Updated: Jan 16
Okay, I need to talk about cryptocurrencies. This isn't because I want to — there are so many more interesting things that exist in the world, like for example, did you know that until relatively recently, nobody knew where eels came from? Straight up, we’ve known about eels since we could fish, which was like a really long time ago, but it took us until the 20th century to figure out where they came from. And as of right now, we still don’t know how they fuck. Eel larvae just show up in the Atlantic Ocean and then peace out toward Europe and the Americas and we just accept that.
I carry over a zettabyte of knowledge in my pocket every day. Do you know how much a zettabyte is? No, me neither but it’s fucking a lot. If I don’t get cancer, or get hit by a car, or get assassinated, which let’s be honest is every journalist’s end goal, I will likely be alive to see the beginning of our species’ interplanetary migration. And, for like 20 bucks I can buy a robot that shoots water directly into my asshole after I poop. Despite all of these incredible human achievements, not one living person, not even the person responsible for the asshole-cleaning robot, knows how eels fuck.
See? I would much rather talk about that for the next couple thousand words, and frankly I don’t understand how this isn’t the top news story every day until we work this shit out, but instead I really feel like I have to talk about cryptocurrencies. It’s y’all’s fucking fault, too: everytime Bitcoin reaches a new abstractly high market valuation, it tears through the headlines like opioids through Sault Ste. Marie and the internet is cleaved straight down the middle with megaboomers on one side, supervirgins on the other, and no in between.
The former group seems to have been convinced that Mark Zuckerberg would be the last person ever to have a new idea about how to use the internet, and the latter believes that their ability to navigate Reddit and read one whole Investopedia entry is a sign of their superior intellect and that their sustained celibacy has heretofore been a result of an overly intimidating cerebral cortex.
Seriously, if I see one more Twitter comedian’s hot take on how Bitcoin isn’t even real money, or one more explainer thread about how to mine Bitcoin on your gaming PC written by a neckbeard in 3rd year CompSci, I’m going to throw my phone at a Canada Computers employee. I swear to God I’ll do it, they’re right downstairs. How much damage do you think a zettabyte of data can do travelling at (a conservative) 75 mph?
So, what I’d like to do is take a second and go over what a cryptocurrency is, why Bitcoin keeps going up in value, and what the applications and effects of this technology could be in the future. This way, hopefully everyone can shut the fuck up about it a little bit more and I won’t have to worry about whether Canada Computers has insurance, or whether I can afford a defense attorney, which I definitely can’t.
Step one of getting my sanity back: what is a cryptocurrency? You may have heard from like somebody’s uncle once that we used to use gold to determine the value of our currency. Speaking of Investopedia: “A country that uses the gold standard sets a fixed price for gold and buys and sells gold at that price. That fixed price is used to determine the value of the currency. For example, if the U.S. sets the price of gold at $500 an ounce, the value of the dollar would be 1/500th of an ounce of gold.”
The reason we had been able to do this is that we knew that gold was hard to get, that everybody liked it, and that there was a limited supply. This meant that gold would always require relatively the same amount of effort to get, and therefore would keep a very stable value that would apply to the value of our currency. While it keeps inflation in check, because a government can’t just print more gold, the gold standard is an imperfect system, which should be obvious given that we don’t use it anymore.
It’s an imperfect system for a whole bunch of reasons, the majority of which are frankly not worth the effort of understanding. A big imperfection though, and the one I wanna focus on, is that gold is naturally occurring. This means both that we don’t know how much there is in total, and that pretty soon we can just get more from space, which is something our species does now because we’re baller.
Right now, instead of the gold standard, or for that matter any physical commodity-backed currency, we use something called fiat money, like the little Italian cars for pussies. Fiat comes from a Latin word that basically means arbitrary, so when I say our money has arbitrary value, I mean it literally. It has no intrinsic value and is instead assigned value by the government that prints it; a dollar is worth a dollar, a pound is worth a pound, and a yen is worth a yen. But In international markets, a fiat currency’s value is based on the relationship between how much of the currency is in circulation, meaning how much money its government has printed — this is the supply, and how much people want to have that currency, meaning how much money is invested in the creation of the currency, in the economy of its home country — this is the demand.
