Tag: money

The Power of Broke

Yesterday I listened to an episode of the James Altucher Podcast with FUBU founder and Shark Tank star Daymond John.  It was awesome.

John talked about his new book, “The Power of Broke”.  What a great title.  The subtitle is, “How empty pockets, a tight budget, and a hunger for success can become your greatest competitive advantage.”  The concept is as straightforward as it sounds.  Being broke is an advantage in many ways.  The power of broke is the power you harness because you have to.  It’s the creativity you employ when you can’t buy your way to the next step.

I’ve written before about the advantages of being broke (with a much lamer title, “Your Lack of Income Can Be An Asset“).  While I focused on the freedom and flexibility to experiment and the low cost of failure, John talked in the podcast more about the clearer decision making and enhanced hustle when options are constrained.

One particularly poignant example was when he was selling hats on the streets of Queens.  LL Cool J would come to the neighborhood frequently, and John would stalk and harass and beg him to wear his hats.  He finally did, and it resulted in an explosion in demand.  John said if he had $500,000 to spend at that time he would have spent it all…on getting LL Cool J to wear his hats.  Because he didn’t have the money, he found a way to do it without.

One of my all-time favorite TED talks is called “Embrace the Shake“.  It’s about how creativity can often be unleashed if you give yourself constraints.  An artist who lost his ability to do his favorite technique was forced to find other ways.  He eventually began a series of experiments in creating art with ridiculously tight constraints.  He could only use paper cups and ink, for example.  The results were as much about what it did to his mindset as about the art he produced.

If you launch a startup with no money, you’ll figure out how to move forward with no money.  If you raise $1 million in venture capital, you’ll figure out how to move forward spending $1 million.  The activities you engage in may even be the same.  Or worse, the money blinds you to problems with your model or assumptions and creates a lag in the feedback loop.  Test small and quick, fail small and quick.  Money often makes that harder.

This is obviously not about any kind of moral superiority to poverty.  It’s not about pretending fewer resources always provide an advantage over more.  It’s about a powerful mindset shift that occurs when incentives and desires are tightly connected.  When you don’t have a backup plan or the ability to give up after the first setback or buy your way into the next step, you have something most of your larger, better funded competitors don’t.  You have the power of broke.

Since it’s a mindset, you can employ it even if you are rich, but it’s definitely harder.  Take advantage of the time you have now as a young upstart and get every drop out of the power of broke.

Doing Work You Love and Being Happy Are Not Necessarily the Same Thing

Would you believe me if I told you that people can be happy doing work they hate?

Everyone wants to be happy.  Well, there is actually some debate about what people want and whether the word “happy” is the the most accurate.  Call it utility, or fulfillment, or flow, or bliss, or the good life, or anything else you like.  I’m going to use the word ‘happy’ to describe an existence that maximizes those moments when you feel proud and thrilled to be alive, and minimizes those where you feel the opposite.  Just give me some definitional generosity, or substitute your preferred word that defines what it is you seek.

Now, most people also think that they want to do work that they love.  That is, they want the way in which they procure the resources needed for survival and material pleasure to be an activity that is inherently interesting and fulfilling.  They do not merely want the hunt to be done for the meat, but they want to enjoy it for its own pleasures.  At least that’s what they’ll tell you.

You might be lying

I think a great many people are lying to themselves and others about what they actually want.  A lot of people want to be the type of person who seeks meaning in their work, but they actually care a lot more about just finding a way to get the resources needed to relax more.  Doing work you love is harder than doing work you can tolerate.  I don’t think that’s a bad thing.  There is nothing morally superior or inherently noble about wanting to do work that you love, and there is nothing bad about wanting to just get the money you need to work as little as possible.  These are personal preferences, and either approach can lead to a happy life.  Of course, lack of self-knowledge or dishonesty with oneself about which approach you prefer can lead to unhappiness just as easily.

In other words, doing work you love is not the secret ingredient needed to be happy.  At least not for everyone.

There are people who can never be happy unless they are doing work they love.  For them, it doesn’t even matter if they make a lot of money at it.  If those people chase money and status over fulfilling work, they’ll be miserable.

