![1
iv
Oxford University Press is a department of the University of Oxford. It furthers
the University’s objective of excellence in research, scholarship, and education
by publishing worldwide. Oxford is a registered trade mark of Oxford University
Press in the UK and certain other countries.
Published in the United States of America by Oxford University Press
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© Oxford University Press 2020
All rights reserved. No part of this publication may be reproduced, stored in
a retrieval system, or transmitted, in any form or by any means, without the
prior permission in writing of Oxford University Press, or as expressly permitted
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rights organization. Inquiries concerning reproduction outside the scope of the
above should be sent to the Rights Department, Oxford University Press, at the
address above.
You must not circulate this work in any other form
and you must impose this same condition on any acquirer.
Library of Congress Cataloging-in-Publication Data
Names: Parkin, Jack, author.
Title: Money code space : hidden power in bitcoin, blockchain, and
algorithmic decentralisation / Jack Parkin.
Other titles: Money, code, space
Description: New York, NY : Oxford University Press, [2020] |
Series: Oxford studies in digital politics | Includes bibliographical references and index.
Identifiers: LCCN 2020004730 (print) | LCCN 2020004731 (ebook) |
ISBN 9780197515075 (hardback) | ISBN 9780197515082 (paperback) |
ISBN 9780197515099 | ISBN 9780197515105 (epub) | ISBN 9780197515112
Subjects: LCSH: Bitcoin. | Blockchains (Databases) |
Cryptocurrencies—Social aspects. | Finance—Social aspects.
Classification: LCC HG1710 .P36 2020 (print) |
LCC HG1710 (ebook) | DDC 332.4—dc23
LC record available at https://lccn.loc.gov/2020004730
LC ebook record available at https://lccn.loc.gov/2020004731
9 8 7 6 5 4 3 2 1
Paperback printed by LSC Communications, United States of America
Hardback printed by Bridgeport National Bindery, Inc., United States of America](https://image.slidesharecdn.com/8885843-250613024919-d50eb1a0/85/Money-Code-Space-Hidden-Power-In-Bitcoin-Blockchain-And-Decentralisation-1st-Edition-Jack-Parkin-9-320.jpg)
![xii PREFACE
xii
another way of saying its data is indisputable—by creating an application for
streamlining letters of credit in global supply chains. Pete Rizzo (2015b) from
CoinDesk, the world leader in news and information pertaining to cryptocur-
rencies and blockchain technology, was in the crowd and would later report:
To attack this issue, Squirrel developed a system by which parties could
enter into a purchasing agreement at a lower risk level. Funds, the team
proposed, could be sent to escrow accounts by both manufacturers and
vendors. Squirrel, in turn, could act as a source of capital and security so
that projects [could] be produced.
Escrow accounts are a contractual arrangement where traditionally ‘non-biased
third parties,’ usually lawyers, handle money for the transacting parties to mini-
mise the risk of a bad actor corrupting the agreement. As a programmable form
of money (conditions can be set as to how coins are spent), Bitcoin allows the
building of smart contracts to manage funds based on pre-written digital param-
eters. Smart contracts are self-executing pieces of code that facilitate transac-
tion outputs (payments, deeds, votes) based on pre-defined inputs (date, stock
price, signatures). Because blockchains are supposed to resemble ‘decentral-
ised,’ ‘sequential,’ and ‘permanent’ records of ‘truth,’ the data they contain, and
constantly build upon, can be used to lock and unlock these smart contracts.
In essence, this can ‘remove’ the adjudicating middle(wo)man and ‘automate’
transactions.6
Global supply chains are littered with producers, consumers, and regula-
tors separated by space, time, culture, language, and currency. As such, they are
deeply connected by networks of trust. With Squirrel we used smart contracts
to ‘remove’ the risk contractors are forced to take on when making purchase
orders to vendors (who may or may not fulfil them). By assigning commodities
a digital identity, their lives could be tracked via a blockchain and cryptocur-
rency could be released as they cross certain predetermined checkpoints. The
idea was to make money flow (via cryptocurrencies) symbiotic with product
movement across a supply chain. In other words, trusted records for multiple
and potentially untrustworthy participants (blockchains) were proposed to
‘automate’ purchase orders as multiple stakeholders reached a consensus on the
whereabouts of goods. Because the entire history of items can be recorded in
blockchains, they are often regarded as ‘secure,’ ‘transparent,’ and ‘auditable’ sys-
tems for realising economic transactions like this.
Other group projects that followed were Chainmail, Kar.yt, Cardify, P2P
insurance, In & Out Checkout, Revocable, BlockchainMe, and BlockNotary.
Following the presentations, I was approached by a blockchain consultant—an
occupation that had not existed a few years prior—who wanted to introduce](https://image.slidesharecdn.com/8885843-250613024919-d50eb1a0/85/Money-Code-Space-Hidden-Power-In-Bitcoin-Blockchain-And-Decentralisation-1st-Edition-Jack-Parkin-14-320.jpg)
![5
Introduction 5
the last twenty years in terms of understanding the interface between humans
and software (Lovink, 2002; Terranova, 2004, Rossiter, 2006, 2016; Golumbia,
2009; Lovink et al., 2015; Tkacz, 2015).
Third and finally, the book commits to the methodological pursuit of detailed
ethnographies surrounding the production and nuances of techno-cultures
(Miller&Slater,2000;Zaloom,2006;Downey&Fisher,2006;Boellstorff,2008;
Miller,2011).Thisbodyofknowledgehasworkedhardtorejectontologicalbifur-
cations between the cultural and the technological spheres, repeatedly proven an
unproductive theoretical chasm: “[l]eaving technology out of analyses of culture
has the unintended implication that it is an autonomous realm of human activity”
(Downey & Fisher, 2006, 5). In opposition to this, ethnographies have looked
to “undermine accounts of change that privilege technology as the sole, driving,
causal agent” (Downey & Fisher, 2006, 5). This mindset is useful for investigat-
ing blockchain ecosystems because it helps provide a fine-grained narrative con-
cerning their interwoven tapestries of culture, economy, and technology through
space. The methods in this book are inspired particularly by participant observa-
tion conducted in software companies (Ross, 2003; Indergaard, 2004; O’Rian,
2004; Girard & Stark, 2005; O’Mahony, 2006; Takhteyev, 2012).
This threefold convergence of literature on finance capital, software studies,
and infrastructure ethnographies is used to interrogate the nascency of Bitcoin
and blockchain technology by focusing on the diverse assemblages of humans
and non-humans that constitute them. A ‘follow the thing’ methodology is used
both for data collection and as an analytical tool to trace out these social and
spatial connections that form decentralised architectures. The three literatures
outlined earlier are brought into conversation with each other through empiri-
cal observations where blockchains enigmatically place the concepts of money,
code, and space in a novel relationship.
Considering the vast quantity of commentaries pertaining to cryptocurren-
cies and blockchains, there is a dearth of detailed ethnographic work in the field
(DuPont, 2019). This is not altogether surprising given the algorithmic nature of
these architectures. “Understood as sets of instructions that direct the computer
to perform a specific task, algorithms are essentially used to control the flow of
actions and future events” (Bucher, 2018, 28). But they often appear detached
from everyday places, operating busily out of view. When it comes to distributed
ledger technologies, codified logic buried within computer networks is used to
achieve what I call algorithmic decentralisation. This process aims to direct social
interaction without the need for hierarchal human decision-making and carries
with it ideas of openness, equality, non-repudiation, automation, and disinter-
mediation. However, it is important to remember that “algorithms do not work
on their own but need to be understood as a much wider network of relations
and practices” (Bucher, 2018, 20).](https://image.slidesharecdn.com/8885843-250613024919-d50eb1a0/85/Money-Code-Space-Hidden-Power-In-Bitcoin-Blockchain-And-Decentralisation-1st-Edition-Jack-Parkin-23-320.jpg)
![7
Introduction 7
geography (Christophers, 2011a, 2011b; Gilbert, 2011). As Brett Christophers
(2011a) notes, although difficult, following money can “reveal and examine the
social and economic relations both underpinning and occasioned by money’s
creation and circulation” (1069–1070). Because Bitcoin has been proposed
as an anarchist form of digital money, its peculiar character can be illumi-
nated, and those claims tested, by tracing out its “social and spatial pathways”
(Christophers, 2011a, 1068). In the context of urban theory, Donald McNeill
(2017) suggests: “[w]e might think about world city-making systems rather than
world city systems” (150). Borrowing and repurposing this phrase to approach
another complex ensemble, I think about blockchain-making systems rather
than just blockchain systems. In this sense, drawing on some of the tools associ-
ated with actor-network thinking for “framing field sites and research objects”
(Madden, 2010, 584), I attempt to follow things, people, and ideas as they col-
lide through blockchains.
I carve three exploratory paths to navigate and disentangle the complexity of
Bitcoin and copycat blockchains. First, I examine the spatial articulations and
contradictions that Bitcoin and other implementations of blockchains enact as
certain practices, such as forking software or storing bitcoin, coalesce around
them. Second, through this spatial organisation, I develop an understanding of
algorithmic decentralisation and demonstrate how its internal contradictions
correlate to power harnessed through the network. Third, I assert how different
actors control certain channels in the (de)centralised networks of blockchains
and (re)shape their digital-material architectures with competing political
ideologies.
Ultimately, all work to develop a critical understanding and theorisation of
algorithmic decentralisation through money, code, and space. While some tech-
nological and economic ideologies preach an impending world of distributed
global transactions, the materiality of economies points to something different.
Centralisation, on some level, is necessary for economies to function. This pat-
tern is not dissimilar to the evolution of the TCP/IP protocol once dreamed
up as the ultimate form of decentralisation (Galloway, 2004). This protocol sets
out the rules machines must follow in order to send and receive information to
and from each other via the Internet. The Bitcoin protocol, in turn, rests upon
this network and uses it to connect separated copies of the same currency ledger
together. Like the Internet before it (and, partly, because of it), the making of
blockchains, shaped by a myriad of evolving actors, is turning them into archi-
tectures with some radical differences to how they were first conceptualised (see
also De Filippi & Loveluck, 2016; Musiani et al., 2018; DuPont, 2018; Gloerich
et al., 2018). While some hackers attempt to stay aligned with ideologies of
economic decentralisation, Silicon Valley and global banks have been steer-
ing blockchains towards traditional models of capital accumulation. Just as the](https://image.slidesharecdn.com/8885843-250613024919-d50eb1a0/85/Money-Code-Space-Hidden-Power-In-Bitcoin-Blockchain-And-Decentralisation-1st-Edition-Jack-Parkin-25-320.jpg)
![34 MONEY CODE SPACE
3
4
Simmel, 1900; Crump, 1978; Roberts, 1994; Maurer, 2006; Dodd, 2014). It is
“the great converter of everything into everything else” (Peel, 2000, 32). Georg
Simmel (1900) famously explained this phenomenon by calling money a claim
upon society: a “socialised debt” between the “individual and a wider payment
community” (Dodd, 2014, 125). In other words, money operates between
people—users have faith it will maintain purchasing power in particular places
extending into the future.
Brett Scott (2018) puts an interesting spin on things: “[m]oney is not a store
of value. Rather, it is a tokenized claim that enables you to access, control, or
mobilize value that resides in goods and services. Burning money does not
destroy value. Rather, it burns up your ability to control the value embedded
in the products of other’s labor” (147). This is a thought-provoking statement
that neatly demonstrates how money is a placeholder for other things of value.
Similarly, when governments print greater quantities of money they are not cre-
ating value out of thin air but increasing the amount of claims on existing goods
and services in, and outside of, their economies (which has the effect of decreas-
ing the buying power of each individual unit, known as inflation). However,
while recognising Brett Scott’s point, the networks of trust that suspend money
as a substitute, or stand-in, for other desirable things also allow it to become a
de facto store of value in and of itself (quite evidently, it can be saved and spent
later). In essence, money may only be a claim upon value but this assertion
begets its own form of ‘independent’ value. This is a shared illusion but a power-
ful one, which makes it very real indeed.
Yet the resultant apparition is by no means infallible. In fact, money is decep-
tively fickle: being the result of social consensus, it is subject to the cultural con-
straints of time and space. The effect of money flattening other things is achieved
and reinforced by a shared faith in the fungibility of money—that is, each unit of
currency carries an identical value to another, making them all interchangeable.
However,certaineventsshowhowdifferentmanifestationsofaspecificcurrency
can embody some radical differences. For example, in 2008 the foreshocks of the
global financial crisis appeared when the British bank Northern Rock sought a
liquidity support loan from the Bank of England, which instilled fear in their
depositors leading to the first UK bank run in 150 years (Stuckler et al., 2008).
For those queuing at Automated Teller Machines (ATMs) ready to swap their
digital pounds in Northern Rock accounts for physical banknotes, fungibility
between the two manifestations of British currency did not exist. This situation
reveals the delicacy of money’s networks of performance (see Appendix 4 for
greater detail).
The idea of national sovereignty (and identity) is often defined by currency
control (Knapp, 1924; Keynes, 1930a). Here currencies are issued by central
banks, informed by governments, administered by commercial banks, accepted](https://image.slidesharecdn.com/8885843-250613024919-d50eb1a0/85/Money-Code-Space-Hidden-Power-In-Bitcoin-Blockchain-And-Decentralisation-1st-Edition-Jack-Parkin-52-320.jpg)
![3
5
Money/Code/Space 35
by businesses, and spent by citizens. All of these actors are essential to the suc-
cessful performance of sovereign money, which becomes imperative for the
articulation of borders (Dodd, 1995; Mezzadra & Neilson, 2013). Chartalism
is the name given to the belief that state-backing is the crucial factor for defining
and enabling money, reinforced by the collection of taxes in specific currencies
that necessarily ties them to citizenship (Knapp, 1924; Wray, 2004).3
Metallism
is often presented as the counterview to this claim, stating instead that value is
derived from the intrinsic qualities of the thing-as-money itself—like the scar-
city, durability, divisibility, and beauty of gold (see Dodd, 2014). Both sides hold
a certain gravitas but should not be held in opposition to each other. Traditional
coinage, for example, was an attempt to align chartalist and metallist qualities of
money into a singular orthodoxy by stamping (precious) metals with state sym-
bology (i.e., the head of the Emperor).4
In short, while the ‘thingness’ of money
is certainly important, the social networks (like those enforced by a state) per-
forming and constraining it are just as crucial (if not more so) for understanding
its elusive qualities.
Cultural-economic networks not only propel fiat currencies into being but
alsoperpetuateregionalboundariessothatmoneyisatoncearesultofpredefined
parameters and a contributing force to the continued negotiation of national
geographic spacing and territorial realities. This creates a monetary perimeter of
inclusion and exclusion positioning actors inside or outside of state economies.
