Decrypting Bitcoin(‘s) relations

These are the resources from my talk at Bitcoin 2012 Conference.


Forms of exchange have varied greatly throughout human history, with multiple strains evolving and petering out, coming into fashion and going into disuse. Glocally and temporally they have intertwined themselves as a core aspect of individual and group relationships. Anthropologists have studied this huge variety from the gift exchange of pigs in Papua New Guinea to the pervasive nature of debt, from the incredulity of Wall Street speculation to the total social fact of potlach prestations, from time-banks to crowdfunding. Where do Bitcoins and Bitcoin participants appear in this picture? How could the Bitcoin community potentially benefit from an holistic and actor-centred analysis? This is a short introduction to comparing the wider network of exchange forms in which Bitcoins are embedded and Bitcoiners are emerging.



Hi, my name is Abraham Heinemann, and I think the conference schedule might suggest that I come here today as an anthropologist. This is not quite correct in terms of bitcoin, as I have done no extensive research with the bitcoin community, a prerequisite for any holistic and anthropologically sound research. For my presentation today I come in the capacity of a student of anthropology, but more simply as someone intrigued by what bitcoin participants are up to, and what bitcoin experimentation in exchange means more generally.

It was in this frame of mind that I happened across this conference’s website. I had just finished reading some inspiring texts on economic exchange and just completed a degree where my research was inspired by the oddities surrounding fish commodification and the network of socio-economic practices embedded in their acquirement, sale, and consumption. Finally I am also involved in exploring the practicalities of a Commons conducive economy.

It was in this context that I realized that it would be a missed opportunity if a cross-fertilisation didn’t happen, One where the emerging bitcoin community and its developers are propelled -if they haven’t already- to explore the decrypting of their relationships and history in the process of developing and redeveloping bitcoin. And where the more uninformed of humanity, including many anthropologists and myself, have the possibility of finding out about and participating in an alternative form of exchange: bitcoin.

At first I was hesitant to take this task upon myself, but as I found no other means of bringing this about Amir Taaki kindly accepted my abstract. More recently I saw some of my initial assumptions happily broken when a whole bunch of stuff appeared on the programme bringing a beautiful array of approaches.

Anyway, this presentation is a very basic introduction to human exchange based on my research of a compilation of others in-depth research and fieldwork, rather than being based on a popular hegemonic discourse. I will be sharing 2 points today, followed by a Q&A session, but one where I have most of the questions, though I will also attempt to answer your questions or give good direction toward answers.

So what do I mean by exchange.

An exchange is a certain type of relationship, where all actors receive & give something between each other as part of a relationship. What we are interested in at bitcoin are socially shared forms of exchange, ones that have some codification that is mutually recognized amongst a group of people. In dominant discourses, exchange -at this larger group level- is usually categorised into parts of ‘economic systems’, and more often than not this discourse is dominated by a thing called ‘money’. These so called ‘economic systems’ are then studied, propounded by economists and other authorities, enforced, and invariably we also find ourselves riding that band-wagon. A band-wagon with all its own justifications, creation myths, dogmas, so on and so forth. My favourite weave is the moral basis for enforcing a certain way which is drawn from the false stories of rationality and competition that mis-claim science as their rock-bed without seeing the intertwining influence between politics, economics and science. But this is a whole story that many have covered in detail, some more informed than others.

I want to start off with a different story, a satirical parable capturing a conversation between Chinese mystic ‘Chuang Tzu’ and his friend Hui Tzu, a Chinese official:

Hui Tzu said to Chuang Tzu:

“All your teaching is centered on what has no use.”

Chuang Tzu replied:

“If you have no appreciation for what has no use,

you cannot begin to talk about what can be used.

“The earth for example, is broad and vast,

But of all this expanse a man uses only a few inches

Upon which he happens to be standing at the time.

