Recently I’ve been following some Weibo accounts and websites related to Bitcoin, watching from the sidelines and even taking part in some of the related debates—for instance, the arguments surrounding this Weibo post were very lively: http://weibo.com/1646744100/zBFt7q7D1
I must admit that paying attention to Bitcoin while I’m anxiously preparing my doctoral dissertation does make me seem a bit off task, but I’d still like to offer myself a defense: after all, this is not completely beside the point.
First of all, of course, one buys Bitcoin hoping to make money, or at least hoping to hedge risk. Right now the international and domestic financial and economic environment is facing a profound turning point: the United States is wrestling with whether so-called QE should be ended; whatever the outcome, whether it stops or cannot stop, the world’s monetary environment will undergo a change. And although China was relatively steady in the previous financial crisis, under the combined effects of slowing economic growth, the housing bubble, and various other factors, whether it can remain stable in this round of upheaval in the international market is highly questionable. The A-share market has already reacted. In any case, even putting aside political variables, the outlook for China’s economy over the next few years is already shrouded in dark clouds.
Chinese people value prudence and preparation, so Chinese people are fond of saving. But under a possible inflation crisis, saving is precisely the least reliable thing. Stocks, bonds, funds, and other traditional so-called inflation-resistant investment products all belong to one and the same financial system; once the financial system itself faces a structural crisis, none of them can easily escape unscathed. Only old-era gold and new-era Bitcoin have the possibility of remaining outside the existing system and standing on their own. So even though gold has been falling in a row, I still believe it is a fairly good hedging investment choice, and Bitcoin is even better than gold.
Second, the reason I have continued to pay attention after buying Bitcoin and writing several related articles is that this really does fit my academic interests. On the one hand, I had a certain interest in economics as early as high school: in first year I liked philosophy, in second year I shifted to history, in third year to economics, and I almost went to Shanghai Jiao Tong University to study economics. Although I later completely set economics aside in college, I still have some lingering attachment to it; on the other hand, although I work in the rather abstract business of theory, my concern for real society is strong, and the issue of Bitcoin involves society, the state, and politics; finally, and more importantly, the issue of money is itself a fundamental aspect of media philosophy.
From the perspective of media philosophy, there are two great media that matter most: language and money. In the broad sense, language includes its extensions: writing, letters, and the like; money, from primitive general-purpose commodities to gold and silver and then to paper currency, and so on. These two media constitute the structure of the whole society and support the basic media of people’s relationships and interactions. Ordinary media ecology pays more attention to the former, but the latter is equally important.
The basic insight of media ecology is that media are not neutral; media create environments. Money, as a medium of exchange, is of course not neutral either; different forms of money have their own different tendencies.
The most basic tendency can be framed in Innis’s classification: time-biased and space-biased—some media are more inclined to be preserved for long periods of time, and the people who use them tend to assess value from a long-term perspective; while other media are portable and easily damaged, inclined toward spatial diffusion, and the people who use them tend to assess value in terms of immediately visible gains and expansion.
From this perspective, the dollar is the most typical space-biased currency. Below I quote a passage from a rather good article:
“In an inflationary society, since money is depreciating day by day, it should be wise to spend it early and enjoy the present; people no longer, or rarely, think about the future, and may even overdraw future income to enjoy today. Diligence and thrift can only become a kind of moral high ground, a choice of those who are mocked. Could this world, which departs from humanity’s universal values and moral outlook, really have been meant to be this way from the start?”
We often hear a fable about an American old woman and a Chinese old woman: one says that a Chinese old woman spent her whole life living frugally, and the money she saved was finally used to buy a mansion just before she died; while an American old woman took out a loan to buy a mansion when she was young, repaid the loan throughout her life, and by the time she died finally paid it off.
In today’s dollar world, obviously the American old woman is wise, while the Chinese old woman looks foolish. Chinese people always like to think about the future, not only for their own old age, but also for their children and grandchildren; while Americans focus on the present, not only spending today’s money today, but also spending tomorrow’s money today.
But the cruel reality is that, under the current financial order, the Chinese old woman with long-term vision is the foolish one; all her hard work is thankless drudgery. Let alone buying a house before dying in the end, she is even more likely to save up until death and still be unable to afford one. And even if Americans cannot repay their loans, at worst they just go through bankruptcy liquidation; more to the point, there is a good chance that after taking out the loan they flip the property and make money as an investment.
My father is also a traditional Chinese man. He advocates doing only as much as one has capital for, and absolutely not borrowing money. If he wants to buy a house, he will wait until he has saved up the full amount before buying. Of course he also taught me to be down-to-earth and proper. Sometimes I want to persuade him to be more open-minded, after all, borrowing and spending ahead of time are the basic logic of capitalism: saving is stupid and borrowing is smart; the poor save money and the rich withdraw it—this is the logic of the world today. But deep down I still agree with him: it is the world that is wrong, not him. What is wrong with diligence leading to wealth? What is wrong with looking far ahead? What is wrong with relying on oneself and living honestly? Is living for the day and only caring about the present really more reasonable?
But this world encourages the lifestyle of drinking today’s wine while you can, and the root of that lies in the inflationary monetary system. Money depreciates every year—supposedly even when the economy is completely healthy, a 2% inflation rate must be maintained, let alone in other situations. Money keeps becoming less and less valuable, so you are always inclined to spend it as soon as possible—of course, only the rich have the qualification to live from day to day; the poor still have to save money desperately, whether willingly or unwillingly.
Many people criticize Bitcoin by focusing on its deflationary nature—of course, people who raise objections from this angle are already relatively on the right track; compared with those who start shouting “Ponzi scheme” at every turn, or who desperately emphasize whether there is state backing, criticism of deflation is worth responding to.
