I’m an anthropologist and economist who went down the bitcoin rabbit hole. I wrote this paper to clear my thoughts on why these two disciplines respond so differently to Bitcoin.
What is anthropology?
Anthropology is a social science that deals with understanding culture through participatory observation or ethnography: cultural immersion in the social worlds studied. This research method is at the heart of the discipline, forcing practitioners to “get out”, expose themselves and experience the culture being studied as an eatery.
This could explain why anthropologists often get into heated debates with economists who instead understand the world through numerical aggregates and abstract models. Mainstream economists view the world from top to bottom, based on deductive considerations that result from their models and assumptions, which are strongly influenced by classical Newtonian physics and its concept of the “balance of heavenly bodies” and which the resulting “system perspective” absent from thermodynamics and influenced engineering (Alizart, 2020).
In contrast, anthropology, which includes both deductive and inductive logic, focuses mainly on the latter. Observed and experienced real evidence leads to the formation (and recalibration) of theoretical frameworks: first comes the evidence, then the theory and so on (more on this in the section on limitations).
Another key element of anthropology is the concern for the “emic” (subjective beliefs and experiences of people in the world) over the “etic” (objective truth). Anthropology therefore believes that objective measures such as various parameters of economic growth can mean very little if they are abstracted from people’s experiences and lived realities. Looking at the emic gives anthropology a superpower: the ability and necessity to be open to alternative belief systems, to challenge their own mental models, to gain additional insights and thereby develop a more differentiated and holistic view of the world.
Anthropologists are not afraid to deal with people’s belief systems because it relativizes them. This means that every culture must be viewed as “a truth” to be understood as a rational system in its own terms, which is why judging a culture from an external point of view often tends to miss the point.
In anthropology, emic truth is multiplicative and relative rather than universal and absolute. What does that mean? “Cultural relativism” does not mean that “2 plus 2 does not equal 4” (these claims by self-proclaimed anthropologists are wrong). It just means that a particular belief system may have come to this conclusion and that in itself can reveal something about that culture. Anthropologists recognize that math and physics have more adequate tools, languages, and frameworks to evaluate ethics (and to determine that 2 plus 2 equals 4 – we need mathematicians for that).
Why are anthropologists interested in Bitcoin (and many economists not)?
Anthropology has a long tradition of writing about the alien “other”, and Bitcoin is undoubtedly a new breed of exotic “other” for the majority of the world’s population. So anthropologists have approached the culture of Bitcoin like anyone else: without judgment and with the openness to question their own prejudices.
Anthropologists have dared to study the world of bitcoin miners, owners, speculators and local bitcoin traders, among others. This has enabled them to understand the beliefs and viewpoints of the communities by going beyond their own perspectives. Many anthropologists have emerged from the studies inspired by the ethos and beliefs of these communities, as I will explain in more detail in the next section.
In contrast, mainstream economists continue to view Bitcoin from the comfort of their ivory towers. Nobel Prize-winning economist Paul Krugman, Nouriel Rubini, Steve Hanke, and many others have systematically dismissed Bitcoin as a bubble, tulip, or speculative good, regardless of how people actually use and view it today.
The economy as a discipline is enclosed in an echo chamber that is isolated from other perspectives and receives little feedback from outside. There is also a lack of methodological tools to understand cultures. No wonder it mistakenly reduces Bitcoin’s meme culture to an irrelevant tribal phenomenon.
The core of the economist’s error, however, is epistemological: what is recognized as truth and where does the truth come from? Does it come from above (which means the state or God) or from below (the local popular belief)? Who decides what money is (the truth of money) when it comes to money? Mainstream economics thrives on the assumption that money through “fiat” is money, which means that its value is determined by the final judgment and formal enactment of the state. In contrast, anthropology, which is interested in people’s views and beliefs, has no problem accepting Bitcoin as money because ultimately people believe it is and that’s how they use it.