“Now suppose, suddenly you take away

all that he actually is not using,

so that all around his feet a gulf yawns,

and he stands in the void

with nowhere solid except under each foot,

how long will he be able to use what he is using?

Hui Tzu said:

“It would cease to serve any purpose.”

Chuang Tzu concluded:

“This shows the absolute necessity

of what is supposed to have no use.”

I also want to unwind a little too and unfold some of the earth that the dominant puddle of economics is nestled in, by suggesting that we lift up our eyes from looking down at our soaked feet in this puddle and at the wider world around us. This is where my first point starts to emerge.

The first point is that exchange is highly variably in its varieties and has not followed a linear path of development as dictated by such myths as starting with barter, then moving to coinage, and then finally to credit systems. Prior and contemporary to our own Western civilisation, many other civilisations have risen and fallen, from the various Chinese empires, to the Indian, South-East Asian kinglets, the Romans, to the Incans. These are a few of the civilisations that we are familiar with, who have had their own centralised credit systems, mostly pre-dating their use of coinage. Interestingly in many cases these credit systems emerged independent from the authorities of these civilisations and where later co-opted by these authorities into becoming full-scale lawfully legitimate markets. These authorities identified deceptively today as antithetical to the markets in which mass-exchanges happen, whereas they are in fact inseparably symbiotic, and what I would call empires.

It is their very symbiosis that is necessary for the endeavours that large centralised empires have: maintaining themselves. This process of self-maintenance -or continual reproduction- of centralised cities, with high density populations, high density armies, and high density agriculture, were requirements for high density wealth and power. High density power can only be held if exchange is disproportionate. High density wealth can only be truly held if it is something that is easy to accumulate, you can take indefinitely from everyone; their life. With systems of sanctioned violence empires can ensure that usually foreign populations have their wealth plundered by their armies, and then under a system of debt sell them back some of their wealth, where the population is in a continual cycle of needing to work to pay off these debts: e.g. giving up at least significant portions of their life. The State authorities of some Empire structures tend to also over-accrue much debt or at least be blamed for it, which if they cannot or will not pay results in either their own armies or their lenders funding an army to plunder what is left. Yes debt-peonage of a variety of forms has been and is the ultimate empire building weapon.

Historical research shows us that this has been developed in multiple ways depending on the distinct circumstances, whether it involves overt slavery, or covert slavery. This aspect of exchange is far more complex and diverse than I have summarised and is epically covered in one of the sources I will provide at the end.

Nonetheless what I am getting at is that empire building and maintenance contains a lot of violent exercising of unequal exchange.  A related characteristic of one of today’s dominating exchange systems is the development of a financial culture that praises the idea of liquidity, an extreme form of high speed power and wealth density creation and maintenance. Due to the qualities of numerical exchange systems (and a whole baloney of stories) everything is calculated in terms of exchange units so that it can be ditched or accumulated as quickly as possible in its numeric form, whatever the real world consequences.

Without the very nature of the actual ‘things’ denoting the transfer being so abstract and liquid, and that their base value depending on the debt-peonage being worked day in and day out, and threat of violence keeping it all together (whether physical or mental), present financial practices would not be able to have invented such magical ways of spinning yet even more alienated exchange units out of the present ones.

There are also a number of other interesting characteristics and different dominant exchange systems today recorded amongst much anthropological work. I shall just briefly mention one: Islamic banking. Here the bank lends money on the basis that it also takes a stake in the risk as well as the profit involved in the lent monies. There is much more involved, but it is an interesting comparison against the more dominant banking model in which the market-state guarantees no risk when it becomes a big enough exchange partner that it appears that the type of exchange it engages in might cease if it were to suffer the losses that happen in the face of risky lending and disappear from the exchange.

But I still think we are not quite looking away from our own feet.  I want to return to looking at credit systems before they become or became co-opted by mega-gluts and power dense empires.

