Embedding into an Emerging Money System: The Case of Bitcoin

ABSTRACT

As global economic crises place the issue of money at the forefront of media attention, a growing minority are turning to “cryptocurrencies” as an emerging digital alternative to state-issued currencies. Bitcoin, the most popular version of this emerging medium, is a useful proxy to answer a key question to the sociology of money: how do people embed themselves into an emerging money system, and what role does value play in this process? Drawing on 23 interviews with Bitcoin adopters, I find that embedding into Bitcoin is closely tied to personal experience and temporal contexts. This study demonstrates that the adoption of Bitcoin follows a distinct process. First adopters discover the value Bitcoin on their own terms. Next, they reflexively overcome challenges to these initial perceptions of value. Finally, they reaffirm their embeddedness in the system through rituals of commitment. This finding has implications for the sociology of money and economic sociology by distilling the connection between fictional expectations that are used to anchor value systems and the social construction of monetary utilities and group identities. Additionally, this connection helps to unpack how Bitcoin continues to mature as a money system despite being characterized by diverse adopters that often engage in economically inefficient activities.

KEYWORDS:

• Bitcoin
• Value
• Qualitative Methods
• Technology

Acknowledgments

I would like to thank the participants for their willingness to share their experiences and unique perspectives on Bitcoin. I am also grateful to Jane Zavisca, Robin Stryker, Jennifer Earl, and Jeff Sallaz for their frequent advice and advising on this project. I would also like to extend a thank you to Andrew P. Davis, Charles Seguin, Jennifer Carlson, Terrence D. Hill, Jessica Pfaffendorf, and Sam Scovill for their thoughtful comments on this paper. Finally, I would like to extend sincere gratitude to Hannah Kyle for listening to my frequent musings on cryptocurrencies.

Disclosure Statement

No potential conflict of interest was reported by the author.

Notes

¹ See the Bitcoin Wiki for more information about the technical origins of this narrative. The initial “genesis block” that produced the first Bitcoin tokens was coded with a date and title of an article in the UK Times alluding to the second bailout of the financial banking system.

² Most seed participants were recruited through the website meetup.com, which facilitates offline interactions between hobbyists – in this case, Bitcoin adopters, to get together in a physical context. Additional resources, such as online forums catering to Bitcoin adopters, social media communities, and business listings advertising cryptocurrency as an accepted payment method, were used to further recruit seed participants. A drawback of this type of recruitment is that these resources cater primarily to the most active adopters in the space leaving open the possibility that more casual adopters were omitted from the sample. When adopters were unable to meet in person due to scheduling or temporal constraints, video conferencing software was utilized. This was advantageous by allowing my sample to become nationally available as opposed to confined to my immediate location.

³ There are reasonable concerns about positionality with such a skewed sampling frame (Biernacki and Waldorf 1981). For instance, libertarian and independent leaning individuals may consistently underplay the importance of institutional frameworks in the Bitcoin. Similarly, the prevalence of non-Hispanic white males may restrict the breadth of experiences captured across demographics. It is important to note independent research has demonstrated that the sample used in this paper is fairly indicative of the population of Bitcoin adopters which are heavily saturated with libertarian leaning, non-Hispanic white males (see Coindesk 2015).

⁴ The SERV-PERVAL scale is a five-dimension index that was operationalized into the interview schedule for the study. These dimensions include: “Quality” value for participant descriptions of Bitcoin having a superior design; “Price” value for participant descriptions of Bitcoin’s financial value as an accurate representation of its worth; “Behavior” value for participant descriptions about the effort to obtain, use, or engage in Bitcoin activities; “Reputation” value for when participants described how reputable Bitcoin was as a financial instrument; and finally, “Emotion” value for participant descriptions of how Bitcoin made them feel. In addition to this scale, the interview schedule operationalized additional value schemes: “Market” value for descriptions of participants interacting with Bitcoin under the utilitarian definition of money; “Ideology” value for when participants described Bitcoin as a proxy for their political or philosophical beliefs; and “Community” value for when participants described collective uses, activities, or understandings of Bitcoin among adopters.

⁵ Silk Road was a marketplace accessible only through what is commonly referred to as the “deep web.” The website was used primarily to sell illicit products and services and was infamous for not only its heavy traffic of bitcoins as the primary payment mechanism, but also the resulting takedown that is still commonly referenced in media accounts of Bitcoin.

Additional information

Notes on contributors

Alexander B. Kinney

Alexander B. Kinney is a doctoral student in the Department of Sociology at the University of Arizona. His research uses theories and methods from organizational sociology to explore the contexts of contested commodities, semi-legal markets, and civil conflicts. His current work focuses on the dynamics of commercial cannabis in the United States in order to understand how semi-legality structures the market, and is asource of professional power and constraint. His previous work has appeared in Poetics and Social Currents.