If you are someone who is forced to feed yourself every day, you should be well aware by this point that this too is an imperfect system. When a government’s central bank prints more money, which remember they can just do whenever because pussy car money (bars), it increases the supply. If the demand is not increased proportionally, say because you’ve invested too much money in the tar sands and now nobody wants your shitty pipeline, Alberta, the currency is worth less in international markets.
This is why the Canadian dollar sucks poopoo and why whenever you hear of an economic collapse, it’s almost instantly followed by the price of bread in that country. Journalists fucking love telling you how much a loaf of bread is worth in a failed state, they’re always like “I bought this wonderbread for 600 trillion Zimbabwean dollars,” like good for you, that’s literally two bucks fifty, I know what hyperinflation is. Also, give that loaf of bread to a starving child, what the fuck is wrong with you?
Anyway, here’s where cryptocurrencies come in. Cryptocurrencies like Bitcoin are similar to commodity-backed currencies in that there is a finite amount of it, it’s just that “it” doesn’t physically exist. We actually know exactly how many Bitcoins there are: 21 million. But they’re not real. I know this is where we start to lose the boomers, but if you are one, bear with me a little bit longer. Bitcoins don’t exist anywhere except in a public ledger that anyone can see, which is called a "blockchain" for reasons that I honestly can’t figure out. However, when you trade bitcoin, the transaction must be verified down to the first time your specific bitcoins were created, or “mined.”
This requires really really hard math. Like supercomputer math, which is why the verification process takes metric fuckloads of computing power, and the requirements increase with each new transaction. According to Investopedia, this process usually takes about 10 minutes, during which, right now at least, about 1.5 to 2.5 thousand transactions are verified. When they are, the computer that solved the really really hard math problem is rewarded with 6.25 “mined” Bitcoin, and a new “block” of transactions is added to the “blockchain.”
Okay, say what you want about cryptocurrency, but the lingo is really lame, so let me try and put this in a way that isn’t deliberately obtuse nerd speak: When you use Bitcoin, it makes additional Bitcoin harder to get. This means that as more and more people trade it, the supply dwindles, both because we get closer to the 21 million cap, and because the processing power required to mine new ones increases. Oh, and by the way, every 210 thousand of those blocks of transactions, the mining reward is halved, meaning that as we approach the 21 million, you get less bitcoin for more effort, further restricting supply, which, as we know from our other arbitrarily valued money, means higher value.
Low supply is all well and good, but it doesn’t mean shit if demand is nonexistent. I have a very low and stable supply of belly button lint, but it doesn’t mean my belly button lint is worth insane amounts of money. And this is where the real world comes into play. In a turbulent global market, like the one caused by the pandemic, the most attractive asset to any investor is gonna be one that is basically immune to inflation.
The U.S. printed something like 2.5 trillion dollars from March to November in order to fight the economic effects of lockdown, which means investors anticipate huge inflation. This, above all else, is why Bitcoin is in the news so much, because when you’re scared of inflation, just assign arbitrary value to something that can’t physically inflate and hide until you think the demand has peaked, at which point you can sell off your hoard . Plus, of course, the more people who stockpile like this, the more demand increases and the more the arbitrary value increases, which is why Bitcoin is worth a truly disgusting amount of money right now.
But by the way, trying to predict the market behaviour of cryptocurrencies outside of long-term trends like this is almost impossible. The Globe and Mail reported that a very successful Bitcoin trader and TikTok star named Maren Altman made her trades based on astrology and nothing else. She literally assigned meaning to the positions of planets in the sky and applied that to her trades and she found more success than half the chodes on Reddit who claim to be experts. I want this fact to be in the forefront of everyone’s minds. You could literally make your trades based on pure hope and pretend you’re a rebel in Star Wars and it would be equally as effective and much more fun. Now that I think about it, hope is actually pretty much exactly how you value a cryptocurrency, so go for it, Lando.