Barter has never been a major exchange form within any recorded society for the purposes of acquiring the necessary material goods, except in a few understandable cases. Firstly it crops up temporarily in some places straight after the fall of a State backed currency, such as after the fall of the Roman Empire, it crops up ceremonially amongst strangers but not for acquiring the basic necessities, and it appears in some prisons.

What we actually see are a combination of localized or non-centralized credit systems and/or the basic needs of life being in the form of a socially accessible Commons e.g. you cannot buy your material needs, they are available under social contract.

What research shows us is that exchange is not a necessity for life itself, but one that can become fairly common. And when someone needs something they register credit, request from the community, take it themselves, receive it as a gift etc… The registering of credit takes on numerous forms, and seems to appear in complex empire systems where it gets commandeered and arbitrated by the market-state, it develops multifariously amongst decentralised civilisations etc. Just think highly complex credit systems were full-scale among such civilisations as the Mesopotamians in 3500 BC. Thats over 5500 years ago.

As some famous writer once said “For every subtle and complicated question, there is a perfectly simple and straightforward answer, which is wrong”, you will thus appreciate that debunking the simplistic and imaginary assumptions and explaining a complicated question is complicated in itself, so I sincerely suggest some key sources at the end that will more accurately do so. Nevertheless excusing my hatchet job, I hope I have started to share the width and variety of exchange practices in a certain sense, rather than the fictive linear and progressive perspective.

To conclude my first point though,what I am trying to do is draw out some questions that are specifically relevant to Bitcoin, and that I have tried to sublimate from my first point in giving some taste of the variation of group level exchange of time and space. We will tie them together at the end.

My second point is inextricable from the first and without it would be to commit the folly that this following quote explicates:

‘…the world of humankind constitutes a manifold, a totality of interconnected processes. And inquiries that disassemble this totality into bits and then fail to reassemble it, falsify reality. Concepts like “nation”, “society”, and “culture” name bits and threaten to turn names into things. Only by understanding these names as bundles of relationships, and by placing them back into the field from which they were abstracted, can we hope to avoid misleading inferences and increase our share of understanding.’

Eric Wolf: Europe and the People Without History, 1982

My second point is to briefly explore this characteristic of the inseparability of exchange from other aspects of life. I want to do this by looking as what seems to be an entirely different branch of exchange but actually seems alien when understanding it because its emphasis are so different from what we are usually used to. In its extremes it appears understandable as primitive from the narrow minded perspective of homo economicus, but in its understanding it may appears strange in its priorities. However it is actually something that is part and parcel of what is usually misinterpreted as barter and happens usually without a market-state but also besides it: Gift exchange is one of its more common names.

Gift exchange in its most prominent forms is a ceremonial form of exchange which is not primarily about acquiring the basic of material goods, but is about strengthening social ties amongst groups and individuals. Some classic examples are Potlach in North America and Mokas in Papua New Guinea. The Kula Ring amongst the Trobriander Islands is a fascinating example where a circle of islands deliver gifts to a others on neighbouring islands many in the form of shell necklaces or armbands. These items are passed periodically between people on other islands and over time gain more social value. Holding on of these items brings prestige and status to the holder, however if one holds onto them for too long then it is bad for ones reputation. This interplay of giving up highly valuable items continually between people on different islands bonds them together and shifts the social power around them over time.

In these examples the onus is on the giver to give overly bountiful gifts to neighbours which bring brings status to the giver, whilst the receiving party then wishes to give even more and so reputation and what it can mean continually shifts. In these prestations the gift not just represents but embodies the relationship between people in a physical form. Other practices such as bride wealth have also been often misinterpreted or morphed with other exchange systems, where the wealth given is not to pay for either bride or groom but is a gift between families.