There are also people who can never be happy unless they have a large amount of money, free time, leisure, and a minimum of stress.  For them, it doesn’t even matter much what kind of work they do, as long as it yields them enough money in a small enough amount of time to do what they really love.  If those people chase a meaningful career with all the material and time sacrifices that requires, they’ll be miserable.

Who are you?

The key to happiness is to discover which type of person you are, be honest with yourself and others about what you find, and have the courage to live it.

Let me illustrate this with a matrix.  I love a good 2×2 matrix.  It’s been awhile since the last one I made (in what is still one of my favorite posts), so I decided to conjure up a new one.  My graphic design skills are once again on full display.  You’re welcome for the visual feast.

Doing Work You Love and Being Happy

Let’s walk through each of the four quadrants one by one.  See if you can recognize people in your life who fit them.

Oh, and notice in particular the fact that the amount of money earned is not the relevant factor in any of the quadrants.  You can have rich, poor, or anything in between in any of them.

“I love my work and I’m happy”

The upper left quadrant represents those people who have gone all-in to find work that makes them feel alive every day.  They may be billionaire tech company founders who live and breath their company, or penniless beach bums who spend all day on the waves and scrape together just enough money giving lessons for a burger and a brew.  I know people so passionately obsessed with their work that they’d rather be doing it than anything else.  Depending upon what that work is, they may be very wealthy or very poor.  They don’t much care.  They care about their craft, and so long as they’re doing it, life is good.

“I hate my work and I’m happy”

The upper right quadrant is where people who have accepted the fact that work is not for them hang out.  They’ve also come to grips with the fact that the things they actually do love require a good bit of money and time, and work is required to get it.  They configure their lives to do the minimum amount of drudgery to get the maximum payoff.  I know business owners who have no interest in their industry, or salespeople who would just as unhappily sell something totally different.  They just found a niche where they can get what they need.

They sometimes live the Four Hour Workweek life, and truly put in almost no time to keep the income stream going.  Those with a longer time horizon and ability to defer gratification may put in a lot more hours upfront and endure a high degree of boredom for the payoff of evenings, weekends, or retirement.  I know people who I don’t think would ever find happiness in any kind of work.  They want leisure.  But they’ve made their peace with this fact and put all their energy into being true to that reality, instead of unhappily chasing an illusive form of work they’d love, or feeling guilty for their material desires.

“I love my work and I’m unhappy”

Ah yes, the martyr.  The people in the lower left quadrant are probably the hardest for me to be around.  They self-righteously remind everyone about how they opted not to “sell-out”, but then never stop bitching about the costs they incurred for doing so.  The truth is, these are people who would be happier seeking money instead of work they think the world will see as meaningful.  This is the jazz artist who gets angry every time the Grammy’s come along and some blonde pop star takes home the hardware.  This is the adjunct professor who chose an obscure academic discipline with almost no chance of good money but never stops yelling about the injustice in the fact that no one values what they do enough to pay them big bucks.

The funny thing is, this is a phenomenon found almost exclusively in rich countries.  The unhappy work purists are typically quite wealthy by world standards, but they can never stop comparing themselves to the richest of the rich.  This obsessive tendency to compare reveals their true preference for material wealth over career fulfillment.  They’d be a lot happier if they were simply honest with themselves and, as my friend Jason Brennan suggests, got a job at Gieco.

“I hate my work and I’m unhappy”

Opposite of the previous category, those in the lower right quadrant believe themselves to be made happiest by money, status, and “normalcy”.  But they are wrong about their true desires.  These people chose the best school, the best major, the best internship, and the job with the best title at the consulting firm because everyone around them egged them on the whole way.  Surely a great job, nice house, respectable resume, and good income will lead to happiness, right?  In their case, wrong.

