The Rise of the Cryptocurrency Gift Economy

Here’s Brett Scott, our favourite Heretical Finance Hacker, talking about the ways cryptocurrencies can amplify the scope of the gift economy. Interestingly, Charles Eisenstein explores the concept of anonymity in gifting and its downsides in his book, Sacred Economics. I’ll post the relevant extract in the comments below, to amplify the discussion. Brett’s article was originally published in Coin Desk.


Participating in, and encouraging a thriving informal gift economy could be a chance for crypto enthusiasts to showcase how an economy based on decentralised voluntary association could also support those who are on the fringes of society.

In 2013, the digital anthropologist Lui Smyth conducted a survey of the most common uses of bitcoin.

He found bitcoin was used to buy web services, software, hardware, gambling services, and (in the heyday of the Silk Road) narcotics. Topping the list though, when measured in terms of the number of transactions, was tipping and donations.

The public block chain provides much anecdotal evidence for this. All one needs to do is search the tipping addresses of people or groups who openly advertise that they take bitcoin tips.

Here, for example, are tipping accounts for Adam B Levine and Stephanie Murphy of the popular Let’s Talk Bitcoin show. Libertarian activist Adam Kokesh has received a significant number of donations via his Youtube channel. And here isWikileaks, the open-source software producer VideoLAN, and the anarchist magazine Strike!.

I have even received one bitcoin tip and a few dogecoin tips for my own blog (indeed, the dogecoin community appears to have a particularly generous heart when it comes to supporting underdogs like the Jamaican Bobsleigh team). This donation culture has also taken off in forums like reddit, where tools like BitcoinTip allow redditors to send each other tokens of appreciation for thoughtful comments.

This use of cryptocurrency for small acts of generosity may seem unusual to those who associate bitcoin with self-interested profit-seeking speculation, but it points to the emergence of a promising cryptocurrency gift economy.

What is a gift economy?

The best way to illustrate a gift economy transaction is to think about a street busker who sets up on the sidewalk and proceeds to give something to society.

The air-conditioned Silicon Valley conferences seem a million miles away from the gritty reality of the rest of the world.

The busker does not expect anything back from any particular person who walks past, but the fact that they leave a hat out for tips shows that they hope that in general some people will be inspired to give back to them.

In 2001 I experienced this first hand when I busked on the New York subway. It differs from normal economic exchange, where a service is offered only to a particular person who completes the transaction with a particular payment.

It also differs from a pure gift, where we hand something over to a particular person without expecting anything back. In busking, a service is freely given to many but voluntarily paid for by only some.

At its heart then, such exchange relies on a different notion of the economic individual, not one who acts in their narrow self-interest, but one who is motivated to act even when they do not have to. It has much in common with the Buddhist notion of Karma – I give something and have faith that it will come back.

Why cryptocurrencies suit online gift economies

So why might cryptocurrencies be ideal for online donations and tipping?

Firstly, they are easy to use. Bloggers engage in the Internet version of busking when they request donations for pieces they write. If I enjoy a blog post though, I do not want to have to enter into a complicated process to donate to the writer. I need the digital equivalent of flipping someone a coin as I walk past them, and cryptocurrency is ideal for that.

There is also something very personal about choosing to give money to an online busker when you are not contractually obliged to do so, and this type of transaction does not lend itself to formal third-party payment providers. Bloggers frequently do set up Paypal donate buttons on their sites, but the third-party adds a layer of formality to something that is intrinsically informal.

Cryptocurrencies, on the other hand, have a naturally informal feel to them, a bit like loose change in your pocket. Their anonymous nature adds to this. When you send a Paypal donation, your identity becomes known to the person receiving it. As the transaction becomes formally recorded, the act can become more contrived, like when a wealthy person donates to a public building to get their name plastered on it.

tips

Hiding identity can be associated with a lack of trust, but equally it can stand for the removal of ego from a transaction. When I tip a street busker it is very fleeting, and the busker will seldom know who I am.

In a sense, I stand for a general person in society who appreciates them. Anonymous cryptocurrency donations are similar. They do not aggrandize the tipper, and can be used to express a pure appreciation for the services provided.

Preserving the soul of bitcoin

This emergent gift economy should be actively encouraged by all those interested in the future of cryptocurrency, and here is why.

Bitcoin initially had the feel of a true underdog currency, an unlikely adventure undertaken by outsider enthusiasts. I often work with NGOs and humanitarian groups, and when bitcoin initially came out there was real curiosity about whether the technology had the potential for helping vulnerable people.

As bitcoin’s fame has risen though, and with it the triumphalist stories of bitcoin millionaires, the tone has shifted. Far from being perceived as a currency of empowerment, it risks becoming seen as just another technology for elites to get rich off, especially as the costs of mining skyrocket. The air-conditioned Silicon Valley conferences seem a million miles away from the gritty reality of much of the rest of the world.