Are we all on the same page now? Can we keep our dumbass comments to ourselves now? No, Bitcoin is not a “real” currency, but the only reason that there are “real” currencies is that our governments decide there are. Cryptocurrencies just use a different organizational structure, a “decentralized” structure, to legitimize themselves, which is basically the same shit. Yet you continue to post your garbage, poorly researched memes on my timeline. And as for the nerds who might be deriving some vindication from that statement, just know that if you tried to tell me any of this in real life, I’d shove your head in a toilet, and I wasn’t even a bully in high school.
I think it’s the culture around cryptocurrencies that really pisses me off though, not the concept itself. There are actually some very cool ideas that stem from cryptocurrency and blockchain technology, and I encourage you to look them up as long as you promise not to tweet about them. My favourite example is out of Akon City, which is a two thousand acre development project in Senegal, headed by singer Akon, which is super original. You know, the Smack That guy. Banger. He wants his cryptocurrency, Akoin, to be the local currency of Akon City and run a decentralized financial system to replace fiat money in all of Africa, which aside from being honestly just hilarious — Akoin bro, are you kidding — could actually theoretically work.
If the whole continent decided that they were going to use Akoin instead of fiat money, the value of which fluctuates based on political stability and other traditional socio-economic challenges in Africa, they wouldn’t have to rely on foreign injections of U.S. dollars that are often lost to government corruption, or subject to harsh IMF controls. They could instead rely on a completely predictable decline of supply matched with an arbitrary demand stemming from the legitimization of their cryptocurrency.
People talk a big game about decolonizing places like Africa, and I really do think this is an avenue that deserves more attention. Also, a whole continent’s currency would be named after the guy who made Smack That, and I want that more than anything in the world. Thing is, I really don’t think it’s gonna happen. There isn’t a single government in the world that would be cool with just handing over control of their financial system to a computer program, whether it be out of greed, or out of the simple fact that sometimes, we need to print more money. For example, I have dual citizenship and I would really appreciate it if the U.S. hurried up and printed my $2,600 already so I can afford my rent in two weeks.
The idea of regulating cryptocurrency is incredibly complex, given that the entire point of cryptocurrency is to not be regulated. But what happens in an emergency? If there are only 21 million units of your national currency total, what happens when it starts to actually lose value in international markets? If you can only physically produce 6.25 units of your country’s currency per 10 minutes, what happens when one unit is worth like 10 U.S. cents?
In a similar vein, Venezuela tried to launch its own national cryptocurrency to fend off U.S. sanctions, and like nobody bought it. There just was straight up no demand, because, again, this shit isn’t actually worth anything. And recently, Facebook has been developing their own cryptocurrency called Diem, which, giving a corporation their very own separate financial system sounds like the most dystopian cyberpunk shit I have ever heard of. Like seriously, that’s terrifying.
This is why regulators across the world are looking at how to deal with some of these problems. If Facebook wants Diem to get off the ground, they have to go through American regulators who are no doubt equally as terrified as I am, given that it took them like ten years to put together a single, desperately needed antitrust case. The only country that’s actually come up with a solid policy framework is South Korea and they just straight up banned cryptocurrencies. At least that’s decisive.
To be honest, there’s no obvious way forward with this stuff. Cryptocurrency is so radically different from our current system that trying to exercise its full potential right away would be chaos. Not to mention the fact that Bitcoin’s anonymous transactions make it incredibly easy to buy or sell illegal goods and services. Don’t get me wrong, I’m all for some good old-fashioned power to the people, but I also like it when my government gives me money in an emergency, and is able to at least identify my blackmailer.
TL;DR Cryptocurrencies are cool, but if you talk about them all the time, I hate you, and if you think the “post-fiat world” is coming any time soon, you’re actually just wrong. I’m looking straight at you, Russell Okung, you literally didn’t get paid in Bitcoin, the NFL pays you in U.S. dollars and your Twitter feed looks like the weird kids’ cafeteria table groupchat. Fuck off.