Cryptocurrency *is* valuable because of a shared belief that it is--but the truly interesting thing is that it behaves more like art objects than currency. That is, I've noticed that the process by which a crypto gains credibility (and exchange value) is uncannily similar to how an artist's work gains, or is granted, exchange value. The art market has been around for centuries, of course, but dates in its most contemporary form to ~ the 1920s. Skilful promotion, criticism, and community, as well as the emergence of national centers, mean that one group of colored suspended dirt, cloth, and wood objects is worth tens of millions, another literally not enough to pay to have it removed.
My favorite (modern) money is the Somaliland shilling.
For one thing, it's issued by a government that no one recognizes, so it completely splinters the "we trust it because a (legitimate) government issued it" theory, and you certainly can't convert it (digitally) to any other "real" currency or wire it to bank accounts abroad, etc.
But I also love the Somaliland shilling because the notes themselves are of such low (individual) value, that no one ever pays for anything with individual bank notes. Instead, they're bound together in "bricks" with rubber bands, and nobody ever removes the bands, so over time, they do get kind of melded together into this thick, chunky single item that's only recognizable (from other denominations) by color.
In other words, even on a tactile level, it's completely different than other currencies. And yet, guess what? Somehow, it works!
Great post! I have a question- isn't there a difference within Chartalism in belief of a government and belief in a requirement to pay taxes? For example, if I think a government will eventually fail and be replaced by another type of government who uses another currency, I might hold both currencies just because I want to be able to pay taxes in either system? I might not believe in the value of the currency due to the governments army, just in the demand it has created through taxes?
Not an economist, but I do know a bit about art.
Cryptocurrency *is* valuable because of a shared belief that it is--but the truly interesting thing is that it behaves more like art objects than currency. That is, I've noticed that the process by which a crypto gains credibility (and exchange value) is uncannily similar to how an artist's work gains, or is granted, exchange value. The art market has been around for centuries, of course, but dates in its most contemporary form to ~ the 1920s. Skilful promotion, criticism, and community, as well as the emergence of national centers, mean that one group of colored suspended dirt, cloth, and wood objects is worth tens of millions, another literally not enough to pay to have it removed.
My favorite (modern) money is the Somaliland shilling.
For one thing, it's issued by a government that no one recognizes, so it completely splinters the "we trust it because a (legitimate) government issued it" theory, and you certainly can't convert it (digitally) to any other "real" currency or wire it to bank accounts abroad, etc.
But I also love the Somaliland shilling because the notes themselves are of such low (individual) value, that no one ever pays for anything with individual bank notes. Instead, they're bound together in "bricks" with rubber bands, and nobody ever removes the bands, so over time, they do get kind of melded together into this thick, chunky single item that's only recognizable (from other denominations) by color.
In other words, even on a tactile level, it's completely different than other currencies. And yet, guess what? Somehow, it works!
Great post! I have a question- isn't there a difference within Chartalism in belief of a government and belief in a requirement to pay taxes? For example, if I think a government will eventually fail and be replaced by another type of government who uses another currency, I might hold both currencies just because I want to be able to pay taxes in either system? I might not believe in the value of the currency due to the governments army, just in the demand it has created through taxes?