At the center of the economists’ fallacy is the belief that money is money by decree (because the state and its experts say so), which means that they do not fully recognize the power of people’s collective choices.
Anthropologists are also interested in Bitcoin as it poses no threat to the status quo of the discipline. Anthropology is mostly a descriptive discipline that deals with understanding things for what they are, rather than “playing around with things”. In contrast, the economy is all about prescribing and “intervening” in the economy: the economy needs to be “stimulated” and then “stabilized”, and employment needs to be “maximized”. As a result, Bitcoin, which cannot be controlled by monetary policy, massively restricts the economy’s leeway to affect the economy. Bitcoin could challenge the core beliefs of economists and possibly their relevance (ouch!). However, this does not apply to the entire economy. For example, there are heterodox approaches that tend to take a systemic perspective, like the Austrian school, which turns the episteme around: Truth and economic activity come more from the economic actions of the individual than from the state, the latter not seen as fundamental to economic life.
What do anthropologists say about Bitcoin?
After looking at the basic methods, theories, and epistemologies used by anthropologists, it is worth checking out what anthropologists are saying about Bitcoin.
1. Bitcoin is money
Anthropologists have no problem admitting that Bitcoin is primarily money “because people call it that [and] many use it as money ”(Kavanagh et al.).
2. Bitcoin harnesses people’s ethos
Research on Bitcoin miners has shown how exciting and creative the Bitcoin (Calvão) room is, and it is this ethos and ethics of the Bitcoin community that can infect the world.
3. The values and rituals of the Bitcoin community are important to the success of Bitcoin
A study by Kinney has shown that the adoption of Bitcoin by individuals follows a certain process: First, users discover the value of Bitcoin on their own terms. Next, they reflexively overcome challenges to these initial perceptions of their worth. Finally, they affirm their embedding in the system through rituals of engagement (Kinney), such as today’s “laser beams at US $ 100,000!” Phenomena on Crypto Twitter. This reaffirms the importance of group identity to the social construction of Bitcoin as money.
The value systems and rituals of the Bitcoin community make Bitcoin ripe and have helped establish it as money. As the Bitcoin community has also made clear, Bitcoin is not only supported by technology and numbers, but also by memes.
4. Bitcoin is not just speculation
Anthropologists reject the notion that Bitcoin is all about speculation. Bitcoin is an asset that owners can hold for the long term.
Bitcoin is not only carried by greed, but also by community, beliefs and a sense of belonging (Morucci).
“Balinese Cockfighting & Bitcoins”
5. Bitcoin is a mirror
Bitcoin’s meaning is “loose enough to mean many things to members of the community, but specific enough to bind that community together.” The fact that this community is a new type of organism (quittem) and that the valuation of Bitcoin is difficult to determine means that any person can project the meanings and desires of their choice onto them. Bitcoin tells us all what we want to believe, and that goes for both lovers and critics (Kavanagh et al.).
6. Bitcoin is very political
So Bitcoin has the ability to create political bodies. It has the ability to project our primitive human passions, even in ways that destroy the current political, economic and social system (Caldararo).
For example to the Bitcoin community in cyberspace and offline, hodling is a way to counteract a state-controlled devaluation of the monetary value (Morucci). In addition, a study by a Bitcoin coffee shop in Slovakia showed how employees were helping initiate Bitcoin newbies. Bitcoin offered the coffee shop (Tremcinsky) a high degree of power and freedom from the state’s “Big Brother control techniques”.
Interestingly, others have concluded that Bitcoin can help us overcome the entrenchment of corporate power caused by the centralization of new technologies, which is currently in the hands of some tech companies (Caldararo).
7. Bitcoin is not just math-dependent and not entirely “trustworthy” – its social level is important in order to maintain it and give it value
Anthropologists have criticized the Bitcoin community’s belief that Bitcoin is completely trustworthy and completely “by numbers”. According to anthropologists, this would be impossible because we are social beings, which means that Bitcoin’s sociocultural layer plays an important role in determining whether it has value and what that value is. The formation of democratic communities in the digital economy remains embedded in social relationships. The idea that Bitcoin is not mediated by any institution is seen as an illusion (Tylor and Bill Maurer).
