Elon Musk’s recent reference to Dogecoin sparked a flurry of speculation. In the ensuing 24-hour period, the cryptocurrency boomed 37 percent. It’s now worth over $10 billion. Should you invest?
I don’t have a crystal ball, but for the past decade I have been delving into the history and philosophy of money. So while I can’t tell you what will happen next week or next year, I can help contextualize some of the hidden forces that lie behind your decision—whatever it may be.
First, I will not be investing in Dogecoin, but it’s not because Dogecoin was originally a joke, nor because its sudden rise was bizarre, nor because electronic currencies are an illusion, and certainly not because Dogecoin’s astonishing spike in value was the result of an eccentric billionaire’s tweet. I’m not investing because despite their apparent newness, cryptocurrencies have too much in common with primitive money.
There is a misapprehension that cash and coin arose from barter, but most of the 40,000-year history of money took place before there was any such thing as a market. Cryptos have a great deal in common with humanity’s earliest attempts, both creating a symbol for the things they most desired. Out of such wishes emerged money made of shells, gongs, the teeth of ancestors, and the skulls of enemies.
In pre-market economies, money was a form of insurance. Ring money and tooth money were draped across the body in order to decrease one’s exposure to risk. They were a way to keep us safe, clothed, and fed. Not only did wampum and feather money deliver rank and standing, they were also ways to guarantee that our hard-earned status would continue into the future. But cryptos illustrate another part of that ancient story, one that economists have for much too long pushed to the side: Since the first prophet and soothsayer charmed an amulet, money has been used to tell the future.
Polished snail shells were the world’s first global reserve currency, and much like Bitcoin and dogecoin, they were used to speculate. Bantu wise men held their cowrie shells in their left hands while prophesying. Micronesian shells money was deployed in games of chance in much the same way as poker chips. Shells were the central figures in primitive asset allocation rituals designed to divine whether or not the future would conform to prediction.
Since the arrival of Bitcoin on January 3, 2009, more than two-thousand digital currencies have been born—each based upon the ardent wish that, at some point in the not-too-distant-future, everyone might believe they were worth something. Some dreams have come true, others have not. The initial coin offering of a cryptocurrency known as “Jesus Coin,” despite being a hoax, attracted significant investment, as did Trump Coin.
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Will the value of Dogecoin, Bitcoin, CannabisCoin, Dentacoin, or Whoppercoin go up or down? No doubt, they will do both. Memes of the month go haywire. Digital algorithms appear and vanish. Cryptos are volatile, they fluctuate, and most people don’t want to be flucked.
If you’re a traditionalist, in which case you believe that money is a store of value, a medium of exchange, a unit of account—then Dogecoin probably isn’t for you. Its value fluctuates, it is not widely used for buying and selling, and there is no widely accepted notion of what a unit of Dogecoin might be worth—as compared to, for example, a dollar or a Tesla.
That said, no one should dismiss the casino as an economic force. From the start, gambling has been an essential element of our conception of money. So when it comes to the cryptos, keep in mind that the new frontier reflects our ancient desire to know the future before the future arrives. Cryptos are real, and they tell us something real about our desire to empower ourselves with the ancient cloak and mantle of shaman and soothsayer.
It just so happens that I don’t believe in augury.
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