Thought for the Day - 20/03/2014 - Abdal Hakim Murad
Good morning.
As everyone knows, this year marks the centenary of the start of the First World War. What is less noted is another anniversary: 1914 was the year when Germany began the world’s slow disengagement from the gold standard.
Much less interesting, I hear you say; and of course you are right. But the First World War ended, while the post gold-standard economy still rules our lives. The supply of money, no longer stifled by a fixed exchange rate with gold, can be anything our governments and the bankers wish it to be.
Whether this is to blame for the recent economic tempests is a question that is beyond me. My point is rather different. Once money was measured in gold and silver coins, sanctioned by religion and natural scarcity. By leaving that behind, we are holding our wealth in a strange environment where money is only what we trust it to be.
In a way it’s impressive that mutual human trust allows us to hold our life savings in pieces of paper.
But how far can the process be pushed, given what we know of human nature? Take, for instance, the strange world of bitcoins. For the past five years this entirely virtual currency has prospered mightily in cyberspace, and is now worth nearly ten billion pounds. No national bank controls it: bitcoins are created regularly by the software itself, and transactions are made secure by a system of passwords and secret keys.
So a bitcoin is not a coin: its value is entirely based on what it is believed to be worth. And that belief is volatile. Yesterday the failed Mount Gox bitcoin exchange, which capsized along with seven percent of the world’s bitcoins, restarted its website. Users can look into their bitcoin wallets to check their balances, but, tantalizingly, they can withdraw nothing. Is their money real, or is it not?
It’s fascinating to read the quasi-theological language of some bitcoin discussion groups. Here is a new religion, it seems. It has its rituals, or protocols. Its founder has mysteriously disappeared. Its software is unseen yet powerful; and its will is inscrutable, as shown in the sudden falls and spikes in the bitcoin price. It will free us from the ever-unpopular banks. As one blogger writes: it is a revolutionary religion that will save the world.
Perhaps when we lose confidence in traditional religion, as many did after the Great War, we instinctively look for surrogates. The web has become a kind of mystical, metaphysical space. But should we place our trust in it? The prophets of old warned us that not all idols look like statues. It is wiser to trust God, says the Qur’an, than to trust the works of our own cleverness.
Release date: 20 March 2014
Duration:
3 minutes
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