However, regionalised economies are more complex than the inside/outside of
bordered national currencies—for example, many Argentinians hold US dollars
as a stable store of value. In this sense, “[m]oney does not map neatly onto ter-
ritorial space; indeed, it often flows along the internees between spaces” (Dodd,
2014, 226). Looking at states as bounded entities with a singular currency, then,
is a reductive approach as perimeters are always navigating a tightrope between
the somewhat real and somewhat imagined (Terlouw, 2001; Van Houtum &
Van Naerssen, 2002; Van Houtum et al., 2005; Walters, 2006). In other words,
“[f]lows of commodities, capital, labor, and information always render boundar-
ies porous” (Harvey, 2000, 35). Even more important to the geographic constel-
lation of currencies is the simple fact that nation-states do not have a monopoly
over money.
Bitcoin was by no means the first alternative currency in opposition to fiat-
based money (Hileman, 2014; Rodima-Taylor & Grimes, 2018; Scott, 2018).
Non-state currencies have been used across varying geographies such as the
localised Brixton Pound in South London (North & Longhurst, 2013; Taylor,
2014), Ithaca Hours in New York (Jacob et al., 2004; Hermann, 2006), and the
more wide-reaching M-Pesa that transcends many African countries. This last
one is a mobile telephone airtime credit that evolved into a monetary form after
a predecessor started being used for economic transactions in Uganda, Ghana,](https://image.slidesharecdn.com/8885843-250613024919-d50eb1a0/85/Money-Code-Space-Hidden-Power-In-Bitcoin-Blockchain-And-Decentralisation-1st-Edition-Jack-Parkin-53-320.jpg)
Money Code Space Hidden Power In Bitcoin Blockchain And Decentralisation 1st Edition Jack Parkin
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- 7. ii Oxford Studies in Digital Politics Series Editor: Andrew Chadwick, Professor of Political Communication in the Centre for Research in Communication and Culture and the Department of Social Sciences, Loughborough University Apostles of Certainty: Data Journalism and the Politics of Doubt C.W. Anderson Using Technology, Building Democracy: Digital Campaigning and the Construction of Citizenship Jessica Baldwin-Philippi Expect Us: Online Communities and Political Mobilization Jessica L. Beyer If . . . Then: Algorithmic Power and Politics Taina Bucher The Hybrid Media System: Politics and Power Andrew Chadwick The Only Constant Is Change: Technology, Political Communication, and Innovation Over Time Ben Epstein Tweeting to Power: The Social Media Revolution in American Politics Jason Gainous and Kevin M. Wagner Risk and Hyperconnectivity: Media and Memories of Neoliberalism Andrew Hoskins and John Tulloch Democracy’s Fourth Wave?: Digital Media and the Arab Spring Philip N. Howard and Muzammil M. Hussain The Digital Origins of Dictatorship and Democracy: Information Technology and Political Islam Philip N. Howard Analytic Activism: Digital Listening and the New Political Strategy David Karpf The MoveOn Effect: The Unexpected Transformation of American Political Advocacy David Karpf Prototype Politics: Technology-Intensive Campaigning and the Data of Democracy Daniel Kreiss Taking Our Country Back: The Crafting of Networked Politics from Howard Dean to Barack Obama Daniel Kreiss Media and Protest Logics in the Digital Era: The Umbrella Movement in Hong Kong Francis L. F. Lee and Joseph M. Chan Bits and Atoms: Information and Communication Technology in Areas of Limited Statehood Steven Livingston and Gregor Walter-Drop Digital Feminist Activism: Girls and Women Fight Back Against Rape Culture Kaitlynn Mendes, Jessica Ringrose, and Jessalynn Keller Digital Cities: The Internet and the Geography of Opportunity Karen Mossberger, Caroline J. Tolbert, and William W. Franko Revolution Stalled: The Political Limits of the Internet in the Post-Soviet Sphere Sarah Oates Disruptive Power: The Crisis of the State in the Digital Age Taylor Owen Affective Publics: Sentiment, Technology, and Politics Zizi Papacharissi The Citizen Marketer: Promoting Political Opinion in the Social Media Age Joel Penney China’s Digital Nationalism Florian Schneider Presidential Campaigning in the Internet Age Jennifer Stromer-Galley News on the Internet: Information and Citizenship in the 21st Century David Tewksbury and Jason Rittenberg The Internet and Political Protest in Autocracies Nils B. Weidmann and Espen Geelmuyden Rød The Civic Organization and the Digital Citizen: Communicating Engagement in a Networked Age Chris Wells Computational Propaganda: Political Parties, Politicians, and Political Manipulation on Social Media Samuel Woolley and Philip N. Howard Networked Publics and Digital Contention: The Politics of Everyday Life in Tunisia Mohamed Zayani
- 8. 1 iii Money Code Space HIDDEN POWER IN BITCOIN, BLOCKCHAIN, AND DECENTRALISATION JACK PARKIN
- 9. 1 iv Oxford University Press is a department of the University of Oxford. It furthers the University’s objective of excellence in research, scholarship, and education by publishing worldwide. Oxford is a registered trade mark of Oxford University Press in the UK and certain other countries. Published in the United States of America by Oxford University Press 198 Madison Avenue, New York, NY 10016, United States of America. © Oxford University Press 2020 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, without the prior permission in writing of Oxford University Press, or as expressly permitted by law, by license, or under terms agreed with the appropriate reproduction rights organization. Inquiries concerning reproduction outside the scope of the above should be sent to the Rights Department, Oxford University Press, at the address above. You must not circulate this work in any other form and you must impose this same condition on any acquirer. Library of Congress Cataloging-in-Publication Data Names: Parkin, Jack, author. Title: Money code space : hidden power in bitcoin, blockchain, and algorithmic decentralisation / Jack Parkin. Other titles: Money, code, space Description: New York, NY : Oxford University Press, [2020] | Series: Oxford studies in digital politics | Includes bibliographical references and index. Identifiers: LCCN 2020004730 (print) | LCCN 2020004731 (ebook) | ISBN 9780197515075 (hardback) | ISBN 9780197515082 (paperback) | ISBN 9780197515099 | ISBN 9780197515105 (epub) | ISBN 9780197515112 Subjects: LCSH: Bitcoin. | Blockchains (Databases) | Cryptocurrencies—Social aspects. | Finance—Social aspects. Classification: LCC HG1710 .P36 2020 (print) | LCC HG1710 (ebook) | DDC 332.4—dc23 LC record available at https://lccn.loc.gov/2020004730 LC ebook record available at https://lccn.loc.gov/2020004731 9 8 7 6 5 4 3 2 1 Paperback printed by LSC Communications, United States of America Hardback printed by Bridgeport National Bindery, Inc., United States of America
- 10. v For Joy and Eric Iliffe
- 11. ix ix Preface Disruptive Dreams When I first started taking Bitcoin seriously in 2012, I thought it was just a currency. That was my first exposure to it and I was really excited for what it was going to do to the financial system. It was really going to give it some liberty and freedom. . . . As I’ve grown in my understanding of what Bitcoin is, and how it is just the first app on the blockchain, I’ve realised how impactful and exciting the blockchain actually is. I think you will all agree with me: this is the single most exciting, most revolutionary idea that has hit in the past, probably, one hundred years. . . . This is going to change everything. And you being here as part of this program—all the things that each and every one of you are building . . . with the tools that many of the companies here have helped build previously— you’re building the future. . . . We’re really excited to see what people have built and where the future is going. You being here in these seats tonight means you are some of the earliest adopters in the world in what will change every single industry on this planet. (Developer Evangelist, BitPay) I was sitting in a crowded room in Mountain View, Silicon Valley. Around me sat a plethora of programmers, lawyers, entrepreneurs, CEOs, start-up employees, consultants,andotherbusinessmenandwomenfromarangeofdifferentprofes- sions: some were about to present their projects and others had come to observe the products that had emerged from six weeks of learning and collaboration. The enthusiastic speech just cited was one of a handful of introductions preceding the Blockchain University demo night. I had heard different variations of this rhetoric in the San Francisco Bay Area over the previous months as I attended meet-up groups and conferences, interviewed investors and start-up companies, and immersed myself in the regional technology economy. It was mid-2015 and the buzzword within the cryptocurrency industry—if it could still be given that compartmentalised label anymore—was “blockchain”: the (once) unique anat- omy of the Bitcoin protocol. I first heard the word “Bitcoin” in the summer of 2013 during heated Orwellian debates over global security and privacy. This sudden agitation was
- 12. x PREFACE x sparked when Edward Snowden publicly leaked classified information con- cerning the US National Security Agency (NSA) global surveillance programs (Gellman & Poitras, 2013; Greenwald, 2013). I was speaking to a software engineer at a barbecue in Shropshire, England, discussing the implications of the PRISM data-mining program used to extract public communications from highly reputable household technology companies such as Google and Yahoo (it was a fun party!). He mentioned that WikiLeaks, an (in)famous organisa- tion that publishes before-secret information like the Snowden documents, had been able to bypass a banking blockade by accepting donations of a networked digital currency called Bitcoin (see also Matonis, 2012). Money, it appeared, was being remade from the bottom-up by an ingenious group of cryptographers— computer programmers who use digital cyphers to obscure certain aspects of data.1 Here, value seemed to be ‘changing hands’ via a cryptocurrency running on top of a distributed payment mechanism, operating freely in the absence of central authorities.2 I would later find out, although Bitcoin embodies a rich pre- history (Brunton, 2019), it was built to do just that; released in the fallout of the 2008 global financial crisis, its software was devised to bypass the institutions that had caused the crash. Fast-forward to 2015 and Bitcoin’s algorithmic archi- tecture (blockchain) was being re-envisioned in Silicon Valley as a new disrup- tive spanner ready to be jammed into the traditional cogs of world systems. Brave New Coin, one of the many emerging press outlets reporting on cryp- tographic ledgers, portrayed Blockchain University as an institution that offered a developer-focused course taught by leading Silicon Valley blockchain start-up founders. The overarching aim was to “educate seasoned software engineers about cryptocurrency and provide them with the knowledge for developing applications” (Schuhmacher, 2014).3 This would counter the skills shortage in Silicon Valley for emerging enterprises looking to design business models on top of various blockchains. Through public and private training programs, hackathons, and demo events, Blockchain University equipped its attendees with the proficiency to initiate blockchain innovations across multiple industry sectors. My fellow ‘students’ included developers, product managers, attorneys, designers, entrepreneurs, and intrepreneurs from Google, AT&T, Infosys, PwC, Oracle, Visa, Raytheon, Saint Gobain, and the Federal Reserve Bank of San Francisco. We were taught by ‘lecturers’ from renowned ventures in the indus- try such as Tom Ding (Koinify), Juan Benet (Protocol Labs), Ryan X Charles (BitGo), Ethan Buchman (Monax), Vitalik Buterin (Ethereum), Matthieu Riou (BlockCypher), Greg Slepak (DNSChain), Atif Nazir (Block.io), Srinivasan Sriram (Skuchain), and Ryan Smith (Chain). MyeducationaljourneybeganwiththepaymentoftwobitcoinstoBlockchain University, then roughly the value of $500 USD but close to $40,000 by the end of 2017 (Bitcoin is capitalised when referring to the software protocol yet
- 13. PREFACE xi xi uncapitalised, or abbreviated to BTC, when referring to individual currency units).4 I have purchased various amounts of bitcoins over the years for research purposes and I retain a small investment in cryptocurrencies as a result. This modest stake has fluctuated violently with the price swings of an emerging mar- ket but my commercial interests remain small. For the most part, these quanti- ties of cryptocurrency have been spent on goods and services like the tuition fees for Blockchain University. Back there, our course was culminating that evening with the presentation of a team project. The “test” was the products we had designed and through them wewould‘graduate.’DuringmyweekendsIhadbeengoingtotheChinaFortune Land Development TechCode Incubator (affectionately dubbed Consensus HQ for Blockchain University purposes) and other notable venues in Silicon Valley (such as IDEO and Singularity University) to learn from industry special- ists about the algorithmic morphology and associated applications of different blockchains: coding, discussing, listening to presentations, solving problems, and designing business models.5 Computational algorithms are a sequence of digitally executed mathemati- cal steps that transform a data input into an output (Cormen et al., 1990): they move, manipulate, (re)organise, and (re)present information into different forms. Blockchains are protocols (codified rules for communication) assem- bled through interacting algorithms that work together like component parts of an engine. As distributed peer-to-peer software, each computer maintaining a blockchain acts as a node in a connected network. Together the nodes use cryptographic techniques to authorise transactions and cement them into a shared ledger; simultaneously, as information periodically updates, a consen- sus is reached as to what the ‘true’ network state is. Bitcoin, for example, uses a consensus model in an attempt to transfer and lock value-carrying digital units through space in a ‘secure’ and ‘permissionless’ manner. When bitcoins are sent, all parties can see the change of ownership transparently on any node running the Bitcoin protocol (although the identity of the transacting parties is obscured). Such properties offered by the algorithmic patterns of blockchains, where ‘trusted’ records can apparently be attained without an authorising third party, promotes a techno-decentralist ideology: a mission to democratise societ- ies by eradicating centralised points of control in economic systems. This vision has proven to be extremely compelling for entrepreneurial programmers in Silicon Valley and around the world. On the 18th May 2015, it was finally time for our Blockchain University cohort to demonstrate its knowledge and showcase newly learnt skills. The ‘president’ of Blockchain University (an ex-PayPal employee) called a fellow teammemberandItothestagetokickofftheevent.Mygroup’sproduct,Squirrel, utilised blockchain’s ‘non-repudiation’ system of record keeping—which is
- 14. xii PREFACE xii another way of saying its data is indisputable—by creating an application for streamlining letters of credit in global supply chains. Pete Rizzo (2015b) from CoinDesk, the world leader in news and information pertaining to cryptocur- rencies and blockchain technology, was in the crowd and would later report: To attack this issue, Squirrel developed a system by which parties could enter into a purchasing agreement at a lower risk level. Funds, the team proposed, could be sent to escrow accounts by both manufacturers and vendors. Squirrel, in turn, could act as a source of capital and security so that projects [could] be produced. Escrow accounts are a contractual arrangement where traditionally ‘non-biased third parties,’ usually lawyers, handle money for the transacting parties to mini- mise the risk of a bad actor corrupting the agreement. As a programmable form of money (conditions can be set as to how coins are spent), Bitcoin allows the building of smart contracts to manage funds based on pre-written digital param- eters. Smart contracts are self-executing pieces of code that facilitate transac- tion outputs (payments, deeds, votes) based on pre-defined inputs (date, stock price, signatures). Because blockchains are supposed to resemble ‘decentral- ised,’ ‘sequential,’ and ‘permanent’ records of ‘truth,’ the data they contain, and constantly build upon, can be used to lock and unlock these smart contracts. In essence, this can ‘remove’ the adjudicating middle(wo)man and ‘automate’ transactions.6 Global supply chains are littered with producers, consumers, and regula- tors separated by space, time, culture, language, and currency. As such, they are deeply connected by networks of trust. With Squirrel we used smart contracts to ‘remove’ the risk contractors are forced to take on when making purchase orders to vendors (who may or may not fulfil them). By assigning commodities a digital identity, their lives could be tracked via a blockchain and cryptocur- rency could be released as they cross certain predetermined checkpoints. The idea was to make money flow (via cryptocurrencies) symbiotic with product movement across a supply chain. In other words, trusted records for multiple and potentially untrustworthy participants (blockchains) were proposed to ‘automate’ purchase orders as multiple stakeholders reached a consensus on the whereabouts of goods. Because the entire history of items can be recorded in blockchains, they are often regarded as ‘secure,’ ‘transparent,’ and ‘auditable’ sys- tems for realising economic transactions like this. Other group projects that followed were Chainmail, Kar.yt, Cardify, P2P insurance, In & Out Checkout, Revocable, BlockchainMe, and BlockNotary. Following the presentations, I was approached by a blockchain consultant—an occupation that had not existed a few years prior—who wanted to introduce
- 15. PREFACE xiii xi i i us to a Chinese commercial bank for potential collaboration. This bank was also examining the capacity of smart contracts and distributed ledger tech- nologies like blockchains for streamlining credit issuance and debt settlement to increase operational efficiency and extend their services (with reduced risk) into broader markets. Squirrel was never established as a commercial enter- prise and so we did not take up this offer, yet such a request demonstrates the attention blockchains were starting to garner from traditional financial institutions. Similarly, these new digital architectures have also caught the attention of central banks: on a trip to the Bank of England that same year, I was told they were examining the capacity of cryptographic distributed ledgers for automating settlements and creating a national digital cash (sovereign cryptocurrency). Due to the spectrum of potential stakeholders, the innovations of small entrepre- neurial blockchain enterprises have become the subject of enormous amounts of interest and investment from large established financial institutions and ven- ture capitalist firms looking to profit from their disruptive potential. Some of the Blockchain University projects, for example, went on to become start-ups them- selves, like BlockNotary, which received angel investment from Silicon Valley Plug and Play.7 The blockchain hype—an innervation of innovation—buzzing around Silicon Valley during 2015 was, and to a large degree remains, palpable (see Gloerich et al., 2018). It was extremely stimulating, and at times intoxicating, to be part of a crowd who saw themselves at the forefront of an imminent tech- nological upheaval. Blockchain University was not only a learning environment but a space where blockchains and their applications were being made—both on a technical level, with code, and on an ideological one, through discourse, debate, and design. The underlying assumption: carefully assembled software can dismantle the centralised powers that have historically ordered economies. Algorithmic decentralisation was presented as the crux around which new societ- ies could, or rather should, be built. And Blockchain University was certainly not alone: as Bitcoin companies had done two years before, embryonic block- chain start-ups were popping up all over Silicon Valley and other global technol- ogy hubs, taking an early position in a newly forming industry. Today, over $22 billion USD worth of venture capital has been invested in cryptocurrency and blockchain-related initiatives (Glasner, 2019). The monumental promise of distributed ledgers to transform the organ- isational ‘structure’ of everyday socioeconomic life quickly seeped into popu- lar media (The Economist, 2015). With the proliferation of such disruptive dreams, the need to decipher the technological, economic, cultural, political, and geographic nuances of blockchains is increasingly pressing. Drawing from multi-sited research, it is the task of this book to detail the political economy of
- 16. xiv PREFACE x i v Bitcoin and other blockchain technologies as they are produced and practised across a multitude of tessellated spaces. From the empirical evidence gath- ered, I construct a narrative on the broader factors influencing, negotiating, and revolutionising financial practices through the visions and materialities of decentralised algorithmic architectures. In the process, I help delineate the dislocations and contradictions between blockchain imaginaries and practice (see also Gloerich et al., 2018; DuPont, 2018). Consequently, this account becomes a story of tension between digital visions of emancipation and material realities of restraint. In the process, I uncover the political relationship between money, code, and space as they are realigned via blockchains. The core argument outlined—threading together disparately and seemingly unrelated matters, con- ditions, and topics—is that algorithmic decentralisation becomes inherently paradoxical as it is practised because it is predicated on, and ordered around, certain degrees of socialised and spatialised cohesion.
