What If I Told You: Money Isn't Real

But It Matters Nonetheless

December 12, 2021
There's a funny meme that I see going around sometimes in cryptocurrency circles:

Morpheus: Knows money?

The implication is that while cryptocurrencies may seem kind of strange and made up, the monetary system and the US dollar is also strange and made up, so really there's no difference.  And, since there's no difference, crypto is just as good and valid as the dollar.  Further,  if you can open your mind and look past the "Matrix" of these made up things, you'll be able to grasp the underlying reality (what this is exactly, is a little unclear, maybe I took the blue pill).

Though this is funny, and there's a grain of truth to it, this is, of course, silly.

It's true in some sense that both the US dollar and Dogecoin are made up, but it doesn't follow that they are the same or that there aren't meaningful differences.  For one thing, dollars have value because, if you are a US taxpayer, they're what you use to pay your taxes.

Al Capone: Would definitely have paid taxes in CaponeCoins, given the chance

But more broadly, saying that because two things don't have physical reality means that we can't distinguish between them is just silly.  We distinguish between "made up" things all the time.  For example, if you meet someone and their job title is "CEO" and you meet someone else and their job title is "Venture Capitalist" that tells you something meaningful.  Those job titles are absolutely made up, but it doesn't follow that they are the same.  We can and do distinguish between things like this all the time.  In The Matrix we learn that there is no spoon.  But, that doesn't mean that we can't tell the difference between a spoon and a fork.

The fact that a bitcoin, for example, trades for different amounts of dollars from day to day means that we can and do make meaningful distinctions between those two things.  If we couldn't tell the difference between them, then why would the price of bitcoins ever change?  And if the price of bitcoins never changed, that would make a nonsense of the whole cryptocurrency project.

I'm old enough to remember the heady days of the late 90's, and some of the rhetoric around cryptocurrencies reminds me of how people talked about the Internet back then.  Blockchains are a fundamentally new computing primitive, and that's really cool and valuable.  But let's not fool ourselves and pretend that all else will be swept away by them.  That kind of muddled thinking makes it harder to build the future.
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