They find themselves hating their work and not really enjoying the material benefits it brings either.  Their weekends are just as dull as the workweek.  As they keep ratcheting up the career ladder they also ratchet up their lifestyle, hoping that the next level and a new car will bring happiness.  It doesn’t.  But because their material quality of life escalates with their income, they feel trapped.  If they happen to realize that they never cared much for money and status as much as meaning in their work, it seems too late.  How could they give up $180,000 a year to start a band or become a chef?  They might lose their marriage, and surely their social standing.

Knowledge and Honesty

Again, every quadrant has examples of both rich and poor within it.  The two happy categories include rich and poor as well as those who love their work and those who hate it.  The key is not finding the one true path that works for everyone.  The key is finding out who you really are.  Then not being ashamed of what you find and not lying to yourself about it.

Self-knowledge and self-honesty.

Finally, after discovering and being truthful about what makes you happy, go do it.  It’s worth all the costs.

————————————

For more on this topic check out the podcast episode with TK Coleman, “Should You Follow Your Passion or Not?“

Your Lack of Income Can Be an Asset

From the Praxis blog.

Let’s say you want to do something awesome.  Maybe you’re interested in being a part of a startup or an entrepreneurial business.  Maybe you’ve got a creative side, and you’d jump at the chance to work on a movie script.  The less cushy your current life, the higher the chance you’ll be in a position to answer when opportunity knocks.  The lower the cost of exit, the easier exit becomes.

A lot of young people just starting out in their careers feel pressure to scratch and claw for a few thousand more in salary and keep up with friends who are moving into nicer houses, driving nicer cars, eating sushi every Tuesday, and shopping at trendy places.  There’s nothing wrong with any of these things, but if you have a stomach for more risk than the average person, and a desire to do some really cool stuff, you might want to resist the urge to upgrade your lifestyle.  Your relatively low income can be a huge asset.

Even the most frugal and self-controlled among us have a propensity to adopt a standard of living right up to our capacity (sometimes beyond).  It makes sense.  In fact, it’d be a little weird if you were raking in cash and sleeping on a park bench, just waiting for the opportunity to use your capital.  Living in the moment is fine.  The thing is, there are so many ways to happily do this.  I’ve found that, whatever the income level, once it’s above a certain very low baseline, you can organize a pretty happy life around it.  The higher it goes, the more you spend and it is damn-near impossible to go backwards.

I knew a guy once who had a great job, making more than any of his peers, but at a place that pressured employees to upgrade their cars, houses, etc.  He soon found himself in a lifestyle that only that well-paid job could sustain.  Then the job turned sour.  He wanted out.  But how to convince his wife, his kids, and himself to downgrade the car, the monthly budget, the mortgage?  Some of these things couldn’t be done at all on short notice.  His high income was not a source of freedom, but a chain, preventing him from doing what he wanted.

So you’re young and and your income is low.  That’s a huge advantage for you.  That means if your friend tells you she wants you to help launch a new business, but you might not get paid for the first six months, you can probably swing it, since you’re already accustomed to eating Ramen and you have no DirecTV to cancel.  Some of the best and brightest are incapable of jumping on great opportunities because they’ve earned decent money quickly, then hemmed themselves in, unable to ever downgrade their short term quality of life.  If you can, you have a competitive edge.

Obviously, no one wants to stay forever on a diet of canned chicken.  But when you’re young, and at the beginning of the discovery process of what makes you come alive, it’s helpful to be free from a huge list of material needs.  You’d be surprised how much an early high income can stall further progress towards your goals.

So if you think you’re poor compared to your friends, smile.  When you consider all your assets and liabilities – your skills, interests, strengths, weaknesses, capital, time, flexibility, etc. – include on the asset side of the ledger the fact that you don’t really need much money to maintain your current quality of life.  It may come in handy when the chance to do something amazing, and far more rewarding in the long term (materially and otherwise), emerges and you’re ready to jump while your buddies have to turn it down to stay with a job that pays for their $15 “happy hour” cocktails.

Debt Can Limit Your Options (even when it’s ‘worth it’)

From the Praxis blog.

