Why did someone pay $65,000 for fossilized whale feces last year?
Let me take a crack at it.
Let’s begin by analyzing what people have historically imbued with value.
Fine art, gold, and diamonds seem to be valid examples. But Why?
Is it because they are beautiful? Art looks fantastic in a living room. Diamonds and gold are gorgeous when wrapped around a finger or neck. But an immediate counter argument would cite the same aesthetic beauty could be had for a fraction of the cost if one were to buy a replica Monet, fools gold, or a printed diamond.
If it’s the beauty we seek, why is it that a virtually identical item could be had at fraction of the cost?
Maybe the fossilized whale feces can help us understand.
Someone paid $65,000 not because it’s beautiful, but because it is limited in supply.
WARNING: If you identify closely with your material possessions, you may not want to read the following 3 paragraphs.
Human beings have ego and ego likes to be fed. Its favorite meal is admiration. Admiration is typically achieved by being special or unique in a desirable way. In the absence of actually being “special” or “unique”, people acquire items that are themselves “unique.”
Whether we are all crazy for imbuing fundamentally useless items with value simply because they are rare, is an entirely different and lengthier conversation. But since the purpose of this article is not to unwind the entirety of human evolution, let’s just take it as a given.
The accumulation of unique items is an extension of our need to feel special. This is why we are willing to pay so much for things that are fundamentally useless but undeniably rare.
Ok, then why do we imbue currency with value? If we’ve established that the common denominator which gives “things” value is their rarity, then why are we so willing to exchange these things for paper currency, which is at it’s core, the opposite of rare?
The answer is of course because of its fungibility. Money can be converted into anything because everyone accepts it. As we all know, there are practical issues with bartering gold, fine art, or fossils for that matter. However, if we simply exchange these items for paper IOU’s like currency, which are accepted anywhere, then we’ve solved the problem.
Essentially Currency is valuable because it’s practical and it’s practical because it’s fungible.
The only problem is, it can be created out of thin air which can greatly diminish its value.
What if technology was able to solve this issue, as it has many others, and merge the great properties of fine art, diamonds, gold and fossilized feces with the practicality and fungibility of currency.
Enter cryptocurrency with blockchain technology.
Cryptocurrency is programmed to be limited in supply, which gives it the properties that make Gold, Diamonds and Fine art valuable, while also being portable, divisible, and fungible which are the qualities that make conventional currency so widely used. If that weren’t enough it has additional features like resistance to seizure and censorship.
For anyone who has been affected or has known of someone who has been affected by totalitarian regimes, like the mid Germany, Italy, and Cuba in the mid 1900s or Venezuela and Syria today, they would surely see the value in an unseizability feature.
Imagine if instead of a diamond or pearls sewn in the jacket pocket, someone could instead leave with a USB card and a password in their head, with the entirety of their networth.
As the internet changed the way we exchange information between one another, blockchain technology, upon which Bitcoin and every other cryptocurrency is built, will change the way we exchange value with one another.
Technological improvement is the lifeblood of capitalism. When someone builds a faster, cheaper, more efficient mousetrap, particularly one with additional beneficial features, it’s only a matter of time until supply demand curves and market forces find equilibrium. The question isn’t “if”, it’s “when.”