also true that in the mean time new generations of young people have massively expanded the economy, which is one of the reasons why the 1920 credits have been rendered comparitively less powerful as the economic network has expanded.

Ancient hunter gatherers intuitively understood that if they failed to keep hunting or gathering they’d fail to survive, and that principle - that humans survive on short-term production cycles - remains to this day. This is one reason why there’s something of a ‘use it or lose it’ element to monetary units, which mediate access to an organic human economy.

Don’t misinterpret me. I’m not saying that there are not abuses of the monetary system by the powers that be, but notice how inorganic the message of the meme is, presenting a social system which is supposed to leap a gap of 100 years with no change.

My family is from Zimbabwe, so I know that inflation in excess can be a very bad thing, but I’d like to ask you what the mirror-image of hyperinflation is. Well, it’s a world in which money units get ever more powerful, but have you ever wondered what that world is? Any ideology that tells you that it is naturally good that money gets more powerful over time is fact an ideology of people who wish to cling onto power despite not working. What are these people called? They’re called creditors, those who stand to benefit from renting out access to a limited means of exchange to newcomers who are trying to enter the fray.

Even conservative economists like Milton Friedman realised inflation went hand in hand with a growing economy. This is a complex topic to convey in a single post, and there are many ambiguities to it, but - in crude terms - if the money supply is held taut in the midst of an expanding economy it can act like a form of strangulation: your production is supposed to expand whilst the money stays taut, which means the creditors become very powerful as those without money demand it, in order to ‘breathe’.

This is a highly simplified account, but it might offer some insight into why a trolley might ‘fill up’ with unearned goods as those holding onto constrained money can claim more from the young people who are producing the new stuff.

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Secret Message 2: Capitalists don’t screw you. Money does.

Let’s look at the top half of the meme again. It is decontextualised, so there’s no explanation for how the person gets their $20, but it presents those dollars somewhat like a disintegrating commodity, like a grain rotting away over time.

By presenting this situation out of context, the meme is designed to conjure the commodity imagination of money, but to apply it to a form of money that simply isn’t a commodity.

The commodity imagination is not a theory. It’s an orientation, mindset, or way of approaching money, in which it’s imagined that money units are - or should be - some kind of ‘substance’ that ‘carries value’. Many (if not most) people subconsciously use this orientation, and it often leaves them susceptible to believing that modern money is somehow ‘not real’, because it is not a true commodity. This also leaves them susceptible to believing that modern money might be a kind of unnatural abomination which is rotting away because of the deceit that lies behind it.

I write a lot about the psychology of this imagination in other places, but for our current purposes the main question should be to ask what is happening to this ‘rotting’ money. In the case of grain, it literally decomposes and turns to dust, but the meme isn’t trying to imply that the physical material of banknotes is disintegrating. It’s trying to argue that the ‘value’ is escaping from the dollar, but where is it escaping to? Is it like a gas leaking out of the atmosphere into space?

No. Monetary systems are closed systems. The internal supply of tokens can certainly fluctuate, but every act of ‘paying’ in one part of the system is also an act of ‘being paid’ in another. One person’s spending is another’s income.

Let’s turn back to the supermarket example shown in the meme. How does the money turn into goods? Well, you hand it to the supermarket cashier, who puts it in the till, from where it will eventually end up in the bank account of her bosses, who will pay her a small slice of that as wages for being a supermarket cashier. Those bosses will also use some of it to pay the suppliers of the actual goods. The remainder is called profit.

In other words, your spending in the supermarket gets split into slices that end up as the income of a whole range of different people and companies, but somewhere else in the system other people are spending, and that ends up as your income.

Our 1929 Time-Traveller was getting his income in the form of wages, probably from some company that was selling stuff that he was employed to help make. He would get paid and then go to a store to buy stuff that other people were employed to make. Now he gets ported into 2020, but let’s now imagine that, in a state of ignorance about his new society, he tells his new bosses that he’ll take $20 a week to work for them. The bosses look at each other, and say ‘suuuure thing buddy’.

Now he gets paid his weekly wage, goes to the store, and hands it over to a cashier for a meagre amount of goods. A tiny slice of his $20 ends up being redirected from the supermarket owners to pay the cashiers, who are getting paid $400 a week.

What’s happening here? Well, everyone else’s wages have increased while his have stayed static. This means only one thing. He’s being screwed by his bosses, who are paying him an outrageously low wage whilst pocketing the massive profits from selling the things that accrue from his labour. They’re laughing hilariously at how little he expects. Indeed, they’re going to take those profits, and stock up on five whole trolleys worth of single-malt whisky and luxury goods.

If you find yourself in this situation, feel free to go picket outside the Federal Reserve to demand an increase in the purchasing power of your $20, but I’d personally suggest that you consider joining a union, because all your fellow workers are getting paid way more than you are. In other words, it’s possible that you’re not so much being screwed by the monetary system, as you are being shafted by your bosses.

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Secret Message 3: Our liberation comes from debt-bondage

So, let’s recap. Not only is this meme designed to naturalise the interests of creditors, but it’s also designed to blame the monetary system for low wages given out by wealthy CEOs. So much for standing up for the little guy.

But it gets even worse.

Let’s turn to the bottom half, which tells that story about a person in 2012 who finds themselves getting all that new stuff in 2014, bursting out of their trolley like a consumer cornucopia. Their money is powerful right?

The thing about money is that it’s actually nothing without people. It’s not like the power resides in the money. It resides in the economic network which is accessed through money. It’s not the money that’s getting you that stuff. It’s people that are getting you that stuff.

For example, you could find yourself deserted on a distant island with a billion units of money, and still starve to death, because no amount of throwing money at the forest will make anything emerge. Those units are meaningless unless they are locked within a labour network, and this applies to any form of money, regardless of who issues it or what its characteristics are.