- 17. xv x v Acknowledgements ThisbookwouldnothavebeenpossiblewithoutguidancefromDonaldMcNeill and Ned Rossiter whose generous feedback repeatedly pulled my writing back into focus when the vivid research topic was running off in all directions. I am specifically grateful to Donald for sharpening the ethnographic aspect of my work and to Ned for driving conceptual developments. It has been a great plea- sure to navigate their sometimes quite contrasting inputs and this monograph is only stronger for that balance. Praise must also go to my editors at Oxford University Press whose constant efforts have made this journey an incredibly enjoyable one. The experience and professionalism of Andrew Chadwick and Angela Chnapko has shone through at every turn. Their contributions have not only been invaluable to the book but theyhavealsoputmebehindthewheeltosteerimportantdecisions.Enthusiasm and attentiveness abound; I could not have asked for a more rewarding publish- ingexperience.AlexceeBechthold,NarayananSrinivasan,andTimothyDeWerff have also helped bring the last stages of the publication together. Thank you to the Institute for Culture and Society at Western Sydney University for its financial support during the research phase of this book. Tribute must also be paid to my colleagues who have provided a fantastic sup- port network over the years: Andrea Pollio, Ilia Antenucci, Jasbeer Musthafa Mamalipurath, Isaac Lyne, Tsvetelina Hristova, Cecelia Cmielewski, Luigi Di Martino, Oznur Sahin, Alexandra Coleman, Harriette Richards, Daniel Musil, Alejandro Miranda Nieto, Mithilesh Kumar, Giulia Dal Maso, Sebastián Martín Valdez, Christiane Kühling, Alejandra Villanueva, and Andrea Del Bono. I would like to thank Liam Magee for broadening my thinking in terms of software infrastructure as well as his consistent interest in other areas of my work. My gratitude is extended to Andrew Leyshon and Nathanial Tkacz whose encouraging comments have proven extremely productive when shaping the
- 18. xvi ACKNOWLEDGEMENTS x v i overall book narrative. Thanks also to Matthew Zook and Ilan Talmud who helped guide the final brush strokes. I am grateful to Aaron van Wirdum and Michael Folkson, as well as mem- bers of Bitcoin Core for challenging the conceptual framework I outline in Chapter 5. While they may not agree with my conclusions, their insight and critique has been extremely constructive. I only hope this book encourages fur- ther debate around the topic of blockchain governance. For her enduring support I am eternally grateful to my mother, Louise Iliffe. While she may never entirely understand how Bitcoin works she will undoubtedly remain my greatest fan. Other notable patrons, who have played an array of supporting roles, include: Freddie Parkin, Helen Barcham, Charlie Parkin, Jeffery Gregson, Jane Griffin, Carl Griffin, Andrew Weddell-Hall, Greg McElroy, Ross Stinton, William Bradley, Thomas Bradley, Christopher Prentice, Callum Smith, Benjamin Hampton, Yara Hawari, Nick Gill, Christine Jones, Neil Partridge, Anika Berkman, Justin Amos, Kenz Mroue, Eleanor Drage, Hector Kociak, David Ewington, Andy Auld, Simon Blaxall, Alex Warehime, David Wiese, James Please, Rory Horne, Sean Shepherd, Georgia Good, and Jake Byrnes. I am also grateful to Roy Peake for helping bring my vision of the cover artwork to life. The book is derived in part from a journal article “The senatorial governance of Bitcoin: Making (de)centralized money” published in Economy and Society (2019) with copyright belonging to Taylor & Francis (available online: www. tandfonline.com/10.1080/03085147.2019.1678262). Permission granted to reproduce this work is very much appreciated. It is certain I would not be in this position today if not for Ian Cook who saw something in my work as an undergraduate, inspired me to pursue an intellectual journey, and encouraged me to “follow the thing.” So, I thank Ian for his infec- tious enthusiasm. Finally, I would like to thank everyone within the cryptocurrency and block- chain communities who animated my research.
- 19. 1 Money Code Space. Jack Parkin, Oxford University Press (2020). © Oxford University Press. DOI: 10.1093/oso/9780197515075.001.0001. Introduction Algorithmic Decentralisation Bitcoin is a technical infrastructure embodying a maelstrom of interconnected human stories. Its vast algorithmic architecture, blockchain, works day and night to weave together economic transactions conducted by people widely separated, but curiously connected, through space. I have been researching Bitcoin for so long now that I often forget to take a step back and marvel at how far the ‘experi- ment’ has come. Just over ten years ago it was merely a hacker pipe dream; today, around a billion USD worth of value flows through its digital veins daily.1 It is fascinating, bizarre even, how a grassroots peer-to-peer network not only evolved to carry precious ‘currency tokens’ but also arose to challenge a financial system occupied by deeply entrenched central and commercial banks. More outstand- ing is how Bitcoin appears to operate without institutions like these because a host of independent software nodes work together to form its interdependent whole. In other words, decentralisation is allegedly achieved through cumulative, networked, algorithmic mechanisms that allow the protocol to ‘take care of itself.’ Distributed ledger technologies like blockchains remain largely misunder- stood outside of the boutique industries of micro-finance, technology start-ups, and the cutting edge of digital media research, yet they are fast moving into the mainstream. But if this narrative began as distributed Davids vs centralised Goliaths, then part of the tale has already taken a dramatic turn. In an ironic twist, financial giants and nation-state authorities are reimagining and redeploy- ing blockchains for themselves. Meanwhile, a burgeoning economic sector is developing these tools to transform, reorganise, and (most important) decen- tralise a plethora of industries from real estate to voting, stock trading to health care, and supply chain management to the Internet of Things (Swan, 2015; Raval, 2016; Mougayar, 2016; Tapscott & Tapscott, 2016; CB Insights, 2018). Bitcoin has stimulated and catalysed these (r)evolutions, hurling them headlong into a complex ecosystem.
- 20. 2 MONEY CODE SPACE 2 If the vignette in the Preface of this book proved even a little daunting or disorientating then take some solace in the knowledge that this was intentional. Once dropped into the world of cryptocurrencies and blockchains, perplexity is a common feeling: even now banks, governments, and the financial press are scrambling to understand their ramifications. Distributed ledgers are difficult to grasp, not least because their lofty ideals often become compromised through everyday workings that create peculiar paradoxes and contradictions (DuPont, 2018).Atitscore,thisbookpayscloseattentiontotimeswhenhumanbehaviour meets high-level philosophical ideas (like decentralisation) through these new technologies and the moments when they dislocate. As the pages are turned, the many threads laid bare in the Preface will disentangle to reveal a conceptual framework for understanding distributed architectures like Bitcoin. It may already be clear that relying on these new code structures to under- pin human interaction could significantly perturb the spatial organisation of future global economies. In many ways a substantial shift has already begun. For example, Bitcoin, the first fully functioning blockchain-based cryptocur- rency, was presented to the world in 2009 as a ‘non-hierarchical’ mechanism for transferring money. This perception of a flattened, egalitarian software model is shared by most blockchain proponents, from anarchist programmers to national governments. It forms the basis of a driving political ambition: creating fairer, or at least more efficient, economies. This focus on levelling or redistributing financial wealth and power among publics has become a foundational tenet for decentralist ideologies, and blockchains have been elevated as the vehicle for success (Brekke, 2018). Conversely, this book helps trace the key power struc- tures emerging through ‘decentralised’ systems by illuminating a geography of Bitcoin and other blockchain architectures like Ethereum. Geographies are par- ticularly useful for unwinding political tensions because they help situate asym- metric technical, social, and economic relationships. They are examined here to unpack the contradictions at play in a world governed by the mathematical con- straints of computer code and demonstrate the material limitations of digitally distributed software in terms of technology start-ups, business models, code, humans, and machines. What is meant by material is not so much the Marxian legacy of material- ism that pursues an analytical study of historical change wrought by economic and institutional forces, but rather materiality as a method prominent within sci- ence and technology studies, actor-network thinking, and non-representational theory. While this may include a ‘loose materiality’ of the people and places researched, the term is used more as a following, focusing, and framing device with respect to the socialised tangibilities of blockchains (version control sys- tems, silicon chips, servers, Bitcoin mines, start-up company offices) as technical systems (Kittler, 1995; Packer & Wiley, 2011; Harvey, 2012; Parikka, 2015). In
- 21. 3 Introduction 3 other words, materiality is the collection of physical objects around, or through, which cultural, political, and economic practices are performed.2 It is this under- standing of materiality as an assemblage of things (with affordances and limita- tions) that informs the method of this investigation: by tracing out the technical capacities and properties of blockchains as digital architecture and tangible infrastructure, their spatial scales and connectivities are better understood.3 Many of those who uncritically champion algorithmic decentralisation nec- essarily present blockchains as dehumanised machine spaces where the math- ematics of computer code can suddenly be trusted to organise society (money, identity, voting, trading) in the absence of coercive oversight from people. At a time when there is a certain degree of obsession and fear concerning ‘robots tak- ing over the world’ with the rise of artificial intelligence (Tett, 2018), it is appro- priate to distinguish what the human and non-human parts—or hybridities—of blockchainsare(DeFilippi&Loveluck,2016;Musianietal.,2018).4 Inresponse to the anxieties of automation, the question is asked whether anyone is in con- trol of these contemporary codified systems or if they truly are autonomous data structures on a never-ending, tamper-proof, mechanical loop?5 The aim is to grapple with both the technical non-human infrastructure at the same time as injecting the human back into blockchain analysis to understand where the power to influence certain aspects of their architectures resides. Taking inspiration from works examining the “social life” of things (Appadurai, 1986), information (Brown & Duguid, 2000), money (Dodd, 2014), financial derivatives (LiPuma, 2017), and Bitcoin itself (Dodd, 2018), the algorithmic decentralisation of code and money via blockchains is examined through a social-spatial lens (Lesyhon & Thrift, 1997; Kitchin & Dodge, 2011; Coeckelbergh, 2015). By delving into the social life of Bitcoin and (some other) blockchains, I argue that despite, or rather through, processes of decentralisa- tion, concentrations of power consolidate across their architectures. Precisely, the book highlights the persistence of certain practices (code governance, cryp- tocurrency mining, and network transactions) to be funnelled through central- ised bottlenecks (lead developers, mining pools, and start-up companies). Here, specific actors have varying amounts of control over certain pieces of networks. Practically speaking, the dynamics and shortcomings of algorithmic decen- tralisation are relevant findings for blockchain programmers, technology start- up companies, global banks, accountancy and legal firms, speculators, policy makers, and the general public. After all, these stakeholders are performing and affecting decentralisation in different ways and so shedding light on their role in (re)constructing economies is an important line of investigation. Fundamentally, the book interrogates how blockchain architectures take shape spatially, culturally, and politically. An ethnographic research method- ology informed by science and technology studies is specifically designed to