Of course, speaking realistically, as I mentioned in an earlier article, I think Bitcoin will become the gold of the internet age, forming a monetary ecology together with other currencies, including inflationary ones. But if Bitcoin’s revolution truly succeeds, so that in this new monetary ecology it is deflationary currencies like Bitcoin that occupy the dominant position, then its subversive significance will be fully revealed.
Many criticisms of Bitcoin’s deflationary nature are reasonable, because they are thinking from the standpoint of the existing financial system, and they find that many existing financial and economic behaviors will be frustrated. For example, lending: the so-called M0M1M2 lending system centered on the central bank is of course difficult to operate, and private lending will also be hindered to a certain extent, because money appreciates over the long term, and the pressure of repayment over many years will keep increasing. That kind of behavior of buying a house when young and repaying the loan only when dying will become much more difficult by comparison.
Bitcoin is meant to break the centralized economic system centered on the central bank and centralized government; I have already said this in an earlier “The Disappearance of the State.” On the other hand, if the American old woman’s borrowing is frustrated and the long-sighted, diligent, and down-to-earth Chinese old woman benefits, isn’t that reasonable?
It is not that Bitcoin cannot support lending; rather, it is precisely that Bitcoin wants to restore lending to its original meaning: first, lending must rely on some kind of interpersonal relationship. We borrow money from people, not from nothingness, nor from our future selves. The current capitalist lending system openly and self-righteously advocates living beyond one’s means; it is not borrowing money from anyone else, but consuming one’s own future in advance. Lending is for urgently solving immediate problems, and therefore lending is essentially an act of “getting out of a tight spot.” Unless there is a pressing emergency, why borrow money? Is a society in which living beyond one’s means is the normal state really normal?
Besides lending, there is another way of borrowing funds called financing. Bitcoin of course also supports financing; in fact, there are already several Bitcoin stock markets now. Although holding Bitcoin itself is an investment that preserves and increases value, there are always people who want to earn more, so using Bitcoin for investment is entirely possible. However, a financial market dominated by Bitcoin would indeed be very different from the traditional financial market. In it, the various magic-trick-like financial devices such as leverage and hedging would gradually lose their effectiveness, and retail investors would no longer regard the stock market as a means of hedging inflation. Financing would also return to its original meaning: financing means raising funds. Entrepreneurs attract investors through their own charisma and prospects, and investors choose promising companies to invest in, receiving returns through dividends after the companies succeed in their operations. That is the original meaning of financing, isn’t it? But in today’s financial market, financial behemoths, through all kinds of magic-trick operations, can arbitrage from the stock market regardless of whether the real-world business operators succeed or not. And retail investors don’t care about dividends at all—especially Chinese stock investors: in the entire Chinese stock market, only “73 stocks pay dividends above one-year time deposit interest rates”; for some stocks, it takes more than a hundred years of dividends to break even, and there are many stocks that almost never pay dividends. But why do stock investors still flock to them? This is the real Ponzi scheme: early entrants always expect later entrants to put in funds to help them recover their capital, and such a stock market of course cannot escape the day when the bubble bursts. Bitcoin financing, by contrast, is much more honest. I have already bought several Bitcoin stocks, mainly those of Cäo Māo, and I did so precisely for the dividends.
On the one hand, we increase our Bitcoin through investment or labor, but on the other hand, we also spend our own currency. So someone raises an objection: since the total supply of Bitcoin is fixed, then even leaving aside population growth, if the coins in some people’s hands increase while the coins in other people’s hands decrease, how can that work? But the key question is: why wouldn’t it work? Why do we feel that it is unreasonable for the money in some people’s hands to decrease?
In fact, in the current economic system, some people’s wealth is always shrinking, especially those who keep their money in the bank; their money is in fact shrinking year by year, only the inflationary currency makes people feel the illusion that money keeps multiplying.
And this illusion is precisely fatal; it is one manifestation of what Marx criticized as commodity fetishism: money, as a medium of exchange, becomes alienated into the object of pursuit. Abstract money keeps multiplying, human greed knows no end, and the accumulation of money itself becomes the goal. Multiplying money stimulates people’s greed, but people have almost forgotten that money is earned in order to be spent, that the value of money lies in exchange, and that the accumulation of money is a means, not an end.
A person raised in the modern capitalist world may indeed become a miser when they enter the world of Bitcoin, because they are not used to seeing the numbers in their account go down. But those who get used to the world of Bitcoin will eventually realize that this money has to be spent sooner or later, or else it is worth nothing at all. The poor frantically save money through honest labor, while the rich will sooner or later spend the money they have accumulated, buying necessities and exchanging them for various industries. Because the total amount of Bitcoin is conserved, the poor’s money increases through labor, and the rich’s money decreases through consumption; this is the proper way for money to circulate.
Those who criticize Bitcoin will cite mainstream economists, speak of all kinds of economic laws and financial order, and then say: look, Bitcoin does not conform to these rules, so Bitcoin is a joke.
But who, after all, is really absurd? Shouldn’t we first ask: do these mysterious “rules” conform to our “common sense”? That labor leading to wealth is good and living beyond one’s means is bad—that is common sense; that looking far ahead is better than only caring about the present—that is common sense; that if an entrepreneur succeeds in running a business then the investor makes money, and if the entrepreneur fails then the investor loses money—that is common sense; that saving money is for spending it—that is common sense… The so-called economic laws and financial systems of our time violate the sound common sense that human society has formed over thousands of years. And after these absurd rules are packaged by profound science and mathematics, they become dogma or articles of faith, making those who are trying to restore things to their roots seem ridiculous instead.
bitcoin:1411wgvec6AKWa5cp7sYqNdo8bq6T4xpe6
Translated from the Chinese original with AI assistance. The original text is authoritative.
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