The title is a part of Adam Smith‘s description of the flaws inherent in any system of bartering: Once two parties have actually agreed to negotiate a swap of items or services, which is easier described than accomplished, how long will it take to negotiate value or price? Is my horse worth the same as your horse? Why do you think so? You must be hiding some detail. You must be trying to foist a sickly ill nag on me to ride off with my healthy animal. How dare you …
If one party thinks the other is out to cheat him—even if the other party is not out to cheat—he will over sell with the intent to make a profit. Further, if the other party also thinks he is about to be cheated, both parties will attempt to cheat each other in order to think they are protecting themselves. Hence Smith’s description of barter as “higgling, haggling, swapping, dickering.” The two bartering parties run the risk of spending the entire day in fickle negotiation rather than in work.
There is a reason why money was invented. It represents a middle party that two bickering, bartering parties find unites them in frustration (a government or a bank setting standards or prices from on high) and (en)forces agreement. I hand you this five-dollar bill for this venti because you and I agree that its stated price is almost five bucks even though you know that I believe that it costs 28 cents to produce from coffee field to my venti cup (it doesn’t; it costs far more), and you accept it, knowing that my half-laughing complaints about my caffeine problems costing me another handsome five-dollar bill almost make your labor worth a handsome five-dollar bill.
Money represents a social agreement. So does employment, something that parties also used to barter over every single morning. (“Work eight hours for me and build that wall in that time and I will give you four chickens.” “What if I build half the wall? Do I get two chickens?” “You get nothing.” “But you got half a wall.” And, hand to face, … scene.) Modern employment is an agreement between you and me that you believe you are my employer. According to the Social Security department, my genial attitude that showed that I agreed that you believed you were my employer towards several people who called themselves my employer earned me upwards of $150,000 over almost 30 years. Oh, right, that is not very much. I was not much of an employee sometimes.
Money has been the primary representation of the exchange of commodities, services, or labor since medieval times; longer in some parts of the world. To the best of any anthropologist’s or historian’s research, no community, no society, has subsisted (much less thrived) on a purely barter-based economy. Money as a negotiating tool has been around for a long time. It is a middle man that works.
Which brings me to bitcoins, a newish system that seems to offer a system for those who agree that they agree that they should agree on a mutual agreement that it represents an agreement that money should not involve human beings at all. It is obvious that I do not understand it or that I understand it too well.
For a couple of years, I have been attempting to educate myself about “bitcoins.” Correction: I decided this morning that I wanted to educate myself about “Bitcoin” and “bitcoins.” After untold minutes spent on this project, the extent of my knowledge remains this (ahem): “Bitcoin,” with the capital B, refers to the network(s) or the software that people use to obtain or unlock “bitcoins,” with the lowercase b.
The rest of any definition I have read presents to me a lot of things I usually refer to as “words.”
Almost three years ago, Marc Andreessen, a famous man, wrote a laudatory essay in the New York Times entitled, “Why Bitcoin Matters,” a long piece that I could not stay with longer than to understand that it is laudatory because it is full of praise. I do not understand what this new digital currency is all about at its very premise. (The fact that every news article that attempts to explain this virtual concept features a photograph of physical coins does not help me in this at all.)
A number of my blog subscriptions pointed me to a reply to the Andreessen piece that was written and published shortly after, entitled, “On the Matter of Why Bitcoin Matters,” by one Glenn Fleishman. My takeaway from that is that Fleishman agrees that the concept (lowercase b bitcoin) is an exiting one for the future of digital transactions but not as exciting as the invention of the WWW or personal computers, which is how exciting Andreessen seems to think it is.
What came to my mind while it was reeling with financial details and denials of frequent fraud in the bitcoin realm was a classic from “Monty Python’s Flying Circus,” entitled “Mystico and Janet,” in which residents of apartment buildings built by a magician (and his assistant) are only secure as long as they believe the apartments in which they sleep actually exist, which they do not.
Getting people to agree that they need to agree on the simple premise that they both need to agree is almost impossible on a good day. This five-dollar bill represents a grudging belief that we both believe that we are agreeing in general terms that I have a five-dollar bill in my hand. Not much more than that. And that we both believe that the system works, and we both believe that the other does not believe this. That is how a venti winds up being priced at more than 28 cents, which is how much someone like me believes it cost to produce, from environmentally sound coffee field to fair-trade coffee bean auction, to factory packaging in handsome one-pound bags of coffee, to you angrily misspelling my name on the paper cup. Actually, when I describe the process from field to coffee cup like that, I wind up thinking that five dollars is not enough for my venti. Can I have a small instead? What do you mean you don’t know what a “small” is?
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This first appeared in April 2015. My education has not continued.
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