- 22. 4 MONEY CODE SPACE 4 explore how different actors in blockchain ecosystems employ decentralisation. Itdescribesgovernancemechanismsthatcoordinatethebuildersofblockchains, the material hardware that executes code, and the technology agglomeration economies that build business models on the back of these new architectures, demonstrating how control is not distributed evenly among people in block- chain economies but rather consolidates around a small number of centres from which they are ordered. Charting a Mode of Enquiry The book is situated at the intersection of three influential scholarly fields of recent years. First, it contributes to debates about the nature of centralisation and spatiality surrounding the financial system, currency, and banking, which has been discussed by economic geography, sociology, and anthropology scholars, among others (Tsing, 2004; Knorr Cetina & Bruegger, 2002; Hall, 2011, 2012, 2013; Coeckelbergh, 2015). This has become an increasingly important area of research following the 2008 global financial crisis and subsequent developments infinancialtechnology(FinTech).Tobuildarationaleforexploringdecentralised digital currencies, the book draws from works on the geography (Leyshon, 1995, 1997,1998;Leyshon&Thrift,1997),sociology(Baker&Jimerson,1992;Dodd, 1994, 1995, 2014; Callon, 1998a, 1998b, 2007; D. Mackenzie, 2004, 2006; Knorr Cetina & Preda, 2005), and anthropology of money (Maurer, 2005, 2006, 2015). More specifically, it navigates the interdisciplinary realm of economic geography to thicken accounts of algorithmic decentralisation by recognising “all econo- mies must take place” (Lee, 2006, 430). Leaving blockchain analysis solely to the abstract models of neoclassical economics would not only risk overlooking their inherent complexity (Dicken & Lloyd, 1990; Hudson, 2005; Pike et al., 2006; Knox & Agnew, 2008), but could also work to externalise them from social rela- tions (Granovetter, 1985; Zelizer, 1997; Becker, 1997; Thrift, 2000a). Second, the book contributes to a growing body of knowledge that examines the increasing role of software in mediating and conditioning social practice and human experience (Manovich, 2001, 2008; Fuller, 2003, 2008; A. Mackenzie, 2005, 2006; Chun, 2011; Berry, 2011). As blockchains take on a degree of autonomy in the form of algorithmic ledgers, important questions are posed around how they work, both culturally and technically. This research contrib- utes most significantly to works that have developed a material account of digi- tal media (Kittler, 1995; Galloway, 2004; Starosielski, 2015; Rossiter, 2016) as well as the geographies of code (Graham, 2005; Kitchin & Dodge, 2011; Kitchin & Perng, 2016; Ash et al., 2019). However, the arguments also find relevance in the subdiscipline of network culture that has made a significant impact over
- 23. 5 Introduction 5 the last twenty years in terms of understanding the interface between humans and software (Lovink, 2002; Terranova, 2004, Rossiter, 2006, 2016; Golumbia, 2009; Lovink et al., 2015; Tkacz, 2015). Third and finally, the book commits to the methodological pursuit of detailed ethnographies surrounding the production and nuances of techno-cultures (Miller&Slater,2000;Zaloom,2006;Downey&Fisher,2006;Boellstorff,2008; Miller,2011).Thisbodyofknowledgehasworkedhardtorejectontologicalbifur- cations between the cultural and the technological spheres, repeatedly proven an unproductive theoretical chasm: “[l]eaving technology out of analyses of culture has the unintended implication that it is an autonomous realm of human activity” (Downey & Fisher, 2006, 5). In opposition to this, ethnographies have looked to “undermine accounts of change that privilege technology as the sole, driving, causal agent” (Downey & Fisher, 2006, 5). This mindset is useful for investigat- ing blockchain ecosystems because it helps provide a fine-grained narrative con- cerning their interwoven tapestries of culture, economy, and technology through space. The methods in this book are inspired particularly by participant observa- tion conducted in software companies (Ross, 2003; Indergaard, 2004; O’Rian, 2004; Girard & Stark, 2005; O’Mahony, 2006; Takhteyev, 2012). This threefold convergence of literature on finance capital, software studies, and infrastructure ethnographies is used to interrogate the nascency of Bitcoin and blockchain technology by focusing on the diverse assemblages of humans and non-humans that constitute them. A ‘follow the thing’ methodology is used both for data collection and as an analytical tool to trace out these social and spatial connections that form decentralised architectures. The three literatures outlined earlier are brought into conversation with each other through empiri- cal observations where blockchains enigmatically place the concepts of money, code, and space in a novel relationship. Considering the vast quantity of commentaries pertaining to cryptocurren- cies and blockchains, there is a dearth of detailed ethnographic work in the field (DuPont, 2019). This is not altogether surprising given the algorithmic nature of these architectures. “Understood as sets of instructions that direct the computer to perform a specific task, algorithms are essentially used to control the flow of actions and future events” (Bucher, 2018, 28). But they often appear detached from everyday places, operating busily out of view. When it comes to distributed ledger technologies, codified logic buried within computer networks is used to achieve what I call algorithmic decentralisation. This process aims to direct social interaction without the need for hierarchal human decision-making and carries with it ideas of openness, equality, non-repudiation, automation, and disinter- mediation. However, it is important to remember that “algorithms do not work on their own but need to be understood as a much wider network of relations and practices” (Bucher, 2018, 20).
- 24. 6 MONEY CODE SPACE 6 I use the concept geographies of algorithmic decentralisation to unpack the spatial and relational distribution of everyday materials, capital, transactions, institutions, labour, ideologies, practices, and regulations that work together to assemble blockchains. This approach avoids slipping into some of the neb- ulous terminologies reminiscent of media theory in the late 1990s and early 2000s that saturated discourse surrounding “cyberspace” (Benedikt, 1991; Burrows & Featherstone, 1995; Munt, 2001; Buckingham & Willett, 2006). Treating computational environments as bounded entities necessarily rein- forces an imaginary of ‘the digital’ as an ethereal fourth dimension removed from the tangibilities of ‘real space.’ This imaginary can promote a “hyper- globalist” (Dicken, 2015, 4) vocabulary that reflects a borderless world and begins to eradicate the need for geographical understandings of the digital/ economical. Sentiments of radical globalisation—that invariably push ‘the virtual’ into discursive realms of spacelessness—still echo throughout new media rhetoric (Kinsley, 2013a). Perhaps unsurprisingly, they now reverberate around cryptocurrency and blockchain industry commentaries. This vernacu- lar neglects how globalisation (even via digitally decentralised architectures) necessarily intensifies spatial complexity and unevenness so that specific geo- graphic connectivities become more relevant than ever (Sokol, 2011). Situating Research The enquiry of this book is heavily influenced by the work of Ian Cook et al. (2004, 2006, 2008, 2014, 2017) and other cultural geographers, anthropolo- gists, and ethnographers whose research involves following things (Mintz, 1986; Appadurai, 1986; Marcus, 1995; Bestor, 2000; Scheper-Hughes, 2000; Barndt, 2002; Dibbell, 2007). As Phillip Crang (2005) explains: Things move around and inhabit multiple cultural contexts during their lives. Cultural Geographers are especially interested in the changes that happen to a thing in this process: material changes; and changes or ‘translations’ in the thing’s meanings. They are also interested in the knowledges that move with the things, especially about their earlier life. How much do people encountering a thing in one context know about its life in other contexts? Who mediates this knowledge? What role do imaginative geographies of where a thing comes from . . . play in our encounters with objects? (178) The usefulness of thing-following as a methodological tool for uncovering the social relations that permeate money has been recently debated in economic
- 25. 7 Introduction 7 geography (Christophers, 2011a, 2011b; Gilbert, 2011). As Brett Christophers (2011a) notes, although difficult, following money can “reveal and examine the social and economic relations both underpinning and occasioned by money’s creation and circulation” (1069–1070). Because Bitcoin has been proposed as an anarchist form of digital money, its peculiar character can be illumi- nated, and those claims tested, by tracing out its “social and spatial pathways” (Christophers, 2011a, 1068). In the context of urban theory, Donald McNeill (2017) suggests: “[w]e might think about world city-making systems rather than world city systems” (150). Borrowing and repurposing this phrase to approach another complex ensemble, I think about blockchain-making systems rather than just blockchain systems. In this sense, drawing on some of the tools associ- ated with actor-network thinking for “framing field sites and research objects” (Madden, 2010, 584), I attempt to follow things, people, and ideas as they col- lide through blockchains. I carve three exploratory paths to navigate and disentangle the complexity of Bitcoin and copycat blockchains. First, I examine the spatial articulations and contradictions that Bitcoin and other implementations of blockchains enact as certain practices, such as forking software or storing bitcoin, coalesce around them. Second, through this spatial organisation, I develop an understanding of algorithmic decentralisation and demonstrate how its internal contradictions correlate to power harnessed through the network. Third, I assert how different actors control certain channels in the (de)centralised networks of blockchains and (re)shape their digital-material architectures with competing political ideologies. Ultimately, all work to develop a critical understanding and theorisation of algorithmic decentralisation through money, code, and space. While some tech- nological and economic ideologies preach an impending world of distributed global transactions, the materiality of economies points to something different. Centralisation, on some level, is necessary for economies to function. This pat- tern is not dissimilar to the evolution of the TCP/IP protocol once dreamed up as the ultimate form of decentralisation (Galloway, 2004). This protocol sets out the rules machines must follow in order to send and receive information to and from each other via the Internet. The Bitcoin protocol, in turn, rests upon this network and uses it to connect separated copies of the same currency ledger together. Like the Internet before it (and, partly, because of it), the making of blockchains, shaped by a myriad of evolving actors, is turning them into archi- tectures with some radical differences to how they were first conceptualised (see also De Filippi & Loveluck, 2016; Musiani et al., 2018; DuPont, 2018; Gloerich et al., 2018). While some hackers attempt to stay aligned with ideologies of economic decentralisation, Silicon Valley and global banks have been steer- ing blockchains towards traditional models of capital accumulation. Just as the
- 26. 8 MONEY CODE SPACE 8 Internet was moulded around centralised governments (Clayton et al., 2006; Zhang, 2006), undersea network cables (Starosielski, 2015), software platforms (Srnicek, 2017), and data centres (Rossiter, 2016), so blockchain architectures are again demonstrating the material reality of particular forms of networked communication. Book Layout Chapter 1, “Pandora’s Blocks,” opens the lid on Bitcoin so that all of its attri- butes, problems, and connotations come spilling out. At the same time, it pulls these disparate strands back into focus by outlining the many discrepancies that will be examined in subsequent chapters. So while in some ways the chapter acts like a primer for cryptocurrencies, blockchains, and their political economies, the material laid out works to set up the book’s underlying argument: asymmet- ric concentrations of power inevitably form through processes of algorithmic decentralisation. The second chapter, “Money/Code/Space,” provides a theoretical discus- sion of these three concepts, as well as their increasing codependency, to fore- ground the emergence of Bitcoin as a radical response to existing economic structures. Using the history of central banking and software production, Bitcoin is compared to traditional modes of centralised governance to out- line some of the political context of algorithmic decentralisation. In doing so, the binary of centralised-decentralised is rendered impotent and reduc- tive when describing complex digital networks. Instead, building upon the work of Francesca Musiani et al. (2018), Michel Callon’s (1986) concept of obligatory passage points is adapted into a framework for understanding (de) centralisation in algorithmic networks. This provides an account of money/ code/space that encapsulates the cultural and economic messiness of Bitcoin and blockchain technology, bringing places of power to the forefront of related discourse. Chapter 3, “Follow the Digital Thing,” presents a methodology accommodat- ing the theoretical positions laid out in Chapter 2. Acknowledging how Bitcoin is geographically contingent and diverse, the follow the thing research design outlined allows for tracing the connections between different aspects of its pro- tocol, practised by a multitude of people in various places. This is done by docu- menting traditional follow the thing work and explaining how knowledge can be gathered from such a technique before adapting this research process for the task at hand. The breakdown then shifts into sketching a specific yet malleable research method that harnesses the flexibility necessary for understanding the complex political economies of Bitcoin and other blockchains.