It’s hard to find a way to combine your career with your passion. It’s much harder if you need to make a lot of money to pay for your lifestyle, loans, etc. I know a number of people who make lots of money – enough to make that law degree a sound financial investment, for example – but hate what they do. The sound financial investment – trading debt for a ticket to a high paying job – turns out to have limited their options to only jobs that pay well enough to service the debt, and they ended up not liking those jobs.

In other words, the lower your wage requirements, the more flexibility you have early on to explore and test and find work you love. Keep that in mind with each step. Ask whether your present decisions are limiting your future options in a way you might regret.

I don’t mean to pick on law students with the above example, but that’s the one I see the most. People get a law degree because they’re smart, and they imagine a law degree as opening up a lot of career options. But after they graduate and have huge debts to pay, the number of jobs that cover it are limited. If you don’t enjoy corporate law, you might feel trapped.

It’s not just education debt that can limit you to jobs you don’t like.  I’ve also met a lot of people who feel stuck with a high paying job they hate because they bought an expensive house or car. If a nicer house and a less enjoyable job is a trade-off you’re happy with, by all means go for it! But it’s hard to undo once you jump in, so be cautious and thoughtful.

I talk a little more here about how low income can be an asset early in life.

It’s Not About Working for Free, It’s About Being Free

I recently posted about trying to be in a position where you could do awesome work with great people, even if for very low or no pay as it is more likely to lead to better results than doing work you don’t care as much for.

Many people said this was a luxury only the elite or wealthy could afford.  I couldn’t disagree more.  In fact, as I’ve written elsewhere, lack of income can be an asset.  We tend to live up to our earnings.  Those with a less costly lifestyle are more able to jump on opportunities that don’t pay well upfront.  The whole point of the post was that it’s good to be in a position where you are most free to seize on opportunities even if they don’t have an immediate paycheck.  Avoid or reduce debt, cut expenses, maintain a minimalist life, be productive so you can do more with less time, try to save some money, etc.

You may have to or want to work a job you don’t care for and earn money for 60 hours a week but that still doesn’t preclude you from going to that awesome local marketing firm you’re interested in and begging them to do 20 hours a week of work even if they can’t pay you.  I contend that the latter will be more beneficial to you long term than the former, and if you work hard and well might turn into more pay as well.

The post was not about working for free.  The post was about being free.  The freer you are to jump on great opportunities the better, and the more things that make that hard you can eliminate the better.

Why Not Go Work for an Awesome Company Now?

Many people can’t get paid jobs because they lack experience.  Most will go pay a lot of money to buy a credential in hopes that it gets them access to the jobs, or take a different job.  You could also just see if you can do the job for free as a way to get access.  Apparently, this is a controversial suggestion.

Today I posted the following on Facebook:

Young people: if you have the choice:

Work with awesome people on interesting stuff for no pay

-or-

Work with average people on average stuff for a salary higher than most of your peers

Which would you take?

I suggest the former will pay off 5 or 10 tens more over the short term psychologically and over mid-long term financially as well.

Avoid anything that makes taking the former opportunity more difficult. (Debt, obligation, geographical restrictions, pressure from others, promises you wish you hadn’t made, etc.)

And this:

Imagine your favorite existing company or your dream startup idea. If someone there came to you and said, “We want you to work with us! We just can’t pay you right now.”

Could you do it? Would you?

If you’re 15-25, I’d say a major goal should be to be in a position where you can afford to say yes.

I was baffled by the number of comments and private messages I received from people who passionately disagreed or found these posts dangerous, ignorant, or offensive.  You never know what things will rile people up on the internet.  Didn’t expect this to be one of them!

No, the posts are not anti-work.  No, they are not anti-money or anti-capitalist.  No, they do not claim in any way that everyone should share the same time preference or risk tolerance.  No, they do not imply that working for free is morally or practically better than working for pay.

The posts are making a point about the particular position of young people early in their careers.  They spend tens of thousands of dollars and several years attempting to gain credentials they hope will grant them access to jobs they like and that can sustain them.  My question is, why not just go get that job now?  Work for free if it’s the only way.  Working for free at a great company is probably better than paying to not get paid at a university so that you can hopefully work for enough pay to cover your debt later.  It’s probably more likely to lead to more money and happiness in the long term.

