You can’t miss it if you try it. From YouTube commercials starring famous comedians to non-stop news stories showcasing yet another broken price record, “it” was cryptocurrency, a movement that took the world by storm in 2021 and 2022. It is largely born out of libertarian trends after the recent financial crisis and is limited. Within Internet sub-communities for years, crypto has finally entered the mainstream.
Harvard was not immune to this explosion of enthusiasm. The first blockchain-focused undergraduate organization was founded on campus, and internship and job offers at cryptocurrency firms became ubiquitous and irresistible.
While the highs of 2021 have mostly faded and the appeal of the blockchain future has been greatly diminished by scandals such as the spectacular collapse of the LUNA “stablecoin” network and the FTX cryptocurrency exchange, it is still unclear why cryptocurrency is more than just this technology. ten years old, it has only had its moment in the sun in the last few years.
The classic answer from pundits has been “easy money,” the notion that rock-bottom interest rates set by the Federal Reserve make it too tempting for deep-pocketed investors to go for crazy ideas of the month like upgrading the global monetary system. . Sure, there may be some truth to that, but it doesn’t explain how cryptocurrency has captured the popular imagination, let alone sovereign governments—how it has convinced a fifth of Americans and millions around the world. and cultural boundaries, risking financial well-being for something new.
As I walked through the Harvard Art Museums toward the end of the fall semester, this question was somewhere in my mind. Being a long-time nerdy numismatist, I soon found myself (again) on the third floor browsing the Roman coin collection, with selections from the late Republican period (1st century BC) to Late Antiquity (3rd-5th centuries BC). includes. .
The temporal diversity of the collection makes it easy to detect clear compositional differences between coins struck at opposite ends of the Pax Romana. And although it may not be fair to assume so at first glance, the quality of the coins also varies significantly. In general, Roman coins minted by the central imperial authority went through a process of successive depreciation as less and less precious metals were used in their production. For example, while the silver dinar during the reign of Nero (AD 54-68) was 94 percent pure, the coins minted by Claudius Victorinus, who came to the throne two centuries later in AD 268, were mostly scrap metal, containing only 0.02 percent genuine silver. For many emperors, the logic was simple. Expensive wars required expensive spending, and what was easier – raising (and collecting) taxes or simply keeping more bullion in government coffers by reducing how much was spent on currency?
Although the thesis that this routine humiliation led to the eventual downfall of the Roman state has been hotly debated over the centuries, the notion that the practice was common knowledge among the Romanus populus is more widely accepted. As the purity of the coins declined, the pay of the regular soldiers steadily increased, while the auxiliaries recruited from the “barbarian” forces demanded their pay in more pure gold. The once unquestioned authority of the Roman state to control the medium of exchange within its sphere of influence was increasingly eroded.
Among the many parallels politicians and thinkers often draw between the Roman world and ours, perhaps one that should be noted with caution, especially given the dominant nature of American cultural influence, is the loss of public confidence in Roman “finance.” system and the system we live in today. While there are of course very significant differences in their respective architectures—that is, we no longer want to chain our monetary supply to the availability of precious species—we can certainly compare the qualities of public sentiment.
After all, money still serves the same social functions in our world as it did in our ancestors, and as with any medium of exchange, unanimous agreement on the value of money is absolutely essential to its continued existence. When the collective belief in value moves beyond some critical point, individuals may be motivated to seek alternatives. While the Romans took refuge in the apparent stability of the aurum, many “gold bugs” still exist today, with cryptocurrency seemingly the new, wildly popular kid on the block.
Indeed, it seems no coincidence that a recent mass media motif such as the rise of cryptocurrency is the imminent threat of inflationary pressures in the US and globally. Think tanks have lined up to offer their own version of how the prices happened, some pointing to the “easy money” policies of central banks, while others blaming everything from the pandemic to the war in Ukraine. Less controversial was the effect of inflation on the average psyche, as popular discontent grew, fueled by a widespread belief that the central authorities were somehow to blame for the emerging crisis.
Put in these terms, it may be less of a mystery why cryptocurrency has attracted so many people recently. It was, in essence, a passive rebellion against establishment institutions driven by the same sentiments and notions of “breaking away from the big banks” that drove thousands to Occupy Wall Street more than a decade ago.
Yes, cryptocurrency’s fifteen minutes of fame may have passed, but widespread mistrust of the current financial status quo persists. Thus, public policy must be prepared to address these eddies of economic discontent so that our currency does not follow the path of the Romans.
Alexander Junxiang Chen ’24 is a Neuroscience and Chemistry concentrator at Quincy House. His column, “Artifactual,” appears Thursday.