- 27. 9 Introduction 9 The fourth chapter, “Building the Future,” describes how technological decentralisation emerged with advancements in cryptography and acted as a politicalcounterweightofresistancetotheencroachmentofgovernmentsacross (online) space. The decentralist worldview is shown to be rooted in the specific political geography of the West Coast of the United States that, during the latter half of the 20th century, became a crucible of counterculture and entrepreneur- ship (Barbrook & Cameron, 1996). Fuelled by this vision, a monetarist desire to create fairer economies through algorithmic decentralisation gave rise to the advent of cryptocurrencies. The intersection and slippage of this technologically deterministic imaginary (preaching a freedom from hierarchy and control) with geographies of material practice is developed throughout following chapters. Chapter 5, “Programming Politics”, outlines the community of developers who have contributed to Bitcoin’s source code. Drawing from ethnographic data and existing political economy theorisations of cryptocurrencies (De Filippi & Loveluck, 2016; Musiani et al., 2018; DuPont, 2018), the governance of the Bitcoin codebase is understood through obligatory passage points found among key individuals and groups involved in the creation of Bitcoin. The consensus modelformakingchangestotheBitcoinsoftwareshowshowcodeisinescapably bound up with political tensions that arise through coordinating geographies of production. Pressures between different stakeholders are exposed to show how conflicts in code development and the increased likeliness of the project ‘fork- ing’ as it scales, demand degrees of centralisation at the architectural level of cryptocurrency design in order for actions to be resolved and implemented. The overall political framework for altering the Bitcoin code is described as senato- rial governance: a (de)centralised model where bureaucratic parties compete to change the monetary policy (codified rules) of the protocol. The sixth chapter, “Grounding Cryptocurrencies,” documents a more spe- cific and exploratory follow the thing research technique to uncover the digital- material architecture of Bitcoin. Treating the Bitcoin code as both a text and material, a single bitcoin is followed through the decentralised protocol ‘from’ Australia ‘to’ the United States. By tracing the spatial relationships between mis- cellaneous paraphernalia from personal computers to Bitcoin mining rigs facili- tating the transaction, the chapter navigates the material culture of the Bitcoin blockchain. This involves opening up software for inspection to uncover the functional performativity of the network. The spatial lens used reveals several material infrastructures such as undersea cables, data centres, pools of Bitcoin mines, active nodes, and third-party wallet software that assemble to form oper- ational modes of centralisation. Drawing from ethnographic research conducted within the Silicon Valley cryptocurrency and blockchain industry, Chapter 7, “Embedded Centralism,” provides an account of the situated frictions among varying stakeholders in
- 28. 10 MONEY CODE SPACE 1 0 high-technology culture. The clashing of libertarian anarchy and entrepreneur- ial profit-seeking are forced into a singular vision reminiscent of the Californian Ideology, contributing to tensions of a splintering community: Bitcoin adher- ents are increasingly fragmenting as it becomes clear the protocol cannot fulfil all of their ambitions. Blockchain technology is symptomatic of this polarising worldview. As ‘radical’ and ‘disruptive’ start-up companies are absorbed into the embedded spatial ties of the surrounding economy, they become increas- ingly ‘normalised’ by their investors at the same time as scaling to enrol more users within their platforms. This has the effect of funnelling financial practices on blockchains through proprietary software controlled by a small number of technocrats, who can be more easily regulated by nation-state jurisdictions. The entrepreneurial geographies of high technology agglomeration industries thereby act as another spatial limitation to algorithmic decentralisation. The final chapter, “Blueprinting Blockchains,” dives deeper into the territory ofspin-offblockchainsofferedastechnologicalmodesoforganisationfordecen- tralising a host of socioeconomic practices. Recent discussions of platform capi- talism are used to critique claims that blockchains are an incorruptible mode of democratic governance. Instead, blockchain capitalism is offered as a more accu- rate transaction model where capital accumulation necessitates certain points of centralisation through dominant distributed ledger technologies. A close exami- nation of blockchain typologies reveals the co-option of these architectures by the very centralised banking firms and governments they were initially designed to bypass. As financial giants and central banks design their own distributed led- ger systems to increase the efficiency of business practices and monetary policy, innovation from the disruptive edges is once again absorbed into ‘the centre’ by the corporate/state powers that be. Algorithmicdecentralisationitselfisshowntobeaninherentcontradictionas spatial trajectories coalesce at different points around blockchain networks. This provides a starting point for understanding the political economies of distrib- uted blockchain networks that, on one hand, are open for all to see and, on the other, work beneath the surface of cryptographically concealed code. Following Bitcoin into different aspects of its network reveals how money, code, and space are not relegated to an autonomous machine world but emerge as a complex web of humans and non-humans formed through cultural, political, and economic practice. In doing so, the book debunks some of the libertarian and liberatory claims of cryptocurrencies by illuminating modes of uneven power. It is only by understanding these limitations that pathways can be taken to building more equitable, or at least less sensationalist, blockchain forms.
- 29. 1 1 Money Code Space. Jack Parkin, Oxford University Press (2020). © Oxford University Press. DOI: 10.1093/oso/9780197515075.001.0001. 1 Pandora’s Blocks Introduction Bitcoin has unleashed a myriad of successive ideas, architectures, and debates into the world. The resultant frenzy has already been referred to as “the para- digm of decentralization” (Griziotti, 2018, 195). Indeed, distributed ledger technologies continue to capture diverse imaginations: hooked on the pursuit of transforming societal organisation(s). But the blockchain hype is seduc- tive, and emancipatory visions that accompany it can distort realities of dis- tributed architectures. This chapter speaks to such dislocation by unpacking the principles and processes of Bitcoin while busting some of the myths that surround blockchain architectures (see also de Jong et al., 2015; Dodd, 2017; DuPont, 2018). Initially, the chapter describes the genesis story of Bitcoin and the politi- cal undertows that fuelled its development. The idea of using code to regulate human action is discussed and directed to open up fertile ground for exam- ining some of the contradictions brought about by blockchains. This moves into an account of the community that formed around developing the Bitcoin protocol before outlining a schematic depiction of the technical apparatus they work(ed) to establish. Bitcoin mining and the incentive mechanism of cryptoeconomics are introduced as underlying processes for keeping the network ‘safe’ from ‘attackers’ while exposing some of the vulnerabilities that emerge from their application. These sturdy cryptographic processes feed into the value formation of bitcoins. The emergence of entrepreneurial start-up companies like exchanges are then highlighted as having a key role in extending Bitcoin’s utilisation to wider markets. Finally, the Bitcoin min- ing arms race teases out some of the problems and discrepancies that emerge when distributed architectures are fused together with modes of capital accumulation.
- 30. 12 MONEY CODE SPACE 1 2 In the Beginning . . . It started, simply enough, on the 31st October 2008 when someone (or some people) going by the name of Satoshi Nakamoto posted in a “low-noise moder- ated mailing list devoted to cryptographic technology and its political impact” (metzdowd.com, 2020).1 The post contained an abstract and link to a white paper hosted on the previously unheard-of website bitcoin.org. This online paper barely ruffled any feathers. Few took notice and those who did entered into sporadic and speculative dialogue surrounding the merits and flaws of the conceptual apparatus it posited. The white paper was titled “Bitcoin: A Peer-to-Peer Electronic Cash System” and it outlined a blueprint for a decen- tralised form of cryptographic currency for the Internet (Nakamoto, 2008). Cryptography was not only used here to cloak transactions but cryptographic hash functions were used as the very backbone of the protocol, chaining every transaction into a shared chronological ledger (blockchain) to prove validity (see Chapter 5). The repercussions of the 2008 global financial crisis acted as the political Petri dish in which Bitcoin was cultivated. Although the white paper itself was published as a technical document without any mention of an agenda, in other places it was resoundingly clear that Bitcoin was formed as an anarchical cur- rency created in response to the government-corporate control of money (Jia & Zhang, 2018). In fact, buried in the (raw hex) data of the first block (dubbed the genesis block) of its blockchain is the following text: The Times 03/Jan/2009 Chancellor on brink of second bailout for banks. This method for timestamping the Bitcoin software proves it was initiated after the included date, with Nakamoto intentionally referencing the front page head- line of an article from a UK newspaper, The Times, that described the British government using taxpayers’ money for saving banks (Elliott, 2009). It was with purpose that this politically charged “Easter egg” was embedded in the codi- fied structure, which offered a radical alternative to existing monetary systems (Frisby, 2014, 107). It points to manifestations of ‘Lemon Socialism’ made clear by the 2008 financial crisis: a term coined by Mark Green (1974) to describe governments intervening in the marketplace to prop up failing firms, thus pre- venting wider systemic collapse. This interposition contradicts the supposedly neoliberal form of world capitalism that preaches a ‘free marketplace’ because public servants had helped privatise the profits of big business while socialis- ing the costs. The ‘too big to fail’ mentality governments had proliferated (when they saved the large oligopolistic banks from collapsing) fuelled Nakamoto’s political thesis.
- 31. 1 3 Pandora’s Blocks 13 A bottom-up ‘hacker’ resistance was launched as the given solution and com- puter code was the nominated tool of disruption. Satoshi Nakamoto offered Bitcoin as a means of emancipating people from the conventional means of monetary control, as stated on the networking website for peer-to-peer systems development, P2P Foundation: It’s completely decentralized, with no central server or trusted parties, because everything is based on crypto proof instead of trust. The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the cur- rency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts. Their massive overhead costs make micropayments impossible. . . . With e-currency based on cryp- tographic proof, without the need to trust a third party middleman, money can be secure and transactions effortless. (Nakamoto, 2009) Bitcoin, then, was a direct monetarist response—a belief that economic per- formance is dictated by changes in monetary policy/supply—to the compul- sory investment (and breaches) of trust systematically installed by centralised controls over money, so heavily influenced by the capitalist market and the liberal state. This is an admirable mission but there is a gaping hole in its logic. Many programmers—particularly cryptographers who use techniques to secure and obscure data (see Chapter 4)—tend to view the world through a philosophical lens that mirrors the mathematical processes of the software they produce. From this perspective, because code is formulaic it carries a form of repeatable integ- rity that can be used to represent universal truths—however many times I repeat the sum 1 + 1, for example, it should always equal 2. On the surface this line of thinking seems reasonable and is often extrapolated into Lawrence Lessig’s (1999)popularmantra“codeislaw”whichclaimssoftwarecanregulateconduct in a similar way to legislation. However, while code can certainly direct human action in certain ways (Kitchin & Dodge, 2011), the social and spatial networks with(in) which it interacts expose a web of complexity not always reducible to computational axioms. For example, Satoshi Nakamoto’s idea that trust can be eradicated and replaced with “crypto proof” is antithetical to the socioeconomic makeup of money (Marx, 1867; Simmel, 1900; Zelizer, 1997; Ingham, 2004; Maurer, 2006; Dodd, 2014). Value is formed through constantly evolving net- works of people (and other materials) that establish certain things (i.e., bank
- 32. 14 MONEY CODE SPACE 1 4 notes) as monetary forms (see Chapter 2). Bitcoin is no different: a mutual faith in the operational procedures of its protocol has allowed its embedded currency units (bitcoins) to become precious (Maurer et al., 2013). Crypto proof, then, is its own form of networked trust (Mallard et al., 2014; Coeckelbergh, 2015; Werbach, 2018). Similarly, as this book will show, code cannot always enforce decentralisation as clinically as its calculative rules might suggest. Cultivating a Community The geographies of Bitcoin’s inception are extremely hazy thanks to the ano- nymity of its creator Satoshi Nakamoto—this glorified incognito adds to the ‘anarchist’ and ‘hacker’ mythology surrounding cryptocurrencies. Following the publication of Nakamoto’s white paper in 2008, Bitcoin remained a concept circling among a specialist set of cryptographers with discussion concerning its feasibility continuing in dribs and drabs on the cryptography mailing list for a little over two months. Theory was put into practice at 18:15:05 GMT on the 3rd January 2009 when the codebase Nakamoto had been building was initi- ated on a couple of unknown machines somewhere out in the world. In doing so, they became the only nodes on the Bitcoin ‘network’; the software was also made available for download on the website sourceforge.com so others could participate. The early political-economic discourse surrounding Bitcoin heightened when a second-year computer scientist at Helsinki University of Technology called Martti Malmi (screen name serius-m) began cooperating with Nakamoto. Malmi renovated the bitcoin.org website, helped design the Bitcoin symbol, and became the first person given permission to contribute directly to the Bitcoin source code (Popper, 2015a). In the process he intentionally politicised the Bitcoin vocabulary to appeal to groups of various (radical) political persua- sions (such as anti-state.com) in an effort to encourage broader adoption of the software (Popper, 2015a).2 Perhaps Malmi’s most significant contribution to Bitcoin, however, was the advent of the Bitcoin Forum in the autumn of 2009, which provided an online environment for proponents and critics to discuss the protocol. The forum attracted an array of programmers who began analysing the conceptual apparatus of Bitcoin: critiquing, disassembling, shaping, recon- structing, and reaffirming the theoretical (pseudo-code) and practical (source code) architecture. It was also in these online environments that terms like ‘cryptocurrency’ (Bitcoin Mailing List) and Bitcoin’s tagline ‘Vires in Numeris’ (Bitcoin Forum) —Latin for ‘Strength in Numbers’—were first used.3 InDecember2010,NakamotouploadedtheBitcoinsourcecodetotheonline repository GitHub and a community of programmers, called Core developers,
- 33. 1 5 Pandora’s Blocks 15 began to help Satoshi Nakamoto, then Lead Developer, advance the protocol. An online community of practice emerged (see Wenger, 1998; Wenger et al., 2002, 2009; Bryant et al., 2005; Dubé et al., 2005; Murillo, 2008). Programmers from all over the world (although the majority from the United States) gathered online to innovate the conceptual, technical, philosophical, and increasingly practical apparatus of Bitcoin through its adolescent stages. The open source software became a technological vehicle for delivering utopian visions: an exper- imental sandbox created by a “grass-roots collaboration of enthusiasts” (Taylor, 2013, 1). Some contributors (like Gavin Andresen, Wladimir van der Laan, Peter Wuille, Matt Corallo, Gregory Maxwell, and Peter Todd) became key fig- ures in the community through the Bitcoin Forum, GitHub, and social media sites such as Reddit and Twitter. On the 4th December 2010, WikiLeaks, a “journalistic non-profit organisa- tion dedicated to publishing selected secret and classified information provided by anonymous sources” (Champagne, 2014), fell under a financial blockade from Paypal, Bank of America, Visa, Mastercard, and, later, Western Union. Following the public disclosure of Iraqi and Afghan War documents by the organisation, the US government applied pressure on these financial institutions to cut the economic lifeline on which WikiLeaks survived: monetary donations. For the then largely libertarian Bitcoin community (see Chapter 4), this block- ade personified the ultimate form of corruption by state powers and demon- strated the control enjoyed by an oligopoly of financial companies; collusion had isolated WikiLeaks from the entire global economic structure. To the majority of Bitcoin proponents, the US government’s reaction seemed to be an act of self-(pre)serving malfeasance, especially considering organisations like the Ku Klux Klan could still accept donations facilitated through MasterCard, Visa, and PayPal (Mross, 2014). Additionally, a significant proportion of Bitcoiners were politically aligned with the idea of WikiLeaks that stands for transparency, the freedom of information, and the accountability of justice—largely against the ‘wrongdoings’ of the centralised state. The blockade of WikiLeaks also provided the fledgling Bitcoin community with an opportunity to test their creation’s potency as an alternative finan- cial channel for sending donations where no centralised institution could be intimidated to withdraw their services. The Bitcoin Forum was rife with comments supporting this political intervention but not everyone shared such optimism. Satoshi Nakamoto opposed the excitation writing, “No, don’t ‘bring it on’. The project needs to grow gradually so the software can be strengthened along the way” (Nakamoto, 2010a). But then an article in PC World Magazine conjectured the Bitcoin-WikiLeaks solution to a wider audi- ence (Thomas, 2010). Nakamoto responded with a final post on the Bitcoin Forum: “It would have been nice to get this attention in any other context.
