Is Bitcoin Just Conceptual Art?

From calculating its value in ten years to figuring out what constitutes its “soul”, everyone and their accountant has something to say about Bitcoin these days. And so do I: Bitcoin is the greatest work of conceptual art of the 21st century. Which is not to say I think it’s a joke—in fact, I find the economic experiment extremely exciting—but rather, I think it shares many of the tenets inherent to conceptual masterpieces like Rauschenberg’s Erased De Kooning Drawing, or Nam June Paik's Fin de Siecle II, or even Yoko Ono’s Fluxus performances.

What I mean is that the idea of a digital currency is absurd, exciting and deeply disruptive—like the best kind of conceptual art. The growing viability of Bitcoin forces us to confront and re-think our preconceived notions about money, the role of the federal government, online anonymity, and the effects of globalization. Plus, let’s be real: I don’t think anyone except for a few highly trained experts and Bitcoin evangelists (aka “bitbugs”) really “gets” Bitcoin in its entirety—but everyone still wants to jump into the conversation and give their 2฿.

So, if Bitcoin is conceptual art, and Satoshi Nakamoto—the anonymous founder(s) of Bitcoin—is the Duchamp of the digital age, then what the hell is it “about”? To decipher this question, I’ll compare Bitcoin to a group of conceptual artworks that it shares some uncanny similarities with.

Hoarding

The ad for the One Million Dollar app starts off with a cheesy male voice asking, “Do you want to get money like Rick Ross? Are you tired of seeing other people showing off their money?” Then, he goes on to explain how for JUST ONE DOLLAR, you can download the app to your iPhone and start flicking through a stack of $100 bills on your screen—while hip-hop beats play in the background.

Obviously, the app is a joke; its creators (Ramin Afshar, Tom Galle, and Bob Jeusette) attempt to lampoon pop culture’s obsession with “bling” and the conspicuous display of wealth is barely disguised, if at all.

But this promise of fabulous wealth and cultural cache which the One Million Dollar app plays off is also what has attracted flocks of powerful entrepreneurs like the Winklevoss brothers to Bitcoin. And many of these early investors have already cashed in. When Adrianne Jeffries of The Verge went to the Bitcoin 2013 conference, she describes wealth “(circulating) around the conference in the form of casual Bitcoin bets, 100-dollar bills being fed into Bitcoin ATMs, and at least one couture-wrapped girlfriend.” Apparently, the tech industry has found it’s next big cash cow.

But there’s another, stranger parallel between the One Million Dollar app and Bitcoin. Hoarding money so you can mindlessly count it on your phone and show it off to your friends is the point of downloading this app. But it’s also one of the biggest problems facing the Bitcoin economy.

Physical Bitcoins created by Casascius

According to many economists, too many people are hanging on to their Bitcoins without actually spending them—which is an issue because unlike fiat currency, which can be printed infinitely by the federal government, Bitcoin has a self-imposed cap of 21 million Bitcoins, which the system should hit by the year 2040. This pre-determined limit creates an “incentive to hoard the virtual currency rather than spend it". And if the price of a Bitcoin is shooting up as more people jump on the bandwagon, but no one is actually spending them, then the currency is essentially useless—as many other writers have already pointed out.

As Paul Krugman puts it, “What we want from a monetary system isn’t to make people holding money rich; we want it to facilitate transactions and make the economy as a whole rich. And that’s not at all what is happening in Bitcoin.” But what Krugman misses is precisely what the One Million Dollar app capitalizes on—our desire to just fondle money on a screen because it feels nice…and makes us look “cool”.

Expectations

Speaking of cool, one of the slickest conceptual art pieces I’ve encountered lately is Caleb Larsen’s A Tool to Deceive and Slaughter—a black, acrylic box with a micro controller and Ethernet adapter inside that’s puts itself up for auction on eBay every seven days. Meaning, no one gets to own it for more than a week.

A Tool to Deceive and Slaughter

The conceit is that by purchasing the artwork, you stand to make money. Because when the box inevitably relists itself, you get to set the new price, which can be significantly higher than what you originally paid—as long as it jives with “current market expectations.” Basically, you get to cash in the publicity and attention the nondescript black box is getting. It’s the art market working at its best.

Larsen’s experiment seems to be working. In 2009, the listing price was $2,600. At the time of writing, it’s $7,500. Sure, you could call A Tool to Deceive and Slaughter a sly moneymaking scheme, but it’s also a smart commentary on how the art economy rides on the fumes of media hype and inflated expectations.

You know where I’m going with this. Bitcoin is exactly the same. Because it’s not backed by a central authority like the Federal government, the virtual currency is extremely volatile and prone to respond mercurially to expectations. This means the value of a Bitcoin is doomed to fluctuate widely between bubbles and crashes—as people scramble to buy when prices are low, and hoard (see above) when prices start climbing again. Hype is the go-go juice of the Bitcoin economy, driving it’s prices up and attracting investors. But too much hype could also be its downfall.

Going From Real To Virtual (And Back)

One of the art world’s biggest conundrums right now is how to price (and sell) new media art. Part of the problem is that a lot of it is ephemeral or immaterial—how much should a GIF cost? But another part of the problem is that no one is sure what the best way to bridge the virtual and physical art worlds is.

An increasingly popular economic model has been to stage exhibitions online in order to sell physical works. Thus the rise of savvy e-commerce sites like Artsy, but also weirder spaces to shop for art online, like the Louvre in Second Life, or the “Monumental Work of Public Art” competition in Cloud Party (another virtual world like Second Life), where Artinfo editor Ben Davis is currently soliciting artists to design public sculptures—in exchange for real prize money.

Second Life

This model seems to be working well, but an artist named Harm van den Dorpel offers an alternative, with his Wishing Well website—where you can use Paypal to buy “coins” in the currency of your choice (Euros, Dollars, Yen…), then toss them into a “well.”

It’s a deceptively simple idea: make each viewer pay the artist a small amount of change in exchange for a short but “meaningful” experience (in this case, making a wish). This model of “micro-transactions” is already gaining traction in the gaming industry, and could very well work for selling online art.

Just like the online vs offline art world, Bitcoin has an uneasy relationship with its real-world counterpart: cash. Businesses have sprung up everywhere to help consumers convert their Bitcoins to other forms of currency, but none have gotten as big as Mt. Gox, a Tokyo-based exchange service that claims to handle 63% of all Bitcoin transactions. Mt. Gox is already resented by many Bitcoin users for its monopolistic tendencies, but last week, when it announced that it would break Bitcoin’s tacit understanding of anonymity by requiring “verifications” of all its accounts—to prevent malicious activity like buying drugs and child porn—it almost became a villain, and the out roar only highlighted the many difficulties of trying to bridge the chasm between real and virtual currencies.

Conclusion

So there you have it. Bitcoin is conceptual art. And if you own Bitcoins, you’re participating in the work. Bitcoin is also new media, collaborative, and decentralized—no one can take credit as its central authority, and its open-source system relies on teams of dedicated users (called “miners”) to keep the Bitcoin supply growing. Lastly, it’s deeply disruptive, to both the financial and political systems we have put in place. So now, let’s burn it.

@MichelleLHOOQ