Do it when you’re young and inexperienced your opportunity cost is low and your financial obligations are few.  Invest in yourself by trading pay for great experience if you can.  That’s what many people think they’re doing with school.  What’s different about working instead?  In many cases, it’s better.

But let’s say you’re out of school already.  I think the same question applies.  Ask yourself, if a great opportunity came your way that didn’t have a lot of money with it but it did have a lot of long term promise, would you and could you take it?  You don’t have to in order to be a good person.  It’s your life, not mine.  But if you wish you could but think you can’t because you have a lot of financial or other obligations, the point is to consider ways in which you can reduce those obligations.  Be in a position to take advantage of the best opportunities (measured on all fronts, not just by pay).  The golden handcuffs are real, and they can hurt.  I’ve written before how debt can limit your options, and how lack of income can be an asset.

If at an incredibly young age you already find yourself having to take a job you don’t like because nothing else will cover your expenses, you might try to find ways to reduce the obligations.  I’m not saying don’t work hard.  I’m not saying money doesn’t matter.  I’m not even taking a side on the follow your passion/don’t follow your passion debate.

I think people overestimate the long term value of money early in their career, and underestimate the long term value of time well spent early in their career.  The latter has greater returns.  I’ve talked to many stressed out new employees who are thinking about not taking a job they love because it pays $27,000, instead of the $31,000 they’re making at the job they can tolerate.  I’ve been there myself more than once.  The thing is, in a few years, and certainly in ten years, that extra money will mean little to you, as much as it feels like right now.  But your time and how well you spent it will mean even more, not to mention the network and skills you build along the way.  Odds are that not just in happiness, but in long-term financial rewards, you’ll do better going with the one that is more up your alley vs. a few thousand bucks.

I’ve never worked for free except on side projects and launching my own company.  I’ve never had an internship.  I’ve always been a paperboy or grocery clerk or golf course go-getter or construction worker or something else to earn money.  The sooner I was able to merge my interests with my income the happier I was.  That’s not for everyone.  But I can tell you many of the best decisions I’ve made were saying no to well paying jobs.  I could have been a pharmaceutical rep at age 19 and had a company car, benefits, and starting at $50-60k.  I couldn’t be happier that I picked a series of jobs with a higher ceiling and more in line with the kind of people I wanted to be around and the kind of stuff I really love doing.  That extra $25k in starting salary seemed like a million bucks at the time.  Now it seems like it would have been more than foolish to take it instead of the path I chose.  If you’re doing great work and working hard at it, the financial rewards will come.

I am not preaching dependence.  Far from it.  This is a message of independence.  Don’t just take internship after internship and live with mom and dad until you’re 40.  Heck no.  Don’t be dependent.  Be independent of as many things as possible – debt, promises, other people, and even a certain income level.  That’s the point.  Pick things that take advantage of your strengths even if the pay is low upfront because of what it can be down the road, and because of the fulfillment you’ll get.  Don’t get locked into an income level that your friends think is cool if it limits your options.

Get paid if you can and as much as you can.  But the idea that schooling is the only way to invest in yourself for greater future gains is absurd.  As is the idea that a better salary is always the best long-term payoff.  Why not give up income to gain human capital on the job?

If after all this you still don’t get my point or think I’m somehow against work, or money, or subjective value, or rainbows and hugs and everything lovely, this post is not for you anyway.  If it resonates with you as similar advice and thinking did with me many years ago, take it to heart.

Time and money are both valuable.  One of them you can create more of, the other you can’t.

Why I Don’t Care About Income Inequality

AbundanceSmartPhone

In the 1980’s if I told you for only a few hundred dollars anyone could have a $1 million asset in their pocket you’d call me crazy.  But here we are.

The chart above (actually a picture of a chart taken with my iPhone and uploaded to this blog with an app to further emphasize the point) is from the book Bold: How to Go Big, Create Wealth and Impact the World by Peter Diamandis and Steven Kotler.  It illustrates why I think worry about and policy efforts aimed at changing differences in income between rich and poor are dumb, destructive, and miss the point by being stuck in a dead paradigm.