- 34. 16 MONEY CODE SPACE 1 6 WikiLeaks has kicked the hornet’s nest, and the swarm is headed towards us” (Nakamoto, 2010b). Nineteen hours later, Nakamoto put out Version 0.3.19 of Bitcoin and then disappeared from the public eye. Gavin Andresen, a software developer from Massachusetts who had become Nakamoto’s closest collaborator, had recently accepted an invitation to talk at the US Central Intelligence Agency (CIA) where he hoped to persuade them Bitcoin posed no threat to government insti- tutions (Mross, 2014). Whether or not this was the reason for Nakamoto’s departure from the project, the creator(s) of Bitcoin became a ghost soon after and Andresen took up the role of Lead Developer. Contributors came and went but the Bitcoin code continued to be built. Bitcoin managed to save WikiLeaks and the organisation continues to oper- ate today. Many use events like this to paint a picture of the Bitcoin protocol as an apolitical structure that ‘distributes control’ and thus ‘removes centralised power’ from its currency network (see Kostakis & Giotitsas, 2014). Yet this is a semantic mirage. The very idea of creating decentralised software as an alter- native to embedded financial systems is nothing if not a deeply political act (Kostakis & Giotitsas, 2014). Additionally, although there are multiple ideologi- cal strands contributing to Bitcoin’s production, a heavy vein of libertarianism fuelled its early advancement and continues to haunt its discourse/development today (Golumbia, 2015; 2016b; see Chapter 4 and Chapter 7). To make this (a)political contradiction even more clear-cut, this book sets out a number of instances where control is not equally distributed across the Bitcoin protocol. One of these examples is the (de)centralised governance structure by which various stakeholders coordinate to develop Bitcoin; here, hierarchy invariably creeps back into the picture (see Chapter 5). But if Bitcoin can be used to bypass financial blockades, then something quite special must still be going on here. How, exactly, can this happen? The Decentral Bank Centralised institutions have long and often been necessary to guarantee the value of money and create order in its production to generate trust (Thornton, 1802).IntheUnitedKingdom,theroleofthecentralbankevolvedovertimeinto an intentionally dislocated arm of government designed to adopt a ‘non-biased’ administrative role to the production and regulation of money (Goodhart, 1991; Elgie & Thompson, 1998). Different central banks enjoy different levels of independence but the world’s oldest, the Bank of England, is positioned today so that it cannot be directly influenced by the economic whims of revolving govern- mentsinanefforttomaintainlongitudinalmonetarystability(seeAppendix1).4
- 35. 1 7 Pandora’s Blocks 17 Despite the presence of such an entity in an overwhelming majority of nation- states (Shah, 2008), boom and bust economic cycles have remained a reoccur- ring global phenomenon in the practical application of neoclassical economics played out by capitalism. Some see financial crises as a breach of responsibility andaninherentflawinthecurrentsystemgovernedbycentralbanks.Thiscomes down to central banks acting as a monetary safety net for commercial banks— the lender of last resort (Goodfriend & King, 1988; Fischer, 1999; Goodhart, 2011; Flandreau & Ugolini, 2011). Few would argue against the postulation that the modern deregulated markets commercial banks operate in created an envi- ronment for the 2008 global financial crisis to occur: fostering a moral hazard with little rule or consequence. In contrast to central banks, the Bitcoin blockchain exists as distributed, peer- to-peer software: every person running the protocol maintains a copy of the dig- ital ledger (or blockchain) that designates currency units to particular accounts (or addresses). The shared maintenance of a ledger is intended to remove the need to trust centralised third parties, like commercial banks, to keep records. It also contributes towards the robustness of the protocol because there is no singular point of failure to attack or hack. The blockchain is designed to be an active database and ‘permanent’ record of every Bitcoin transaction ever made. Transactions are sent to all nodes in the Bitcoin network at once, and roughly every ten minutes these transactions are bundled into a block and added to the blockchain like new pages in a ledger (see Figure 1.1). Thus, nodes in the global network update the state of the blockchain ‘simultaneously’ so that a consensus is reached as to which addresses hold amounts of bitcoin. While transactions made with bitcoins are transparent, addresses are pseudonymous in the sense that they are not tied to the identity of users.5 This not only changes the transac- tion structure from traditional systems but also facilitates a new inbuilt privacy model (see Figure 1.2). Here, disclosing one’s identity to an authorising body is not a prerequisite for making a transaction and so personal information is no longer required for authorisation as it is with a commercial bank. Instead, each user holds private keys to sign transactions via their addresses where bitcoins are ‘stored.’ This allows people to act as their own personal bank via the network. Here lies an important problem with the canon ‘code is law.’ In Figure 1.1, when Alice sends 10 bitcoins to Bob, “identity is no more and no less than the use of a particular private key. If Alice lets someone else use her private key, that someone will appear completely identical to the ‘real’ Alice. Indeed, from a cryp- tographic perspective that other person is the real Alice” (Day, 2018, 292). So, when the mathematical integrity of cryptography is used to define ownership, the protocol can be ‘tricked’ to release coins for an attacker who has stolen Alice’s private keys (de Jong et al., 2015). But in terms of the protocol’s rules it has not been fooled at all. Because such ‘fraudulent’ activity perfectly obeys coded laws,
- 36. 18 MONEY CODE SPACE 1 8 a great deal of onus is put on individuals to keep their private keys safe. In other words, control and security measures over monetary administration reside with each user instead of a third party. If blockchains are indeed permanent ledgers, then these transactions should be, and the vast majority are, undoable (see Chapter 8 for the revocability of blockchain transactions). The monetary policy of Bitcoin also follows the dictum ‘code is law’ as it is definedandgovernedbythealgorithmicstructureoftheblockchain.Inregulation Figure 1.1 A Bitcoin transaction where Alice sends 10 BTC to Bob by broadcasting it to every other node in the network. They all update their ledgers ‘simultaneously’ (source: Brikman, 2014). Traditional Privacy Model New Privacy Model Identities Identities Transactions Transactions Trusted Third Party Counterparty Public Public Figure 1.2 Traditional privacy model offered by financial institutions in comparison to the privacy model offered by Bitcoin (source: Nakamoto, 2008).
- 37. 1 9 Pandora’s Blocks 19 terms, operations can only be made within the codified parameters set by the protocol, reflecting Alexander Galloway’s (2004) argument that decentralised computational networks do not eradicate control; rather, power is defined by the rules of systems. For example, monetary production is codified into the pro- tocol so that bitcoins are released slowly over time in an exponentially declining manner until a maximum of 21,000,000 will be produced by 2140.6 Inflation, then, is steady, predictable, and declining until it stops entirely. At that point, assuming the demand for bitcoins continues to increase, the cryptocurrency becomes deflationary as, under current protocol rules, no more coins can be cre- ated. In fact, because coins can disappear permanently from circulation with the loss of private keys, Bitcoin could even be subject to hyperdeflation (DuPont, 2019). The artificial cap makes Bitcoin analogous to a digital super-transferable precious metal that can be transacted through computers. Indeed, the practice of Bitcoin mining extends this metallic analogy (Maurer et al., 2013): chunks of bitcoin are ‘randomly’ rewarded by the protocol to people called miners who ‘donate’ their computer power to both administrate and secure the Bitcoin net- work (see Chapter 6). Miners are important because they authorise and execute transactions by putting them into blocks and cementing them in the chain. The foundation for this procedure is a cryptographic technique called a hash function, which is sim- ply an algorithmic formula that “takes an input value and produces a very differ- ent output value” called a hash (Day, 2018, 324). Any small change to the input data will radically change the output hash. For other nodes to accept a block of transactions, the hash (output data) must fit a predetermined specification. This is like solving a puzzle: one piece of the input data, a ‘number’ known as a nonce, is arbitrary and adjustable so miners can try adding as many to the block data as possible in an attempt to create the winning hash on the other side. Because there is no way of knowing which nonce will form the desired hash, miners must use brute force, or do ‘work,’ in order to find it: dedicating computing power to try as many nonces as possible. Only when the resultant hash fits the predeter- mined specification, which acts as proof-of-work for other participants to check, can they mine a block into the blockchain by submitting it to the network for validation (see Chapter 6). Put simply, proof-of-work exists when a network user provides evidence their computer has undertaken effort to solve a problem (Dwork & Naor, 1993). Once this proof is disclosed, miners are subsequently rewarded for their efforts (and electricity costs for repeatedly running the hash function) with a quantity of bitcoins. “Mining is therefore a lottery, but those with the fastest machines will, on average, win more often (just as those who buy more lottery tickets will, on average, win more often)” (DuPont, 2019, 94). Furthermore, this process is also how the protocol ‘mints’ new coins and puts them into circulation: rewards
- 38. 20 MONEY CODE SPACE 2 0 for successful miners started at 50 BTC, but have halved every 4 years and will continue to do so until they eventually disappear in 2140. At that point, transac- tion fees, which can be included by the sending party, will be the only source of income for miners (who usually include transactions with the highest fees in their blocks to maximise their profits)—transaction fees will also begin to exceed mining rewards some time around 2040. In essence, miners profit from Bitcoin seigniorage (DuPont, 2019)—a term traditionally referring to the differ- ence between the cost of creating money (like manufacturing and distributing metal specie) and the value of the coins themselves. The Bitcoin blockchain, then, is “written by the collective, collaborative, and competitive effort of the participants in the system” (Maurer, 2017a, 112). It is like a digital tapestry of transactions woven by miners who together hire out their computational power to maintain the ledger (Scott, 2014b). Because bit- coins are endemic to the protocol, they theoretically cannot be created outside of what has already been predetermined by its codified parameters; this is unlike the process of fractional reserve lending practised by commercial banks or the ‘printing’ of money by central banks. Instead, Bitcoin attempts to redistribute monetary trust into a ‘predetermined’ codified architecture that ‘decentralises’ the control of monetary policy. However, its algorithmic architecture does not omit third parties as it indeed claims to do (Nakamoto, 2008), but rather ran- domises them (miners) across a ‘distributed’ network. This randomisation is important because it ‘ensures’ no single miner can omit transactions from the blockchain and therefore restrict an actor from participating in the network: this is why Bitcoin is often referred to as ‘permissionless’ in terms of access and is why it could be used to bypass the WikiLeaks blockade. Cryptoeconomics AprogrammerattheSiliconValleyEthereumMeet-upGrouponcetoldme:“the blockchain is truth.”7 This, he explained, is the very point of its existence. A cofounder of a blockchain-based company in the same three-way conversation expanded on this point by saying: “blockchains are a thermodynamic commit- ment to a point of view of history.” What he meant by this is the proof-of-work mechanism (mining), utilised by Bitcoin and many other blockchains, expends electrical energy (generating hashes) to create a trusted record that people in a distributed system can reach consensus on.8 To understand this vision, it is nec- essary to describe the process of tying blocks together. Theinputdataofablockmustincludethetransactions(ifany)aminerwishes to submit, a nonce, and the (winning) hash of the last block (see Figure 1.3). When a miner broadcasts a winning block hash to the network, all peers can
- 39. 2 1 Pandora’s Blocks 21 check it fits the predetermined parameters and then include that block in their own copies of the blockchain, thereby coming to a consensus as to what the new network state is. They will then start building on top of this block by bundling its hash together with new transactions and a random nonce—changing the nonce over and over again until they (or someone else) find(s) a winning hash for a new block. And the cycle repeats ad infinitum (previous block hash + transac- tions + winning nonce = current block hash). Because the last block’s hash is mathematically linked (via the formula of the hash function) to all the transac- tions in that block and, in turn, all the previous blocks going right back to the genesis block, this small piece of information is used to connect the entire his- tory of transactions together in a chain. Before Bitcoin, reaching consensus in a distributed system like this was an unresolvedissueincomputerscienceknownastheByzantineGenerals’Problem (Lamport et al., 1982): a dilemma that seeks an algorithm (computational or otherwise) to communicate a common agreement between multiple parties when one or more of them has the potential to be dishonest. The Bitcoin block- chain solved this problem by creating a shared chronological chain of transac- tions secured by proof-of-work mechanics, which generates a coherent global view of the system state. In this sense, there is “supposed to be a singular version of the blockchain, the idea being that the ledger’s sequentially arranged hash- based linkages create an unbroken, monolithic record of all confirmed transac- tions” (Vigna & Casey, 2015, 149). There are times, however, when two miners can find the correct nonce for a new block within a few seconds of each other and both broadcast their valid block of transactions (nigh on) simultaneously to the network. This causes a split, or fork, where miners go ‘rushing off’ to mine on top of two competing valid blocks. Because this form of divergence is endemic to the blockchain’s mechanics I call this a systematic fork; the discrepancy should be quickly resolved by network mechanisms, which happens (on average) two or three times a week (see Chapter 5 for a typology of forks). Systematic forks are temporary glitches recognised and accounted for by the Bitcoin protocol so their presence is fleeting (Waldman, 2015). Resolution is achieved via the clever incentive scheme mining facilitates, known as Block Prev Hash Tx Tx ... ... Nonce Block Prev Hash Tx Tx Nonce Figure 1.3 The previous block hash forms part of the input data for the next block along with transactions (Tx) and a nonce. The hash ensures all blocks are mathematically linked together into a chain (source: Nakamoto, 2008).
- 40. 22 MONEY CODE SPACE 2 2 cryptoeconomics. This ‘ensures’ individual miners work in the best interest of the network whole. The idea is miners will begin working on the block that was broadcast to them first while keeping an eye on the other chain when they realise there has been a fork. Once a new block is found, the miners on the shorter chain will switch their power to mining the longest chain, discarding, or ‘oprhaning,’ the block they were before working on. Any transactions that were in blocks of the shorter chain will go back into the mempool (memory pool)—a list of queued transactions that have not yet been confirmed into a block. This effect occurs because miners will always trust the ‘longest chain’ as it contains the most proof-of-work and is thus more difficult to undo.9 To change the state of the net- work, a miner would have to overtake the longest chain, which is extremely hard because they would be competing against the accumulated power of the rest of the miners: finding a winning hash is mathematically challenging so the more computing power being dedicated to a chain, the greater chance it has to build the next block more quickly than any competing chain. Since the miner should be (selfishly) looking to obtain the block reward (and transaction fees) it would be more economically viable for them to find the nonce on the longest chain rather than expend power (and costs) on an impossible catch-up game while all other miners are ignoring, and thus making irrelevant, the state of the network they are preaching. This game-theoretical component of the blockchain mining process is also what protects the network from attackers because it should not be in the miner’s economic interest to cheat the system: If a greedy attacker is able to assemble more CPU power than all the honest nodes, he (sic) would have to choose between using it to defraud people by stealing back his payments, or using it to generate new coins. He ought to find it more profitable to play by the rules, such rules that favour him with more new coins than everyone else com- bined, than to undermine the system and the validity of his own wealth. (Nakamoto, 2008) Thus, Nakamoto designed a system where self-interest aligns itself with the best interest of the network. In other words, “Bitcoin links economic incentives to a desired system behavior” (Day, 2018, 331). Here, cryptography is used to prove the historical properties of the blockchain while the incentive of obtaining eco- nomic value in the form of cryptographic tokens defined by the system encour- ages those properties (and value) to hold into the future (Buterin, 2017). This is why, when a transaction is made, subsequent blocks built on top of the block containing that transaction are known as confirmations; as the work to undo the chain becomes exponentially harder, that transaction becomes more likely to be
- 41. 2 3 Pandora’s Blocks 23 cemented (thus confirmed) in the ‘historical record’ with time. Thereby, consen- sus is not an end product but is ever-more-closely reached with each subsequent block built on the chain.10 The mathematics of the system ensures that the prob- ability of an attacker catching up to the rest of the network (without collusion) and changing the ledger state, thus being able to ‘double spend’ their bitcoins, becomes increasingly infinitesimal through time. Therefore, the Bitcoin consen- sus model materialises as a codified mathematical process built into the proto- col and reached via the longest chain.11 This ‘immutability’ of data is often why people refer to blockchains as append-only databases where information can be added but not deleted. However, if multiple miners band together their hashing power they can more easily rewrite the longest chain, thus omitting transactions the protocol had previously confirmed. This kicks up another contradiction: the blockchain is meant to be a permanent record but can be altered if ‘attackers’ collaborate (see Chapter 5 and Chapter 8). Making Money Value is categorically subjective. In fact, the subjectivity of value is the underly- ing foundation on top of which markets are built; things are never inherently ‘precious’ on their own accord but are rather culturally defined and calculated/ quantified as such. Markets function due to the temporal and spatial subjec- tivities of worth surrounding particular commodities: people are willing to pay different prices at different times in different places for different goods. This pro- cess of price negotiation (say, for Apple shares, gold contracts, oil derivatives, the British pound, Manhattan apartments, or a bitcoin) forms what is known as a market price, which is merely a (moving) consensus of the agreed-upon value for a specific commodity (Callon, 1998b, 1999)—an illusion of objectivity. This mirage is the product of a “classic oxymoron, conflating an empirical quantity with a socially maintained principle” (Brunton, 2019, 9). The globalisation of stock markets along with trading tickers has given the impression of a singular (albeit fluctuating) world price for certain shares and commodities yet, in real- ity, the vast majority of trades are made at different amounts to the digits run- ning along computer screens. This ‘established’ market value is actually a moving average of the ‘going rate’ for goods derived from bundling their entire bid and ask prices together. What seems like an objective value is thus a mathematical accumulation of specific economic transactions: an abstraction of multiple sub- jectivities personified by individual trades (themselves socialised interactions). To understand markets properly, then, researchers must “trace how the webs of heterogeneous material and social practices produce them. It is these that are performative, that generate realities” (Law, 2007, 12).
