In
the near-ish future, hyperinflation, Gresham’s Law, and even central banking as
we know it might become relics of the past. We are not there yet, but the
silver bullet might already be out there in cyberspace. It is called Bitcoin
and it is not just for Libertarian eggheads anymore. Nicholas Mross documents
the genesis and prodigious growth of the digital currency in The Rise and Rise of Bitcoin (trailer here), which screens
tomorrow as part of the special Tribeca Talks series at the 2014 Tribeca Film Festival.
Presumably
writing under a pseudonym, “Satoshi Nakamoto” sketched out the principles of the
decentralized Bitcoin infrastructure, integrating pre-existing technologies in
revolutionary ways. Finite in number, Bitcoins would be “mined” by those who
lend their computing resources to process Bitcoin transactions. Mross’s brother
Daniel was one such early adopter, whose Bitcoin evangelism provided the
impetus for Rise.
As
director and co-writer, Mross provides a lucid explanation of the Bitcoin
system and an authoritative history of its formative years. However, he spends
a disproportionate amount of time chronicling the Bitcoin mining experiences of
his brother, who seems like a really nice guy, but will probably mostly be
remembered in the Bitcoin history books for inspiring the currency’s first
feature documentary.
Unfortunately,
the news cycle did not do Mross any favors either. He was able to tack on an
epilogue addressing several late breaking developments that bear quite directly
on the Bitcoin narrative, but it is clearly a rushed job that lacks the depth
of the prior segments. You cannot blame anyone, it is just a documentarian’s
worst fears realized.
There
is still good history and analysis in Rise,
but one wishes he had gotten even more fundamental, by measuring Bitcoins
against Jevons’ textbook functions of money: a medium of exchange, a measure of
value, a standard of deferred payments, and a store of value. Although not
universally accepted, you could probably use Bitcoins for all your daily
shopping in certain New York and Bay Area neighborhoods, so yes, it increasingly
serves as a medium of exchange. Bitcoins are commonly listed in most market
reports, so they can technically serve as a measure of value, but the extreme volatility
Mross chronicles makes this slightly problematic in practice.
Clearly,
the store of value question remains the thorniest and will continue to be so
long as Bitcoin holdings are vulnerable to hacking or the collapse of exchanges
(as happened in the notorious Mt. Gox case, which factors prominently in the
third act). Without that sense of security, it is hard to envision widespread
acceptance of Bitcoins as a means of deferred payments.