These forms of exchange are not somehow romantically divorced from issues of power-struggle and so on and so forth, but understood in their context they are an extreme example of what happens on a smaller scale as mixed with more localized credit systems across the globe. They are an example of how humans are overtly using exchange as a means of maintaining and creating relationships between each other. A key aspect of gift exchange is that it is key that one never gives the same amount as one has received, either more or less if given because this physically embodies the fact that ones relationship is ongoing. This is in contrast to monetary exchange where the one provides the socially acceptable equivalent so there is no relationship to be maintained. And this is one area where coinage seems to come into play, it is designed for use with strangers who one does not wish to have a relationship with. However it then creates some social dilemmas when it becomes used for that which was not strange, friends, family, material needs etc. This is not necessarily a problem of money as the exchange item in itself, as exampled by its use in gift exchange ceremonies now. It is more the aspect of basing a system of social value on it, rather than the other way around, where its value is not in its ability to bring humans together but in the ‘so-called’ arbitrary fluctuations of inflation. Again exampled in the massively destructive nature not just ‘money’ in itself but material items produced under such measurements have brought to practices such as potlach, because once an item is introduced whose production is outside the sphere of the potlach participants, and it becomes inflated in value, the Potlach participants end up having to over-give in their exchanges to compensate.

It is because money is subject to precise division and manipulation and permits exact measurement of equivalents. It is impersonal in a manner in which objects of gift and localized credit systems can never be. It thus helps promote a belief in rational calculation in human affairs and further the rationalisation that is characteristic of what we think of as modern societies. When money becomes the prevalent link between people, it replaces personal ties anchored in diverse and diffuse feelings. With impersonal relations that are limited to a specific purpose. Consequently, ‘abstract’ calculation is said to penetrate arenas of social life, e.g. kinship relations or the realm of aesthetic appreciation. Which were previously the domain of qualitative rather than quantitative appraisals. Precisely because money makes it possible to limit an exchange to the purpose at hand, it increases individual “freedom” (very misunderstood word). and fosters social differentiation. Where the cash relationship penetrates, it can dissolve bonds based on ties of ‘blood’, kinship, or loyalty. Money in market economies is more than a standard of value and a means of exchange. It symbolises and embodies the ‘modern’ spirit of rationality, calculability, of impersonality. Money levels qualitative differences between things as well as people.

Pulling an aspect of this together we perhaps glimpse why exchange is usually understood as an interplay between people. However all relationships between people are not exchanges, such a thought is one hard to push away sometimes within a perspective that at least lets us even imagine that everything can be abstractly quantified, and at some level translate relatively into an exchange item. The exact point in gift exchange -for example- is that all exchanges are relationships, but not all relationships are exchanges.

I have gone a bit off tangent, but I hope I am managing to extend further the fact the complexity and variety, and ways, meaning etc in exchange across the world.

To conclude on a classic statement and tie together the underlying threads. Economies are often studied, understood, and use as if they are somehow separable from everything else, and most specifically there is an assumption that they have linearly developed to better allow each human actor to acquire the basic necessary ‘resources’ to live and perhaps some additional ones, from others in a mutually acceptable form. As I hope you have seen it is not such one-way clean road through a desert that was built for the purposes that are necessarily assumed.

Exchange items then are representations of economies that are ‘embedded’ with a whole mix of other categories, within our socio-cultural relations -including power struggles. They are involved in the production and reproduction of the material conditions for social life. Economies are a key condition for, and force in wider cultural practice made up of a set of interconnected historical processes, moving at both the level of an encompassing system (global) and on the micro-level (local).

As we work with the materials needs in our lives we create social salience through exchange, which embeds  specific values in our societies formation, whilst the currency and exchange item hold the focus of what this social salience is.


  • How important are the agency exerting qualities of an item being exchanged?
  • How important is it for an exchange form to be decentralised from both sides of the market-state coin?
  • How important is it for an exchange form to generate its own value (perhaps in the sense of a human economy) aside from the value of proprietary currency?
  • Does the savings aspect of bitcoin correlate with strengthening a human economy?
  • How important is the decryption of Bitcoin relations? In the sense of understanding the weave of relationships that make it happen.

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