The above chart only scratches the surface.  It’s hard to comprehend just how much wealth (not income) we have today compared to 20, 30, or 50 years ago, let alone a century or two ago.  Anyone who complains that income gaps are growing misses the miracle under their nose of wealth exploding, and more accessible to individuals at any income level than ever before in human history.  50 years ago, it could take a hefty sum to launch and run a basic advocacy organization, for example.  You would need a secretary, long-distance phone line, office space, filing cabinets, a travel agent, a print shop that you’d have to visit to approve runs of literature (at least several thousand at a time), space to store them, shipping cost, etc. ad nauseum.  Today you can setup a WordPress website, bid out for design work on Fiverr or 99 Designs, get VistaPrint to run a few hundred after proofing a digital copy, book your own travel, store your own files, run email campaigns with MailChimp, etc. ad nauseum for a few hundred bucks.

Anyone can write and record songs, publish books, start businesses, sell goods and services, learn anything in the world, or meet people across the globe for free or close to it with a phone and some WiFi.  These things are equally accessible to rich and poor.  Wealth – as measured in opportunities and fulfilled desires, the real end of money – is greater than ever and flatter than ever.

The biggest obstacles are those erected by the wealthy to stymie competition from upstarts taking advantage of all this accessible capital.  Licensing requirements, regulations, wage laws, tax laws, immigration restrictions, intellectual monopoly status on non-scarce resources, and subsidized education and idleness are the biggest hurdles to the poor seizing the newly available wealth and creating a better life.  It’s not about income or even net worth.  It’s about what you can do and the value you can create and consume.  The chart above and the world around us indicate that there has never been a more broad and deep spread of wealth.

GDP doesn’t matter.  Neither does income.  Opportunity matters.  Value matters.  Times have never been better across the board, which is exactly what most threatens those precariously perched at the perceived top.  Don’t worry about them.  Let the doomsayers and wannabe warriors of equality clamber for an illusive goal that doesn’t make anyone better off.  Take advantage of the exponential growth in opportunity all around you.

A Book That Will Help You Understand Why Bitcoin is Amazing

My friend Steve Patterson – a brilliant and clear thinker, excellent writer, radical, tech enthusiast, and scholar – has written what I think is the best intro to bitcoin you can find.  It’s sufficiently basic, so even a tech noob like me can grasp it, but it doesn’t shy away from delving into the details of how the technology works.

downloadWhat’s the Big Deal About Bitcoin is the kind of book that, as you read it and immediately after, make you feel like you completely grasp the intricacies of bitcoin.  After a few days you can’t really explain or recall exactly what had you so excited.  That is a sign of a book that does a great job boiling down really complex ideas.  Big ideas take a while to understand, longer to be able to explain to others, and longest to become second-nature.  A book this small that can give you the complete intellectual understanding of the concept immediately is rare.  One encounter will convince you of the power of bitcoin.  Another will help you be able to explain it.  I’m reading it for a third time as I try to gain a level of understanding sufficient to convey it to others!

Prior to reading Steve’s book I was excited about bitcoin as currency from primarily a theoretical standpoint.  I know the dangers and limitations of government issued currency and the power and beauty of competitive, market-based currencies.  I was also very interested in bitcoin as method of payment as a practical solution to the archaic, costly, time-consuming methods currently available to individuals and businesses.  Transferring money is ridiculously cumbersome, and the fact that I’ve had to physically enter a bank branch twice in the last month – with several paper documents in hand – is absurd and annoying.  I knew bitcoin had potential as both a currency and method of payment, and I loved buying and transferring small amounts to play around with it.  What I did not understand was the real source of bitcoin’s value and power, the blockchain itself.

The blockchain is nothing more than a public ledger, but one that is completely decentralized and essentially eliminates fraud and most of the biggest problems that have long plagued both physical and digital financial transactions.  But the blockchain is more than just a financial innovation.  It’s a unique distributed software process that can be applied to anything where proof of ownership is incredibly valuable and forging such proof is low cost. (Copying paper money, or paper titles, for example).  It makes units of digital information, which by nature are infinitely copy-able, into unique, scarce pieces of data.  That single innovation has the power to transform the world, and the number of applications and technologies than can be built on top of it are endless.

