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Last night my roommate told me about bitcoins, a digital currency created two years ago by Satoshi Nakamoto, a shadowy entity who may be a financier, a programmer, or an anarchist (or he/she/it may not even be a person at all). The name “bitcoins” also refers to the software and built-in encryption features which allow the “coins” to be anonymously transferred while still retaining whatever “realness” they have. The concept initially filled me with unreasoning anger, but thinking about bitcoins has caused me to reflect more deeply on the notional nature of all money. Most dollars are no more real than bitcoins: only a tiny fraction of American legal tender exists in the real world (as the paper scraps or metal disks found in cash registers, laundry machines, money clips, dancers’ garters, underground hoards, piggy banks and what have you). The majority of money is ones and zeros zipping through huge servers run by large financial institutions–not really that different from bitcoins (although the dollar is backed by lots of important guys in suits and by a huge military rather than by the personal assurances of a Japanese cyberpunk shadowspawn).
Instead of thinking about today’s national currencies I like to reflect on currencies based on real objects but still not pegged to any use value. The rather beautiful giant stone coins of Yap are probably the most well-known example of such money, however, a more interesting and widespread example is provided by mollusk shells–which have been used as a medium of exchange by different societies worldwide throughout history. Over three thousand years ago the Chinese were using cowry shells as currency. It is said that the classical Chinese character for money was the same as for cowry (I am going to leave Chinese scholars to argue over the actual characters—trying to follow the vagaries of Chinese etymology left my head spinning). In Thailand the “bia” was a unit worth 1⁄6400 Baht and was literally a cowry (which was also a common counter used in gambling). On the East Cost of the United States, Iroquois and Algonquian tribesmen utilized “wampum” belts manufactured from littleneck clams to solidify treaties or as exchange for personal transactions. Tribes of the Pacific Northwest utilized tusk shells or scaphopods for their shell money. Different tribes of Australian aboriginal people utilized different shells as money and often regarded the money shells from other tribes as worthless. Other examples of shell currency are numerous and come from all parts of the world, but one is particularly instructive.
The most infamous use of shell currency may also have been the most complicated and lucrative. In the seventeenth, eighteenth, and early nineteenth centuries competing Dutch, Portuguese, English, and French slave traders utilized cowry shells as a common medium of exchange (among several others) to buy slaves along the African coast. The slaves were sold by local rulers who obtained them in internecine tribal wars or by Arab merchants who specialized in mass kidnappings. The cowrie shells used in such transactions originated from the Maldives and later from Zanzibar. They were carried to the Mediterranean and to the Sahara by Arab traders and to Europe by merchants from the miscellaneous colonial powers. The potential “mark-up” on such shells was tremendous since one could obtain then easily from living snails in the Indian Ocean and then exchange them for living people in the Bight of Benin.
My personal feelings about international trade are not as negative as this grim historical example would seem to indicate (I feel that today global trade is, on balance, more likely to deliver people from slavery than into it). However I feel that this example is a good metaphor for the central mystery of money. Cowry shells are pretty and have been used for rituals, games, and adornments for a long time–but their value does not seem intrinsic in any special way–except maybe to living cowries. Indeed the monetized mystique such shells had in the eighteenth century is long gone: I found many web sites which will sell you barrels of money cowrie shells for next to nothing. What is the magic that makes shells worth a human life in one era and a quasi-worthless novelty in another? I have no answer other than to point at the strange epic that is history. I suspect that the smug Federal Reserve Board members discontentedly shaking their heads at the tone of this article do not have one either. Money is a fairly obvious illusion…and yet you will never live your life outside its thrall.