Magical capitalism, gambler subjects: South Korea’s bitcoin investment frenzy

ABSTRACT

‘First, it was just tech people. Now, literally everyone is interested in bitcoin’, said CNN News while reporting on the bitcoin mania that haunted South Korean society in the winter of 2017–2018. This study takes that speculative frenzy as an entry point for exploring lay bitcoin investors’ experiences and the ‘magical’ features of contemporary financial capitalism. It first situates the bitcoin investment boom in the contexts of South Korea’s post-developmental transition and the rise of mass investment culture. Drawing upon participant observation of online communities for South Korea’s bitcoin investors, this study then demonstrates how lay bitcoin investors’ daily beliefs and practices are distinguished from more traditional economic subjectivities – namely, disciplined workers and rational investors. Lay bitcoin investors present themselves not simply as calculative investors but also as enchanted gamblers who often rely upon magical formulas and rituals that express their hopes and despairs in the face of an uncertain future. Instead of dismissing their beliefs and rituals as ‘irrational exuberance’, this study argues that their cultural practices should be understood as a reflexive response to the ‘magical’ mechanisms of the financial market based on self-referential valuation and self-fulfilling performativity. In examining how the logics of uncertainty and magic are returned at the heart of contemporary capitalism, this study consequently seeks to situate the lay investors’ struggles in dealing with the ambiguous future within the broader transformation of the human condition during the triumphant rise of financial capitalism.

KEYWORDS:

• Bitcoin
• magical capitalism
• financial subject
• mass investment culture
• South Korea
• performativity

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 I will use bitcoin as a sort of synecdoche for all the cryptocurrencies discussed throughout this article. Bitcoin is not only the first cryptocurrency but also by far the most recognized one.

2 For a methodological discussion about conducting participant observation or ethnographic research online, see Wilson and Peterson (2002) and Horst and Miller (2012).

3 This petition titled ‘Against the regulation plan on cryptocurrencies’ was uploaded to the Blue House homepage by an anonymous citizen on December 28, 2017. Available from https://www1.president.go.kr/petitions/76020 [accessed 10 June 2019].

4 This self-deprecating term ‘dirt spoon’ originates from the ‘spoon class theory’ that has recently gained popularity among South Korean youth. The spoon class theory refers to the idea that a young individual’s status can be classified on a scale from ‘gold’ spoon to ‘dirt’ spoon, based on the amount of their parents’ financial assets (Cho 2017).

5 What constitutes the basis for the value of a currency has long been debated (Ingham 2004, Dodd 2014). When it comes to contemporary fiat currencies, it is generally believed that their value is backed by the state authorities that issue these currencies. Since bitcoin is a virtual currency untethered to any state or government, the basis of its value is thus ambiguous. The following statement by Paul Krugman encapsulates the scepticism: ‘fiat currency is backed by men with guns whereas bitcoin is not, so why should this thing have any value?’ (quoted from Dallyn 2017, p. 464).

6 This ‘doubly’ collective nature of the belief is significant. It means that what matters is not individual belief about others’ beliefs but the expected collective belief on collective belief. This is comparable to what Slavoj Žižek (1989) calls ‘the objectivity of belief’ as the basic structure of commodity fetishism. He argues that ‘the point of Marx’s analysis … is that the things (commodities) themselves believe in their place, instead of the subjects … They no longer believe, but the things themselves believe for them (Žižek 1989, p. 31; italics in original). In our discussion, ‘the thing’ that believes on behalf of the subject can be ‘the market’ itself whose movement is reified and collectively believed by people. See also Orléan (2004).

7 Of course, this statement should not be understood to mean that words ‘freely’ create the market without any restraints. As both Butler (2010) and Graeber (2012) point out, what should be emphasized are the social and institutional settings that render a certain statement as performatively ‘felicitous’. What I want to note is that the non-foundational structure and the hyper-connectivity of the investors, both of which characterize the cryptocurrency market, seem to provide an ideal circumstance in which mass investors’ utterances can produce felicitous performative effects.

8 Critical scholars of bitcoin have pointed out that the belief that bitcoin is based on a decentralized system is simply a myth and bitcoin’s governance system is in fact highly centralized, or even monopolized by a handful of programmers and miners (Schneider 2019, Parkin 2019). In aligning with their technical analysis of the bitcoin market, what I want to add is that the apparently decentralized and trustless system of bitcoin – which is assumed to not require any belief in authorities or institutions – is ultimately backed by and indeed produces a transcendent and fetishistic belief in the market.

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Seung Cheol Lee

Seung Cheol Lee is an assistant professor of Anthropology and East Asian Studies at the University of Mississippi. His research interests are focused on the question of how neoliberal financialization has reshaped people’s social, affective, ethical, and political lives. He is currently working on the formation of mass investment culture in South Korea in the context of its post-developmental and post-work transition.