Don’t get too bogged down trying to understand my explanation – I’m reading the book again to get better at explaining it, but I’m not there yet!  Pick up a copy and read it for yourself.  I’ll be surprised if you don’t walk away thinking bitcoin is the biggest innovation since the internet.

 

 

Bitcoin – Because Everyone Has to Say Something

Whatever it is, whatever it will become, Bitcoin is pretty cool.

I’ve enjoyed watching it get a lot of attention, and draw attention to big ideas and questions like the role of money, decentralized orders, radical choice, polycentrism and the digital future.  It’s also a little depressing to read the flow of articles on Bitcoin coming from most journalistic outlets.  Not because they like or dislike Bitcoin, or because they describe it correctly or incorrectly, but because their grasp on the economics of money, from its origin to its uses and history, is shaky at best.

No one need be an expert on economics – especially the conceptually difficult arena of monetary economics – to write for a newspaper.  But when you are writing about money, and confidently, it behooves you to dig in and discover what this money is all about.  Rothbard’s famous quote applies here,

“It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a ‘dismal science.’ But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.”

Thankfully, none of this economic ignorance matters as it regards Bitcoin itself.  Bitcoin doesn’t care what journalists think.  The always quotable and insightful Jeff Tucker summed up why very nicely in a recent Facebook post,

“It’s so strange how this how thing is becoming some kind of fight between pro- or anti-BTC, as if this were some policy thing. It’s not. This is a market technology. It either works or it doesn’t. It’s like being for or against email, for or against online media, for or against Skype. I mean, if you don’t like it, don’t use it. Whether it succeeds or not is up to any intellectual; it’s up to the market.”

The downside of journalistic economic ignorance is that it may result in confused ideas among the public, and therefore create incentives for confused policy from lawmakers.  I’ve heard journalists claim that government guarantees are the best and only sign of a sound money, (because, you know, hyperinflation never happens) and that the core purpose of a currency is price stability (because, of course, markets have been traumatized when trying to adjust to the rapidly falling prices in, say, the tech industry).  It’s sad to see such silliness, but it’s also great to see discussion everywhere about what makes a currency.

It can be helpful to compare money to language.  Both are spontaneous orders.  Both are tools that facilitate exchanges between people.  Both are wholly dependent on the individuals involved for their value and evolution; yet neither can be controlled by any one person.  Try introducing a new language, or even a single new word to an existing language.  Not easy.  Yet anyone is free to try, and new words emerge constantly.  They stick around only so long as they are perceived as valuable ways to facilitate an exchange of ideas.  It doesn’t really matter what experts think makes for a good word or language.  It matters what actually takes root in the world – a world where people face trade-offs and try to get the most value for the least effort.

Bitcoin kind of reminds me (as an admitted computer ignoramus) of programming languages.  Computer programmers have developed and become conversant in all kinds of languages that mean almost nothing to me.  These emerged out of nowhere in a relatively short period of time.  Some lived, some died.  Today, they provide an incredibly valuable function that serves not just programmers, but all of us, even though almost none of us speak the language.  Perhaps Bitcoin could evolve similarly.

Even if never the dominant currency “above the table” so to speak, it may find a powerful place in behind the scenes markets among niche experts, just as programming languages do all around us.  Maybe you or your friend or your uncle will never own Bitcoins – none of you probably write computer code either – but perhaps the crypto currency will be busy at work facilitating exchanges among many market participants you interact with.

I don’t really know, and I’d rather spectate than speculate.  It’s pretty fun to watch, and it’s even better to hear the chatter about a lot of topics I never expected to see in the public conversation.  Money is a mysterious and complex thing.  It’s prudent in such matters to refrain from confident proclamations.  I’m as likely to buy-in to someone’s prediction of Bitcoin as I am their prediction of which words will fall in and out of use in the next ten years.