So then, where are those goods in the trolley cornucopia coming from? Well, other people of course. But how is it that these people are falling over themselves to gush out all these goods for the person pushing the trolley around, seeing as though two years ago that person was not prepared to do the same for them?

Perhaps there’s another side to this story. Let’s imagine, for example, that rather than being a person who earned 1BTC in 2012, the person was a broke, unemployed worker. In an act of defiance of their situation, they resolved to become a small-time entrepreneur. To start their ceramics enterprise, they took on a 20 BTC loan from a creditor. They use some slivers of it to buy supermarket goods, but the rest gets poured into buying the materials to start their business. The interest rate seems ok - they believe that they’ll be able to make enough stuff to sell, which can be used to pay off this loan in a few years time.

But wait. There’s a problem. The money units used to price everything keep getting ever more powerful relative to the things they are used to price. This means the person has to sell a lot more pottery than expected in order to keep up with loan repayments. Oh crap! The money has quadrupled in power in one year, which means the person will have to sell four times more actual goods than expected to get the same amount to repay the loan. They’re suddenly extremely stressed. How on earth can I make that much! They’re racing to desperately produce enough to try eke out the income to repay their debt.

Someone else on the other side is seeing that as their trolley getting ever more full. Ah, this magical money is just miraculously bringing forth more goods into my trolley like mana from heaven! Amazing, let me also buy some fine ceramics.

That mana comes from debt traps, and that isn’t heaven by any stretch of the imagination.

The One Deep Truth underneath it all

I’ve showed you the three secret messages that can be pulled out of this meme through time-travel, but let me now reveal the one deep truth that beneath all of them. None of these apply to Bitcoin in the slightest.

But why?

Well, it’s simple. Bitcoin is a sophisticated - even elegant - system for moving digital objects around in a decentralised manner, but it is not a monetary system. Those objects are priced on a market, like any other object, but they use moneylike branding and slogans to compete for attention against other objects, which might otherwise be bought instead of them.

Memes like the one above are part of the marketing pitch, and have three objectives. The first is to do some conservative monetary scaremongering, to leave you believing that you desire deflationary money. The second is to then present to you a non-monetary object which superficially looks like this ‘deflationary money’ you seek. The third is to then sell you this object for… well…. actual money.

Think of Bitcoin tokens as being like ornate digital collectibles, with elegant monetary branding carved into them. They are available for sale in all good online stores that sell digital collectibles, and the darkest of the secrets in the meme is this: the Bitcoin collectibles in the bottom half are not competing against the dollar in the top half. They are competing against the goods in the supermarket trolley.

The objective of the meme in 2021, is to get you to take your 2021 dollars and spend it on Bitcoin (sold by one of those dealers operating out of the digital collectibles market), rather than spending it on trolleys full of actual consumable goods. This will allow a Bitcoin dealer to take possession of your 2021 dollars, and then walk outside to a supermarket and full up a trolley with bourbon and pistachio nuts.

This is easily confirmed by perhaps the most obvious flaw in the meme. No supermarkets accepts Bitcoin, and no labourer producing the goods in the trolley gets paid in Bitcoin. It is - in other words - something you can choose to ‘put in your trolley’, rather than something you use to buy the trolley goods with.

The meme is so successful because it plays on the ambiguity of the collectible, which uses its ‘moneylike’ branding to pass itself off as a competitor to money rather than a competitor to goods. If you want to read further on this, check out my piece for Coindesk, called How to Win a Bitcoin Street Fight.

This branding has been very successful, and now the object is appreciating in price, as people try to buy them from the dealers. In a transnational economy with billions of people, there indeed are hundreds of millions who might be prepared to buy such an object, especially in anxious times, and its market price could rise a lot as the dealers who hold it sell small slivers to those trying to buy it.

The dealers use this price rise to feed into the existing marketing they started with. They say things like ‘Bitcoin is rising against the dollar’, when what’s actually happening is that Bitcoin’s price relative to other goods and services is rising, as it defeats other objects in the trolley in the race to be bought.

The dealers might say ‘Bitcoin is increasing in purchasing power’, but Bitcoin is not used to purchase things. It is, rather, something that is purchased.

Imagine going into a store, buying an expensive item, and then returning a few days later to return it. The store has two options. It can give you your money back. Or it can tell you that you can swap the returned item for goods of an equivalent price. In this latter situation, is this returning good now 'money’? No. It’s a money-priced good that can either be exchanged for money, or swapped for other money-priced goods (this is called ‘countertrade’).

Similarly, you can buy Bitcoin in a market for digital collectibles, and you can return to that market to resell it for money. Alternatively, you can swap it - or countertrade it - for another money-priced good. Those are the two options, and neither of them entail Bitcoin being a monetary system. It remains, as ever, a movable digital object with moneylike branding.

The good news is that this means the ‘cornucopia’ of stuff overflowing out of the supermarket trolley in the meme is actually not being extracted through debt slaves. Rather, it’s happening through the bog-standard process of selling something for more money than you bought it for, and then using that money to buy more stuff. This is probably somewhat less destructive than a highly constrictive deflationary currency.

The bad news is that in the process of trying to pump this object with this monetary branding, the dealers are telling millions of people deeply conservative stories about the monetary system, and packaging it up as some kind of exciting radicalism. In fact, if anything, they’re just helping to empower the standard conservatives within the normal fiat monetary system, who benefit from the ideological messages within the marketing used to sell the objects.

Upon reading this, those dealers will probably deny this. They will probably argue that I’m a stooge for the fiat money system and the banks and the Federal Reserve. But I’m not the one trying to sell you Bitcoin collectibles for dollars, am I?

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