A similar stance was confirmed by Giacomo Zucco, who proclaimed the importance of a puritanic Bitcoin-only stance, in which all cryptocurrencies except Bitcoin are declared as “shitcoins” and are not worth holding.
This further underscores that the “social layer” of the Bitcoin protocol is just as important as the technical one.
8. The nature of money is changing and Bitcoin will play a vital role in the future
Anthropologists have found that thanks to Bitcoin, serious questions are raised about the nature of money, which has important implications for society and humanity at large. Even if it fails, Bitcoin is a fascinating “injury experiment” that shows how money is tied into the social order and how certain values and practices arise “(Kavanagh et al.).
In his book, The Social Life of Money, Dodd wrote that what is considered money has changed over time and that we are on track to change it again. Money is becoming increasingly fragmented, and Bitcoin is likely to play a role in the future of money.
Limitations of Anthropology in Understanding Bitcoin
Anthropology is far from perfect and has some challenges as a framework for understanding Bitcoin:
- Anthropology lacks the quantitative toolkits necessary to understand and explore activities in the chain from which one can derive much knowledge about behavior. We need to advance anthropology to understand the technological backbone of our digital world so that it remains relevant and can have broader discussions with other disciplines.
- Anthropology has always been a very diverse discipline that welcomed perspectives, theories and approaches from very different angles and other disciplines. In recent decades, however, there has been an increasing homogenization towards hyper-reflective, highly theoretical and excessively philosophical schools of thought, which often lose touch with people’s everyday lives.
- Anthropology lacks a systematic view of macroeconomics and is insufficient to understand the fundamentals of the current currency paradigm. This leads many anthropologists today to view the market as simply dysfunctional and the system simply capitalist or neoliberal, without realizing the full role central banks play in economies.
Like the rest of science, anthropology has no (or little) skin in it, so not only can it afford to be wrong, but it can continue to be wrong and pretend it is right. Anthropology need not fear to be more widely applied in practice, and in this way it can broaden its methods and frameworks. This is what the hybrid discipline of design anthropology is doing today.
Most importantly, anthropologists have a lot of interesting things to say about Bitcoin. In contrast, economists’ comments are often very old-fashioned and uninformed.
Anthropologists recognize the important role Bitcoin plays in rethinking what money is, which in turn has many ramifications for social life. At the same time, anthropologists also recognize that the social dynamics and community surrounding Bitcoin, its memes, and the sociocultural elements of the Bitcoin phenomenon are critical to its success.
Anthropology may not be the best discipline for understanding Bitcoin as a whole, but the same is true of any other discipline on its own. Bitcoin is complex and requires a thorough understanding of technology, cryptography, incentives, culture, social psychology, network systems and much more. In other words, it’s not a one-discipline job.
The cultural and social aspects of the Bitcoin phenomenon cannot be underestimated and overlooked as it provides answers to many questions (such as why). Why are people interested in Bitcoin? Why should we care about Bitcoin? Well, for many anthropologists, this technology may well put money back into people’s hands.
- I am aware that the disciplines of anthropology and economics are very diverse and complex, more than I imagine here. I am therefore guilty of making generalizations. I don’t intend to speak for all of the economists or anthropologists out there.
- However, this article does not aim to criticize the economy as a whole, but its current state: it has lost touch with reality due to its command and control approach, top-down methodologies, models, assumptions and approach to the lack of a System perspective.
Many thanks to the following thinkers and authors for their valuable feedback: Martin Tremcinsky, Emil Sandstedt and Paula Magal.
This is a guest post by Michele Morucci. The opinions expressed are solely their own and do not necessarily reflect those of BTC, Inc. or Bitcoin Magazine.