- 42. 24 MONEY CODE SPACE 2 4 Initially, bitcoins held no financial value: they were traded among early users mainly as a means for testing the functionality of the system. But a gathering faith in the cryptographic processes that underlie Bitcoin caused programmers to start parting with fiat currencies in exchange for bitcoins. Value arose slowly over time as more and more people became prepared to give up other valuable assets for the new cryptocurrency. A perceived robustness of the Bitcoin pro- tocol and the stability of its transactions realised by cryptography is ultimately what allows the digital tokens ‘running through’ its network to act as a form of money. On the 22nd of May 2009, what is widely regarded as the first Bitcoin transac- tion for a tangible good took place. Laszlo Hanyecz, a programmer from Florida, offered to pay anyone on the Bitcoin Forum 10,000 BTC for a pizza. A user from London with the screen name jercos placed a long distance phone call to Hanyecz’s local Papa John’s and paid for two pizzas with a credit card. Once they were delivered, Hanyecz sent 10,000 BTC to jercos’s digital wallet (those same bitcoins would have been worth $195 million USD at the time of the 2017 price peak).12 It is small, incremental practices like this that gradually established and increased the value of cryptocurrencies. Bitcoin’s users trusted that these digital tokens could only be unlocked by the person(s) holding the private key to an address; consequently, the value of bitcoins was, quite literally, willed into being through socioeconomic practice (see Chapter 2). Later that year, on the 5th October, a user of the Bitcoin forum, going by the name of New Liberty Standard, established the first Bitcoin exchange rate by dividing their electricity costs of mining by the amount of bitcoins they gener- ated. The calculation gave the official exchange rate of 1 BTC = $0.0008 USD or 1 USD = 1,309 BTC.13 New Liberty Standard also established the first online Bitcoin exchange and slowly a market for trading its digital tokens began to grow. Here, people started to speculate over a bitcoin’s price, subjecting its value for- mation to market mechanisms; many were willing to pay more than the costs of electricity for something (a balance in a distributed ledger) they saw as hav- ing a greater inherent financial value than the simple equation (electricity costs/ amount of mined bitcoins) allowed for. This not only allowed market value(s) to form, but enabled people not participating in mining to own quantities of bitcoins. The trade-off for processes of price discovery was (more often than not) the surrendering of private keys to exchanges that would submit transactions to the protocol on their users’ behalf. In other words, a third party is (re)introduced, arguably contradicting the original philosophy of Bitcoin laid out by Satoshi Nakamoto and (re)submitting the cryptocurrency to the potentially cata- strophic consequences of centralisation. In July 2010 programmer Jed McCaleb created the Bitcoin exchange Mt. Gox, which became extremely popular thanks
- 43. 2 5 Pandora’s Blocks 25 to a fluid interface that allowed people to hold both bitcoins and dollars with their accounts (an innovation at the time).14 Underneath the surface, users of the exchange were trusting one person, McCaleb, with their finances: the company was quite literally run from wherever he took his laptop. Nevertheless, Mt. Gox grew into what would become the largest Bitcoin start-up company in the indus- try. In March 2011, McCaleb sold his exchange to a French programmer living in Tokyo, Mark Karpelès. By July 2011 it was clear Mt. Gox held a monopoly position over global exchange for the cryptocurrency, administrating 80% of all bitcoin trading (Vigna & Casey, 2015). However, at the end of 2013, some early warning signs of internal problems began to appear: withdrawals for customers were delayed for weeks or, in some cases, months. The company claimed this was a necessary restriction because a bug in the Bitcoin software, which became known as transaction malleability, made it possible for users to double spend coins (see Chapter 5). However, on the 4th February 2014, Mt. Gox announced possible insolvency, having lost 744,448 bitcoins then valued at $473 million USD (Donnelly, 2014).15 While the soft- ware bug did exist, subsequent statistical analysis has disproven its responsibil- ity for such a colossal loss of bitcoins (Decker & Wattenhofer, 2014). Instead, the crisis has widely been put down to company incompetency giving way for theft via the hacking of centrally stored private keys. This collapse reinforced the view of Bitcoin purists who claim any kind of centralisation creates internal vulnerabilities and defies the point of cryptocurrencies. In a similar vein, these centralised points of control reattach public addresses to the identity of cus- tomers who must disclose personal information to be serviced and thus places them back within the legislative reach of state governments. There is, however, a benefit to this (re)centralisation: start-up companies increase accessibility to non-technical users and provide new financial tools by offering a variety of ser- vices maintained by software layers resting in between users and blockchains (see Chapter 7). A Growing Start-up Economy Up until 2012, Bitcoin companies were, for the most part, experimental projects with little to no capital investment run by opportunistic coders who had spot- ted a gap in an emerging market (Epicenter Bitcoin, 2015). Even as late as 2015, I was often handed business cards with the letters “CEO” printed under the per- son’s name to later find out they were the only one running the enterprise.16 As more and more companies appeared, they started to settle into particular catego- ries: wallet providers, which manage cryptographic addresses for customers via easy-to-use graphical user interfaces (GUIs); exchanges, which act as a gateway
- 44. 26 MONEY CODE SPACE 2 6 between cryptocurrencies and fiat currencies; payment processors, which pro- vide a point of sale for merchants so that customers can purchase goods with cryptocurrencies; mining companies, which create mining hardware and/or run large-scale mining operations on behalf of their clients; infrastructural develop- ers, which create new distributed ledger technologies or use added layers of soft- ware to improve existing architectures; financial services, which build on top of cryptocurrencies and blockchains to create new fiscal instruments and secu- rities, and; investors, who provide capital for the businesses above hoping for future economic returns (see Chapter 7). By 2012, the embryonic industry had begun catching the eye of this last group: venture capitalists. The lucrative potential of Bitcoin start-up companies entered the world stage when articles such as Bloomberg’s “Meet the Bitcoin Millionaires” hit global headlines (Raskin, 2013). Investors first to the table included Roger Ver, Marc Andreessen, David Azar, Cameron and Tyler Winkelvoss, Barry Silbert, Wences Casares, Fred Wilson, Pete Briger, and David Marcus (Popper, 2015a). Many of the early companies, however, have since disappeared due to technical incompetencies, hacks, regulation procedures, a failure to scale, banks refusing to provide business accounts, a lack of demand for their ser- vices, or being revealed as scams. For example, BitInstant was shut down from a lack of compliance with US regulation, TradeHill was forced to close when their bank stopped servicing them, and Mt. Gox collapsed spectacularly from a lack of due diligence. The resilient few that survived—like Coinbase, Bitstamp, and BitPay—are now considered by many to be market leaders.17 In 2013, with growing media attention and more readily available venture capital, they were joined by a second wave of start-ups (Ludwig, 2013). This pattern was explained to me by the Managing Partner of a cryptocurrency and block- chain venture capitalist fund: Sometimes being an early mover is overrated. You can add up a lot of errors on your back. A lot of the early guys were passionate about Bitcoin but they weren’t good entrepreneurs. It’s not good enough to love Bitcoin. You’ve got to be a good operator, a good entrepreneur, and a good executive. . . . This second wave consists of guys that have built companies before and are frankly more credible. This trend was personified by the exponential rise in capital investment in the Bitcoin sector: growing from 2.2 million in 2012, to 50.1 million in 2014, 1.15 billion in 2016, and 5.6 billion USD in 2018 (CoinDesk, 2020). The dynamics of this start-up industry and its effect on Bitcoin will be discussed by Chapter 7, while the implications of other pioneering blockchain technolo- gies looking to disrupt a plethora of industries will be picked up in Chapter 8.
- 45. 2 7 Pandora’s Blocks 27 For now, it is necessary to highlight these start-up companies as islands of con- trol and vulnerability in the Bitcoin ecosystem. If the Bitcoin protocol defines coin ownership as the ability to use private keys to initiate transactions, then trusting companies to manage these technical procedures begets a new form of intermediary. “These do the work that financial intermediaries have always done: broker settlement and clearance, make equivalence between exchange rates, manage risk and fraud” (Swartz, 2017, 92). It is for this reason that many in the Bitcoin community refer to wallet services as “Bitcoin banks”; the indi- vidual using them is no longer directly in control of their funds (i.e., with cryp- tographic private keys). Payment processors also act as intermediate gateways for spending cryp- tocurrencies. Looking back at Laszlo Hanyecz’s 10,000-BTC-for-two-pizzas transaction, he did not directly pay Papa John’s with bitcoins but used jercos as a third party who accepted bitcoins and used his or her credit card company to pay the pizzeria in US dollars. Typically, the vast majority of merchants who accept bitcoins do not want to hold them (Manusu, 2014; de Jong et al., 2015). Consequently, payment processors play a similar role to jercos by taking bit- coins and paying merchants in the equivalent amount of fiat currency (while taking a fee). This start-up economy creates a new contradiction: Bitcoin is designed to eliminate third parties but many still use them to interact with the Bitcoin protocol, which has the effect of streamlining its use but centralising particular functions. Despite immense volatility, the value of individual bitcoins has grown con- siderably over time to provide some of these companies with a unique injec- tion of capital from their appreciating hordes. Similarly, many early adopters have made extortionate amounts of money from early investments, which has serious implications for wealth (re)distribution. Analytics show that 97% of all bitcoins are held by 4% of addresses (Chaparro, 2018), some of which could even belong to the same entity.18 Similarly, Satoshi Nakamoto owns 980,000 bit- coins but has never touched this trove other than tinkering with the project in its infancy (Wong, 2017a).19 Like the global distribution of other monies, then, bitcoins tend to be concentrated among a relatively small amount of ‘whales’ who hold a significant amount of economic power as well as the ability to short exchange markets. Some in the community justify the newfound prosperity of these tech-savvy early adopters given their role as believers in, and pioneers of, a ‘liberating’ technology. However, in the same stroke, the asymmetry of cryp- tocurrency affluence reveals the limitations these technologies have for redis- tributing wealth. Bitcoin “might appear as though it exists outside the financial system, but by promoting scarcity and competition this project aggravates the over-accumulation of capital and exacerbates the social inequalities that it is sup- posed to combat” (Kostakis & Giotitsas, 2014, 437).
- 46. 28 MONEY CODE SPACE 2 8 The Mining Arms Race To accumulate bitcoins, one must mine them, accept them for goods/services, or buy them with other currencies. One of the reasons why exchanges became such lucrative ventures was the increasing difficulty of receiving block rewards for mining. The initial Bitcoin white paper assumed that each computer on the network would have a similar amount of hashing power, making the ability to write the next page in the ledger equal among participants. This dispersion is essential for decentralising control because it means no single entity can ‘hijack’ the network. For the first generation of miners this mechanism was a success but the landscape would soon mutate. Towards the end of 2010, miners were beginning to realise they could start using their computers’ graphical processing units (GPUs) instead of their computers’ central processing units (CPUs) to mine bitcoins more efficiently (Taylor, 2013). GPUs are designed to render thousands upon thousands of polygons and pixels simultaneously for video games, and are thus well-suited for repeating the same mathematical function over and over again on many pieces of data (i.e., darkening every pixel on the screen as a digital sun within a vir- tual world sets). In other words, they are good multitaskers for simple opera- tions. Miners began scaling their operations by using GPUs that generated more hashes per second than CPUs, and, in turn, increased the likelihood of receiv- ing block rewards, thus maximising their profits. It was not long before miners began daisy-chaining GPUs into custom-built mining rigs; some would even use free electricity from their employer’s offices or university dormitory rooms to power their machines (Taylor, 2013). Silicon chips called field-programmable gate arrays (FPGAs) also started being redeployed as mining machines mid-2011 but they were soon over- shadowed by application specific integrated circuits (ASICs), tailor-made to function solely as mining chips (Taylor, 2013). Companies like Butterfly Labs, ASICMINER, and Avalon pioneered this bespoke silicon for the production line and began selling their rigs worldwide (Taylor, 2013). This gave way for huge industrial-sized mining farms that filled warehouses with thousands upon thousands of linked ASICs. The Bitcoin protocol has an inbuilt difficulty curve for finding the winning hash: the more hashing power enters the net- work the harder it is to generate it. This keeps a steady block creation rate of roughly one every 10 minutes. Gigantic mining farms have pushed the mining difficulty higher and higher, making it nearly impossible for small-scale miners to receive block rewards: as far back as 2013 the collective power of the Bitcoin network was more than 256 times that of the world’s top 500 supercomput- ers combined (Cohen, 2013). Consequently, syndicates called mining pools have emerged that allow individuals to join forces for a share of the profits in
- 47. 2 9 Pandora’s Blocks 29 proportion to the amount of hashing power they contribute (see Chapter 5 and Chapter 6). The resultant dominance of mining pools has come under scrutiny in the Bitcoin community due to the possibility of what has been called the 51% attack. This states that if a single party or group gathers over half of the Bitcoin min- ing power they can hijack the network (Kroll et al., 2013; Eyal & Sirer, 2014).20 In other words, if a centralised cartel controls mining they can rewrite the his- torical record to double-spend coins—as well as alter the protocol rules forced by consensus (see Chapter 5)—since they become the network majority. The game-theoretical nature of Bitcoin protects against this outcome because those securing the network in return for financial gain should not act in a way to dam- age its integrity, as this would result in their own bitcoins becoming less valu- able (Nakamoto, 2008). However, this technique could be used by a malicious attacker with enough resources. Thus, another vulnerability is presented: as min- ing pools grow they endanger the ‘distributed’ nature of the mining economy by advancing their own power over the network. This was famously personified by the company CEX.IO in 2014 (Gill, 2014). The start-up not only allowed inde- pendent miners to join their pool but also offered a cloud mining service called Ghash where customers could essentially buy quantities of hashing power gen- erated by mining rigs it privately ran—acting like shares that paid out cryptocur- rency dividends. As the company approached 51%, a backlash from the Bitcoin community convinced CEX.IO to cull their mining power to stay below 40% of the network whole, and urged other mining pools to do the same (Wilhelm, 2014;Bershidsky,2014).Sowhilecryptoeconomicsdiscouragesthe51%attack, the codified rules of the Bitcoin protocol still allow for it. ASIC mining chips are simple yet powerful pieces of hardware: “you can heat your house with them, you can toast bread with them, and if you don’t dissi- pate the heat from them they will melt” (Antonopoulos, 2015b). Consequently, they consume vast amounts of electricity and contribute to the earth’s warm- ing atmosphere (Brunton, 2015). One estimate put the total energy consump- tion of Bitcoin in 2017 at 30.1 Terawatt Hours, equivalent to the entire nation of Morocco (Kobie, 2017). This has caused many commentators to call Bitcoin environmentally unsustainable (Becker et al., 2013; Malmo, 2015; Appelbaum, 2018; de Vries, 2018). Others, on the Bitcoin Forum for example, have coun- tered this argument by pointing out how the traditional financial system also consumes a vast amount of energy to keep its offices, commuter transport sys- tems, and Internet servers running. However, ancillary services for cryptocur- rencies do not disappear and also utilise energy intensive materials like these. The mining arms race, then, is another human-machine process that draws out the many problems and contradictions inherent in Bitcoin, and (proof-of-work) blockchain architectures as a whole.
