Friday, March 2019
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The United Colors of Cryptocurrency
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The United Colors of Cryptocurrency

I am someone who is always intrigued as to how things are marketed. It occurred to me after giving a lecture at the University of Cyprus, that there was currency even in hotel names which pertained to other cities, countries, or non-national historical figures. As I walked around Nicosia, I spotted hotels with names like Cleopatra Hotel, Europa Plaza Hotel, Xanthis Inn, Central Park Residence, and so forth. Then I started to think about it and many hotels the world over maintain a currency in their reference to “somewhere else,” as if being a hotel was not enough of a luxury in itself. And it hit me that somehow, bizarrely, such names would attract people just for the novelty. You can stay in Hotel Venezia in Rome, in Venice check into Hotel Tokio, in Tokyo sleep a night at Hotel New York, and in New York book into Hotel Wales. This form of referentiality to something outside the product made me think back to how capitalism functions whereby exchange-value of commodities takes on a value of its own, as if its own currency.

Marx defines value as a social process of objectification of labor whereby, in the market, labour becomes represented indirectly as the “exchange-value” of commodities. This exchange value takes on “independence” in money, the canonical form of value. Money becomes the necessary  condition for exchanging commodities and their production. In other words, the labor theory of value (LTV), a central concept of Marx’s Capital (1867) maintains that the value of a commodity can be measured by the average number of labor hours required to produce a specific commodity. Marx argues that this theory explains the value of all commodities, including the commodity of waged labor. And Marx’s theory of money links money’s role as a universal medium of exchange to other commodity’s exchange values, which includes the value of the ability to work itself, labour-power.

Until 1971 the classical money theory of Marx and Ricardo easily accommodated financial systems around the planet as paper notes were merely symbols for gold. But since the end of the gold standard in 1971, a new system came into play. I turned to Paul Cockshott, economist and Honorary Research Fellow at University of Glasgow, for more answers to my questions. Cockshott explains how, since 1971, dollar bills or Euro hold any value since the end of the gold standard:

The best explanation for this is given by economists like Wray and Knapp, who put forward the state theory of money. This is not initially expressed in terms of labour but can be converted into a description in terms of labour. Their claim is that the Euro circulates because European law states that all tax debts in the eurozone must be settled in euros. This concept is brought out most clearly in the work of one of that school Matther Forestater who asks how the British were able to enforce the circulation of their colonial currencies in their African empire. He shows that they did it by imposing taxes that had to be rendered in the colonial coin and not in the traditional cowries used as money. This forced the peasants to sell crops to the British merchants for these coins to get the coins for the tax. They designate something that only the state is allowed to issue as the only thing they will accept for tax debts.

Cockshott goes on to tell me that in this way money is established through “the process of state appropriation of surplus labour” discussing how Wray and Forstatters view the shift from early feudalism which charges corvée(forced labour exacted in lieu of taxes)  to a system which commutes labor duties into taxes in state money, forcing the monetarization of the whole economy. In his paper co-authored with David Zachariah, “Conservation laws, financial entropy and the Eurozone crisis,” the contemporary extrapolation of older monetary systems through the Euro is explained:The empire or state imposes the circulation of its token currency by obliging the producers to pay taxes in money. Since the producers must ‘render unto Caesar’, they are forced to sell their product to the employees of Caesar. The state creates money tokens with which it pays its employees. The state employees willingly work for the state in return for these tokens knowing that these tokens will enable them to command the labour of others in their turn. The state thus breaks down the self-sufficient or barter economies of the countryside and enforces the spread of commodity exchange.

What is interesting in this understanding of currency is that labor is what fundamentally backs up currency today. Labor is a real “thing,” if you will, where names of hotels are just glitter. How then does capital arise from the symbolic thrill of an empty product, of the new when there is nothing tangible—neither the gold standard, nor labor—to back it up?

Here is where I return to my hotel “being there” theory whereby the cryptocurrency market has had to rely almost entirely on its branding and presentation as credible such that today, these new monetary products are either billed under the umbrella of national identity or they are still caught up in the early millennial cloud or a version of an e-something nomenclature. While the symbolic force of dot.com-esque names of blockchain companies, mining providers, and trading platforms (eg. CloudHashing, BTC-e, etoro) is quite powerful, we should not underestimate the way that bitcoin can be sold under the guise of national identity, such as Bitcoin SuisseMexico Coin and the e-Krona. Even Bilbao has recently announced its plans for a blockchain system, and French tobacco shops as of 1 January are selling bitcoin through KeplerK. Still, as more and more municipalities think about jumping onto what some call a “ponzi scheme” and what many others claim blockchain is a “gamble.”  Yet, most people are questioning the ethics of blockchain from the way it hosted online, to the over-reliance on servers and the damaging effects on the environment, to its potential links to criminal activities. In seeing the rise of blockchain amidst a widening skepticism of these commodities, I have to ask myself if the new trend of using nationalist names on more recent blockchain offerings is not part of a larger scheme to make these products less suspicious while framing them—albeit counterintuitively—as “safer.”

Bitcoin for many is still a matter of believing in it or not regardless of the façade which references a new era of believability or the more traditionalist approach of the longstanding symbolism linked to the durability of the nation-state. In the end, the liquidity of this digital currency could end up meeting the dreams of its investors or reveal the lie that many claim it is. But, like George from “Seinfeld” tells Jerry, “It’s not a lie if you believe it.”

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