Recently Andreas Antonopolous urged bitcoin enthusiasts to tone down the rhetoric of speculation and to focus on bitcoin’s potential role in facilitating charity. And as Andrea Castillo writes, new approaches to welfare that go beyond the traditional left vs right battles are needed.

Participating in, and encouraging a thriving informal gift economy could be a chance for crypto enthusiasts to showcase how an economy based on decentralised voluntary association could also support those who are on the fringes of society.

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1 Comment The Rise of the Cryptocurrency Gift Economy

  1. AvatarStacco Troncoso

    Here’s the passage from Charles Eisenstein’s Sacred Economics I mentioned earlier. It’s extracted from chapter 18: Relearning Gift Culture: http://sacred-economics.com/sacred-economics-chapter-18-relearning-gift-culture/

    “Consider the ideal of the free gift, which Jacques Derrida characterizes as follows: “For there to be a gift, there must be no reciprocity, return, exchange, countergift, or debt.” This would preclude any benefit accruing to the giver, such as social status, praise, expressions of gratitude, and even, perhaps, the feeling that one has done something virtuous. The closest example of this in real life would be anonymous charity, or perhaps the alms given to Jain ascetics, who make sure to offer neither thanks nor praise for the food. (1) Jain religious beliefs are quite relevant to this association of the free gift with purity, spirituality, and nonworldliness. The Jain seek through asceticism to burn away karma and purify themselves while creating no new ties with the world. Thus they take care never to visit the same house twice and never to respond to an invitation, striving toward the ideal of an unexpected guest receiving pure charity untainted by any worldly bond.

    The Jain are an extreme case, but similar ideals inhabit the other world religions. Christians, for instance, are enjoined to fast, pray, and give charity in secret. Buddhists following the Bodhisattva path are supposed to dedicate their lives to the liberation of all beings, putting others ahead of themselves. In Judaism, the principle of chesed shel emet, the highest form of kindness, is to give with no hope of repayment or gratitude, while the highest level of charity is when neither donor nor receiver knows who is giving or receiving. Anonymous charity is one of the five pillars of Islam, and huge Islamic charities are funded anonymously. I don’t think I need cite too many examples to persuade the reader of the association of altruism and anonymous charity with religion.

    The religious ideal of the free gift that doesn’t create any social bonds is, ironically enough, very similar to monetary transactions! These also generate no obligation, no tie: once the money is paid and the goods delivered, neither party owes the other anything. But with the exception of the idealized true gifts described above, gifts are very different. If you give me something, I will feel grateful and desire to give in turn, either to you or to someone else that social custom prescribes. Either way, an obligation has been created, an assurance of continued economic circulation within the gifting community. Anonymous gifts don’t create such ties and don’t strengthen communities. The recipient might be grateful, but that gratitude has no object save the universal or abstract.

    Gratitude, moreover, arises not just from the receiving of gifts, but also from their witnessing. The generosity of others moves us toward generosity ourselves. We desire to give to those who are generous. We are moved by their openness, by their vulnerability, by their trust. We want to take care of them. With the possible exception of anonymous charity, gifts don’t happen in a social vacuum. They expand the circle of self, linking our self-interest with that of anyone who, when he has more than he needs, will give us what we need. The religious ideal of the unattached gift, which diffuses the resultant gratitude to the universal level, has a place insofar as we wish to identify with the community of all being. But I do not think that the resolution of the Age of Separation is a state of universal oneness. Rather, we will step into a multidimensional self that identifies with all being, yes, but also with humanity, its own culture, its bioregion, its community, its family, and its ego-self. Accordingly, the anonymous, unencumbered gift has an important but limited role to play in the coming economy.

    This was certainly the case in primitive gift cultures. While there did exist the equivalent of the universal, unrequitable gift in the form of sacrifices to the gods, most gifts were social in nature. In his classic 1924 monograph The Gift, Marcel Mauss establishes a strong case against the existence in primitive societies of a free gift. Generally speaking, Mauss said, appropriate gifts and return gifts were quite precisely determined and were enforced through social approbation and obloquy, status and ostracism, and other forms of social pressure. This is a desirable state of affairs: the obligations and commitments that arise from gifts and their expected requital are a glue that holds the society together.

    We can feel the absence of that social glue today. In the logic of me and mine, any obligation, any dependency, is a threat. Gifts naturally create obligations, so, in the Age of Separation, people have become afraid to give and even more afraid to receive. We don’t want to receive gifts because we don’t want to be obligated to anyone. We don’t want to owe anybody anything. We don’t want to depend on anyone’s gifts or charity-”I can pay for it myself, thank you. I don’t need you.” Accordingly, we elevate anonymous acts of charity to a lofty moral status. It is supposed to be a great virtue to give without strings attached, to expect nothing in return.”

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