The Seductive Emptiness of Bitcoin

Like everyone else, I notice the skyrocketing value of Bitcoin compared to anything else. On the one hand, feel uneasy about it, yet, on the other, I wonder if I should invest my paltry life savings into the stuff. Bitcoin seems to defy any economic law of gravity to keep going up, and up, unattached to anything tangible or real.

To address my uneasiness, I spoke with Brett Scott, who writes the Altered States of Monetary Consciousness newsletter and is the author of a few books, including Cloud Money: Cash, Cards, Crypto, and the War for Our Wallets and The Heretic’s Guide to Global Finance: Hacking the Future of Money. Brett is a friend, and one of my go-to people when I feel confused — bamboozled? — about cryptocurrencies and other money-related stuff. He helps set me straight. From our interview:

Brett: Bitcoin is fascinating because it’s so empty, and that emptiness is partly why it’s successful. It’s essentially numbers that are written out after expending energy. It’s incredibly weak at its core—there’s no inherent utility like with physical objects—but this blankness allows it to be filled with meaning through marketing. That makes it volatile and captivating, but also deeply circular. Its value relies on constant speculation and belief, not on any intrinsic feature.

Daniel: That’s a great point. I’ve always felt like Bitcoin’s “money” status is more of a social construct than a reality. People often argue, though, that fiat currency is just as made up as Bitcoin. How do you respond to that?

Brett: The key difference is that fiat money is backed by powerful state structures. A dollar isn’t just a piece of paper; it’s a credit instrument supported by the coercive power of a state that can levy taxes, field armies, and operate globally. Bitcoin, by contrast, is just a digital object priced within a fiat system. Its value fluctuates wildly because it lacks the stabilizing infrastructure of a genuine monetary system.

Now it seems possible, with Trump appointing a new “crypto czar” (whatever that means), we will see the rules changed so that the US Treasury can invest in Bitcoin as part of its “strategic reserve.” The number $100 billion gets casually thrown around. Meanwhile, the incoming Republicans (or whatever you call them) talk about eliminating the FDIC, which insures checking accounts of under $250,000, so ordinary people won’t simply starve in the event of a bank failure. This will make many non-rich people more likely to invest in speculative assets like Bitcoin.

But that’s good, because Bitcoin along with other cryptocurrencies will keep rising to make everyone smart enough to “Hodl” fabulously wealthy, right?

I just read Ruth Ben Ghiat’s “Republicans Have Crashed a National Economy Before To Enable Power Grabs and Privatizations", about our orchestrated decimation of Chile’s economy in the 1970s, masterminded by dear old Henry Kissinger.