I Don’t Believe in Bitcoins

Cybercurrency, sabermetrics, Twitter analytics and me.

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I’d just managed to complete my first-ever PayPal purchase when I started hearing about Bitcoins everywhere I turned. I don’t know if it’s the whole Magic: The Gathering thing or what, but I picture Bitcoins like the pile of gold Smaug sleeps on in The Hobbit. Imaginary world, imaginary currency.

But I do try to keep up, so I kept reading up on Bitcoins: on the Vinklevoss twins’ plans for a Bitcoin investment fund, on the surprisingly sober Senate hearings on the cryptocurrency last November, on the Mt. Gox mess, allegations of corruption, and on some old Japanese guy living in California who is either the mastermind behind Bitcoins or a befuddled dopplegänger. It would be a lie to say I understand Bitcoins better now. In fact, the more I read, the more confused I become.


Somewhere along the way, I found myself thinking about Michael Lewis’s Moneyball and the “science” of sabermetrics — the use of statistical analysis to quantify the sport of baseball.  The book is great, the movie’s great, Bill James has made the Red Sox into perennial winners by applying his theories, and these days everyone from soccer managers to peewee league coaches is running stats on every aspect of their games. Last fall, Major League Baseball sent a sabermetrician to ease even the late-late-late-adopting Phillies into Moneyball land. He must have been convincing; he’s been hired by the Phils full-time.

I’m no sabermetrician, but I know a team is in trouble when Ruben Amaro says, as he did upon locking down 39-year-old Bobby Abreu, “The purpose of this signing is to see if he has anything left.”

In my reading about Bitcoins, I came upon this blog post from tech writer Timothy B. Lee, in which he explains what makes Bitcoins viable: “People treat a currency as valuable because they expect others to consider it valuable.” Mr. Lee went to Princeton and I didn’t, so he could probably tell you which of Aristotle’s 13 types of fallacies this qualifies as. I just think of it as bandwagoning, a.k.a. lemming-ing. No matter how many of my neighbors believe in fairies, I don’t believe in fairies. And I don’t believe in Bitcoins any more than I believe in Smaug.

For a while here at Philly Mag, we had weekly meetings with a lovely young woman who built her career on the magazine version of sabermetrics. She ran endless analytics breaking down our blog posts by every metric imaginable; she did the same with Facebook postings and tweets. She showed us pie charts, bar graphs, indexes and vertices. She sliced and diced and ran numbers like a South Philly bookie. There were so many trees in her forest, and she was determined to show us every single damned one.

She’s not here anymore.

You know who’s still with the Phillies? Fourteen players who are 30 or older, including five “new” acquisitions with an average age of 36.4 years. I never got as far in math as algorithms, but I can add and divide. Yes, numbers matter. But not always the kinds of numbers sabermetricians pay attention to.

There’s another kind of faulty reasoning that’s known as the Multiple Napoleons Fallacy. Psychologist Paul Meehl described it in a paper he once wrote, called “Why I Do Not Attend Case Conferences.” If a patient believes he’s Napoleon, Meehl explained, that doesn’t mean he’s Napoleon — no matter how fervently sure the patient is. There’s a difference between reality and delusion, and it’s a difference worth keeping in mind. There was only one Napoleon. And as for Bitcoins, no matter how many libertarians, anarchists and ATM entrepreneurs want them to be real, they’re not.

Still, sometimes I get this stuff wrong. I’m old; my thinking’s out of fashion. Young people make me cranky. (Oh my God, they make me cranky.) We've all got hundreds of “friends” we’ve never met these days, right? We even fall in love with our imaginary friends, and have sex with them. So just in case I was missing something, I emailed my computer-savvy 21-year-old son: “What about these Bitcoins?”

“Bitcoins are dumb,” he emailed back. “Money backed by nothing isn’t a good strategy.”

Which reminded me for some reason of the ending of Annie Hall. I guess all those Bitcoin believers really need the eggs.

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  • Peter St. John

    Sandy,
    I miss your Romance novels and just found this divaguer (I don’t know how to make nouns out of verbs in French, that’s from Google Translate, but what luck! “diva” guerre!) which I enjoyed reading.
    Modern currencies in fact aren’t backed by substantial things (like gold) anymore; there isn’t enough gold in the world to exchange for all of the world’s goods and services. Instead, money is like a protocol; if I believe that a store will except his Euro bill in my hands for me to buy a candy bar, then I’ll accept the Euro in payment for my discursions. My belief could be false, for example after a horrible stock-market crash or run on banks, and the store wouldn’t take my euro. Nevertheless the currency depends on mutual acceptance.
    Sometimes belief does cause truth. For example, the statement “Pete believes this statement” is true, if in fact I believe it; but is not true, if I do not believe it. But more to the point, money is like a protocol, like HTML or English. Computers can communicate over the Internet because of mutual acceptance, between browsers and servers, of the protocol.
    Anyway I was just reminded of you by “50 Shades of Grey” (which I haven’t read and probably won’t). I don’t know which of the seven stories it is but it made something like $100 Million dollars. So I suggest you resume Romances, buy Philadelphia Magazine and hire me as the TechnoGeek Editor :-)
    Love always,
    Peter
    peter.st.john@gmail.com