Toward an Anthropological Theory of Money with Natalie Smolenski (WiM394)
Nov 20, 2023
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Natalie Smolenski, Bitcoin entrepreneur and theoretical anthropologist, discusses the relationship between anthropologists and economists, the significance of Bitcoin, the difference between social institutions and social technology, and the impact of new technologies on old institutions in a Bitcoin world.
Money serves as a salable good, storing and measuring value, and facilitating exchange.
Introduction of general-purpose money disrupts existing social institutions and challenges authority structures.
Trust plays a crucial role in the emergence and acceptance of different forms of money, like gold and Bitcoin.
Deep dives
Money as a Social Technology
Money is a social technology that solves the problem of the double coincidence of wants by acting as the most salable good. It stores value, measures value, and serves as a medium of exchange.
Spheres of Exchange
The introduction of general-purpose money can disrupt existing social institutions, such as the traditional system of trading brides in the Tiv community of Nigeria. Money's ability to collapse moral spheres and challenge existing authority structures creates both opportunities and challenges.
The Functions of Money
Money must fulfill the functions of storing value, measuring value, and serving as a medium of exchange. These functions are interdependent and essential for the functioning of any monetary system.
Credit Money vs. Commodity Money
Credit money is currency backed by the creditworthiness of an issuer, while commodity money is based on the value of a physical commodity such as gold. The elasticity of credit money's underlying collateral poses risks, while commodity money's value is intrinsically linked to the commodity it represents.
The Evolution of Money: From Gold to Digital Commodity Money
The podcast episode discusses the historical evolution of money and explores how different forms of money, such as gold and digital commodity money like Bitcoin, have shaped societies and economies. One key point highlighted is the importance of trust in the functioning of a monetary system. It explains how trust in a medium of exchange is crucial for it to be considered as money, and how different forms of money emerge based on the level of trust within a society. The episode also emphasizes the role of gold as a commodity money that has been used for international trade and as a store of value throughout history. Finally, it delves into the significance of Bitcoin as a digital commodity money that offers self-verification and automated final settlement, challenging the need for centralized institutions like central banks for enforcing final settlement.
Legal Money, Emergent Money, and the Utility of Bitcoin
The second main point of the podcast centers around the distinction between legal money and emergent money. Legal money refers to top-down money defined by law or state authority, which can be in the form of credit or commodity. Emergent money, on the other hand, is bottom-up money that arises naturally and is based on consensus and acceptance within a community. The discussion highlights how emergent commodity money, such as gold, has been historically valuable for international trade in low trust environments, where different legal systems exist. The significance of Bitcoin is then explored as digital commodity money that combines the advantages of a digital technology with inherent value and automated final settlement. Bitcoin's ability to function as a digital store of value and medium of exchange challenges the role of central banks and questions the need for centralized enforcement of final settlement. The podcast concludes by considering Bitcoin as a revolutionary social institution that has the potential to reshape the future of money.
Natalie Smolenski joins me to discuss her paper, 'Toward an Anthropological Theory of Money.' We talk about the relationship between anthropologists and economists, the difference between social institutions and social technology, and the anthropological significance of Bitcoin.
Natalie Smolenski is an author, Bitcoin entrepreneur, and theoretical anthropologist. She is the founder of the Texas Bitcoin Foundation.
// OUTLINE // 00:00:00 - Coming up 00:00:40 - Intro 00:02:14 - Helping Lightning Startups with In Wolf's Clothing 00:03:00 - Natalie Smolenski's Background and Her New Paper 00:05:00 - David Graeber and Nick Szabo Twitter Debate 00:11:34 - Bridging Together Anthropologists and Economists 00:16:26 - Graeber's Top-Down Theory of Money 00:19:45 - Interstate Payments 00:21:43 - How Fiat Shaped Social Science 00:24:47 - Social Consensus and the State 00:27:27 - Defining Social Institution and Social Technology 00:30:04 - Run Your Business from Anywhere with NetSuite 00:31:09 - Secure Your Bitcoin Stash with the iCoin Hardware Wallet 00:32:07 - Distinguishing Social Institution and Social Technology 00:36:46 - How Technology Affects Institutions 00:38:31 - Money is the Most Sailable Good 00:41:18 - Spheres of Exchange 00:45:35 - Money as a Social Institution 00:47:37 - Functions of Money 00:51:55 - Objective Measurement of Value 00:53:41 - Credit Money vs. Commodity Money 00:57:10 - How the State Utilizes Credit Money 01:00:28 - Is Money a Creature of the State? 01:04:38 - Geopolitical History of Gold 01:07:23 - Enhance Your Brain Power with Mind Lab Pro 01:08:30 - Take Control of Your Healthcare with CrowdHealth 01:09:32 - A Bitcoin Wallet with Privacy Built-In: Wasabi Wallet 01:10:23 - Payment vs. Settlement 00:14:56 - Legal and Psychological Settlements 00:19:04 - Legal Money vs. Emergent Money 01:22:46 - Value of Emergent Commodity Money 01:25:40 - Tending toward Commodity Money 01:28:45 - Utility of Bitcoin 01:31:10 - Anthropological Significance of Bitcoin 01:34:32 - Where to Find Natalie on the Internet
