—Fernand Braudel
The history of digital cash consists of scientific discoveries from the 1970s, hardware from the 1980s, and networks from the 1990s, shaped by theories from the previous three centuries and beliefs about the next ten thousand years. It speaks ancient ideas with a modern twang, as we might when we say “quid pro quo” or “shibboleth”: the sovereign right to issue money, the debasement of coinage, the symbolic stamp that transfers the rights to value from me to thee. Digital cash has the hovering, unsettled realness (not reality) of all money, a matter of life and death that is also symbolic tokens, rules of a game, scraps of cotton blend and polymer, entries in a database, promises made and broken, gestures of affection and trust. The long history we are discussing here is at its heart the history of a debate about knowledge, an epistemological argument conducted through technologies.
It is a debate broadly familiar to anyone who has taken an interest in the nature of money, or even looked idly at a banknote for a bit: how do I know that money is real? I want to phrase the question in this somewhat awkward way to capture how it can be reasonably answered. We can ask it at the level of a particular token of money—how do I know this money is real?—with the feel and texture of a note, the security threads, watermarks, and ultraviolet inks. We can ask it at the level of some type or variety of money, perhaps expressed as a preference for one currency as more “solid” than another, for instance, or for cash over credit, or gold over both: how do I know this kind of money is real? Finally, we can ask it at the level of money as such—what is money that it has value for us, and how do we know that value? How do I know that money is real?
For digital cash, the answers to these questions lay in the future, in two senses: its creation relied on technologies of trust and proof that barely existed or were in the process of being developed, and it needed predictions and stories of the future to drive adoption and acceptance in the present. The two central future narratives of early digital cash experiments were crisis and transcendence.
Devotees of metallic money—of cash backed by gold and silver, and coins made of them—cherish the bodily, empirical knowledge that metal gives: the way it warms in the palm and between the fingers, the chime of a round of pure silver cast onto a marble tabletop. It is just elementally there, with its “magnificent stupid honesty” (as H. G. Wells once described the gold standard). “Do you take silver?” customers of Bernard von NotHaus’s American Liberty Dollar coinage scheme would ask checkout clerks, before they performed “the Drop”: releasing the coin into someone’s hand so they could feel the weight of the silver, as a prelude for their buying into its value. In 1974, Von NotHaus had coauthored “To Know Value—An Economic Research Paper,” a manifesto outlining a rationale for a new, deflationary, gold-based financial system, which he would go on to build over the following decades with various companies and mints that issued coins as a “private voluntary barter currency.” The distinction was a delicate one. Von NotHaus’s Liberty Dollar coins were technically “medallions,” collectibles that were not, not, they repeated emphatically, trying to pass as legal US currency. Why would they want to? Already in 1974, he was predicting runaway inflation and tyrannical crackdowns; his money was envisioned as a way out of government-induced crises.
Likewise, his “eLibertyDollars” were not posing as dollars as such—as legal tender—but were instead just digital “warehouse receipts.” These receipts could be redeemed for a quantity of precious metal stored in a warehouse outside Coeur d’Alene, Idaho. They were seldom redeemed, though. They are better understood as the right to transact part of an ingot of silver sitting on a pallet somewhere, without needing to handle or physically subdivide it. On the internet, the receipts could be bought, sold, speculated on, and used as collateral (until the business was raided by the FBI and the US Secret Service in 2007). They were an example of a digital gold currency (DGC). DGCs had names like IntGold, e-Bullion, the Aspen Dollar, Pecunix, GoldMoney, and E-Gold; they were one of the two main threads of digital cash’s development, and by far the most consequential prior to Bitcoin. Their model of money was the token, and their future was crisis. (...)
DGCs preceded companies like PayPal by years, and the biggest among them were handling billions of dollars of transactions in their currencies annually by the early 2000s. They pioneered mobile transactions and micropayments in units as small as ten-thousandths of an ounce of gold. Their framework for digital currency was tokens corresponding to specific portions of specific bars of metal in safe deposit boxes and secure warehouses from London to Idaho to Dubai. Another subtle distinction arises here. The tokens worked as pointers to the gold, which you need never see or touch. What you were really transacting with DGCs was the right to transact that gold in the future. To spend this “currency” was to assign the rights, in whole or in part, to someone else.
by Finn Brunton, Cabinet | Read more:
Image: uncredited