- 48. 30 MONEY CODE SPACE 3 0 Conclusion The crypto-spatial ties of the Bitcoin network allow an unlockable and trans- ferable balance tied to digital addresses to act as a monetary form. This chap- ter has outlined some of the key actors (developers, miners, start-up founders) that assembled to form the Bitcoin ecosystem. In doing so, it has begun to show how the politics of money and code are skewed and reshuffled as a multitude of people interact with the network. These entities are critical for outlining the contours of algorithmic decentralisation as it plays out through new distributed ledger technologies. Sofar,IhaveprovidedaschematicdepictionofBitcoinanditseconomywhile starting to show how models of power created by human-machine interaction can be flipped upon their head. Some radical differences have clearly emerged as Bitcoin evolved from a theoretical white paper into a practical protocol. While some of its ideals may fall short of the original vision, Bitcoin and other block- chain architectures remain extraordinary technologies currently transforming the socioeconomic makeup of everyday life. And their maturation process is by no means over. The rest of this book will unpack the many entities laid out in this opening chapter to reveal further tensions of Bitcoin’s adolescence and the growth of complementary and competing blockchains. It starts by outlining a conceptual framework suitable for understanding how power asymmetries form across cryptocurrency and blockchain economies.
- 49. 3 1 Money Code Space. Jack Parkin, Oxford University Press (2020). © Oxford University Press. DOI: 10.1093/oso/9780197515075.001.0001. 2 Money/Code/Space Introduction The title of this chapter is taken from two important works in human geography. The first is Money/Space: Geographies of Monetary Transformation by Andrew Leyshon and Nigel Thrift (1997) who exhibited how money is performed and circulates through dense social and spatial networks. As a collection and devel- opment of previously published work, the text reflects multiple visions and expressionsofmoneythatmanifestondifferentspatialscales.Theycallthecode- pendent relationship between currency and geography “money/space.” Nearly a quarter of a century later, in light of the exponential ubiquity of financial instru- ments, new payment technologies, the formation of the euro(zone), and the 2008 global financial crisis, this critical text offers a framework for understand- ing more contemporary financial landscapes. The second key work is Code/ Space: Software and Everyday Life by Rob Kitchin and Martin Dodge (2011) who examined how software increasingly shapes the modern world. Code, like money, not only occupies space but enacts it. They call the codependency between software and geography “code/space.” The key point made by Kitchin and Dodge is that digital systems are now fundamental to spatial production. Using Money/Space and Code/Space as a starting point, in this chapter I examine a threefold relationship between money, code, and space. By building an analytical framework incorporating this three-body system, money/code/ space aims to open up the complexity of blockchains as sociotechnical objects brought into being by deeply monetised and codified geographic networks. This is done through an interrogative lens designed to unpack the historical and mod- ern manifestations of decentralisation. The epistemic value of the forward slash is similar to that devised by Michel Foucault (1980) in Power/Knowledge, where he demonstrated the inextricability of both terms. Similarly, for Rob Kitchin and Martin Dodge (2011) the slash binds together “code and space into one dyadic concept” (x). The association is “so mutually constituted that if one half of the
- 50. 32 MONEY CODE SPACE 3 2 dyad is ‘put out of action,’ then the entire intended spatial transduction fails” (Kitchin & Dodge, 2005, 173). For example, software is so crucial to the opera- tions of modern airports (booking tickets, check-in, baggage handling, security procedures, air traffic control), if code were to be removed from the equation then their organised spaces would cease to function (Kitchin & Dodge, 2004). So when I use the phrase “money/code/space” I am asserting the assemblage in question (i.e., a blockchain) is in a triadic relationship and is thus dependent on all three elements to exist as it does. As such, the term helps capture dynamics of economic digital geographies. With this framework in mind, the chapter does five things. First, it places Bitcoin within geographical theorisations of money to better understand how monetary forms are spatially constituted and enacted. Second, it critically deconstructstheterm‘decentralisation’amidstitsplethoricconnotations.Third, a spatial framework is devised for understanding (de)centralisation in relation to digital-material, cultural-economic networks. Fourth, drawing from actor- networkthinking,(de)centralisationisredefinedusingtheconceptofobligatory passage points to highlight certain connectivities that produce power in appar- ently distributed architectures (see Callon, 1986; Musiani et al., 2018). Fifth and finally, blockchains are compared to traditional modes of monetary governance administered by central banks. Throughout, money/space is conceptualised via modes of human interaction and, in its contemporary form, is shown to be tied intimately to code/space. This narrative works to present Bitcoin and other blockchain technologies as heterogeneous networks that can be examined—in terms of the digital code, material infrastructure, cultural-economic practices, and discourses of decentralisation held by different groups—to illuminate sites of ‘centralisation’ across their money/code/spaces. Cash, Credit, or Crypto? Money is a peculiar cultural artefact. It is a “socially powerful—and socially necessary—illusion” (Dodd, 2014, 6). Often the intrinsic/use value of a thing- as-money is next to nothing: a bank note is almost inherently worthless inde- pendent of the value that networks of people ascribe to it.1 But this simple fact does not make money any less powerful: if I were to climb an urban rooftop and announce via a megaphone that “bank notes are merely pieces of paper” and then drop a million dollars onto the street, people would still surely grab at the notes as they floated down towards the pavement. Peter Pels (1998) draws on literature that follows Karl Marx’s (1867) idea of fetishisation to explain this phenomenon; here, a “double attitude” (Freud, 1950), or “double conscious- ness” (Pietz, 1985), is at play. This form of fetishism is both ‘fictional’ and
- 51. 3 3 Money/Code/Space 33 ‘functional’: “a form of misrecognition as well as recognition of reality” (Pels, 1998, 102). The value of money is fictional/false because of its inherent noth- ingness: the virtuality of value is somewhat detached from the medium itself, so to ‘work’ it needs institutions, beliefs, and trust. On the other hand, the value of money is functional/true because of what people can(not) do with(out) it. There are, so to speak, two sides of the coin.2 The functionality of money is suspended by consensual networks of trust that propel things-as-money into the more-than-material. This is why money has historically been able to adopt many forms: all things-as-money do not hold monetary value outside of the social and temporal settings of human interac- tion. Consequently, money’s peculiar performativity has been historically rei- fied in a bed of materialities such as cowrie shells, beer, salt, glass beads, gold, peppercorns, buckskins, yak excrement, tally sticks, grain, coinage, bank notes, cheques, and credit cards. As Ernesto Laclau (1990) states, a “stone exists inde- pendently of any system of social relations but it is, for instance, either a projec- tileoranobjectofcontemplationonlywithinaspecificdiscursiveconfiguration” (101). Similarly, money objects exist independently of people and do not act as money unless endowed with value through cultural practice. If the materiality of money does indeed embody social relations like this, then the spaces it fills make it culturally specific across disparate geographies. This character of money is described by Andrew Leyshon and Nigel Thrift (1997) as “information circu- lating in specific, separate but overlapping actor-networks, made up of actors, texts and machines, which think and practise money in separate but overlapping ways” (xiii). These networks culminate to create monetary value, brought into being through independent yet interlinked relationships. When the Bretton Woods agreement, which tied the value of participating state fiat currencies to gold, dissolved in 1971 the term ‘fiduciary’ was used to describe trust in money with no backing of precious metal. Yet this applica- tion is a misnomer: all money is fiduciary and dependent on trust (Hütten & Thiemann, 2018). Even gold—still widely considered to be the ‘holy grail’ or ‘base’ of monetary value—can be seen as an arrangement of atomic particles (an element) that has been ascribed social meaning (a monetary standard) due to its rarity and utility (Graf, 2013). It is only when networks of trust disintegrate that a thing’s ability to act as money diminishes. In short, money is what money does; but never externally to its embedded social relations—see Appendix 2 for an account of the West African cowrie shell and Appendix 3 for the Swiss-printed Iraqi dinar. The networks of practice that create money elevate it as the ultimate com- modity (Harvey, 2010). This gives it the ability to flatten other commodities into a relational and relative measurement of value, homogenising them under a quantifiable scale so their independent worth can be compared (Marx, 1867;
- 52. 34 MONEY CODE SPACE 3 4 Simmel, 1900; Crump, 1978; Roberts, 1994; Maurer, 2006; Dodd, 2014). It is “the great converter of everything into everything else” (Peel, 2000, 32). Georg Simmel (1900) famously explained this phenomenon by calling money a claim upon society: a “socialised debt” between the “individual and a wider payment community” (Dodd, 2014, 125). In other words, money operates between people—users have faith it will maintain purchasing power in particular places extending into the future. Brett Scott (2018) puts an interesting spin on things: “[m]oney is not a store of value. Rather, it is a tokenized claim that enables you to access, control, or mobilize value that resides in goods and services. Burning money does not destroy value. Rather, it burns up your ability to control the value embedded in the products of other’s labor” (147). This is a thought-provoking statement that neatly demonstrates how money is a placeholder for other things of value. Similarly, when governments print greater quantities of money they are not cre- ating value out of thin air but increasing the amount of claims on existing goods and services in, and outside of, their economies (which has the effect of decreas- ing the buying power of each individual unit, known as inflation). However, while recognising Brett Scott’s point, the networks of trust that suspend money as a substitute, or stand-in, for other desirable things also allow it to become a de facto store of value in and of itself (quite evidently, it can be saved and spent later). In essence, money may only be a claim upon value but this assertion begets its own form of ‘independent’ value. This is a shared illusion but a power- ful one, which makes it very real indeed. Yet the resultant apparition is by no means infallible. In fact, money is decep- tively fickle: being the result of social consensus, it is subject to the cultural con- straints of time and space. The effect of money flattening other things is achieved and reinforced by a shared faith in the fungibility of money—that is, each unit of currency carries an identical value to another, making them all interchangeable. However,certaineventsshowhowdifferentmanifestationsofaspecificcurrency can embody some radical differences. For example, in 2008 the foreshocks of the global financial crisis appeared when the British bank Northern Rock sought a liquidity support loan from the Bank of England, which instilled fear in their depositors leading to the first UK bank run in 150 years (Stuckler et al., 2008). For those queuing at Automated Teller Machines (ATMs) ready to swap their digital pounds in Northern Rock accounts for physical banknotes, fungibility between the two manifestations of British currency did not exist. This situation reveals the delicacy of money’s networks of performance (see Appendix 4 for greater detail). The idea of national sovereignty (and identity) is often defined by currency control (Knapp, 1924; Keynes, 1930a). Here currencies are issued by central banks, informed by governments, administered by commercial banks, accepted
- 53. 3 5 Money/Code/Space 35 by businesses, and spent by citizens. All of these actors are essential to the suc- cessful performance of sovereign money, which becomes imperative for the articulation of borders (Dodd, 1995; Mezzadra & Neilson, 2013). Chartalism is the name given to the belief that state-backing is the crucial factor for defining and enabling money, reinforced by the collection of taxes in specific currencies that necessarily ties them to citizenship (Knapp, 1924; Wray, 2004).3 Metallism is often presented as the counterview to this claim, stating instead that value is derived from the intrinsic qualities of the thing-as-money itself—like the scar- city, durability, divisibility, and beauty of gold (see Dodd, 2014). Both sides hold a certain gravitas but should not be held in opposition to each other. Traditional coinage, for example, was an attempt to align chartalist and metallist qualities of money into a singular orthodoxy by stamping (precious) metals with state sym- bology (i.e., the head of the Emperor).4 In short, while the ‘thingness’ of money is certainly important, the social networks (like those enforced by a state) per- forming and constraining it are just as crucial (if not more so) for understanding its elusive qualities. Cultural-economic networks not only propel fiat currencies into being but alsoperpetuateregionalboundariessothatmoneyisatoncearesultofpredefined parameters and a contributing force to the continued negotiation of national geographic spacing and territorial realities. This creates a monetary perimeter of inclusion and exclusion positioning actors inside or outside of state economies. However, regionalised economies are more complex than the inside/outside of bordered national currencies—for example, many Argentinians hold US dollars as a stable store of value. In this sense, “[m]oney does not map neatly onto ter- ritorial space; indeed, it often flows along the internees between spaces” (Dodd, 2014, 226). Looking at states as bounded entities with a singular currency, then, is a reductive approach as perimeters are always navigating a tightrope between the somewhat real and somewhat imagined (Terlouw, 2001; Van Houtum & Van Naerssen, 2002; Van Houtum et al., 2005; Walters, 2006). In other words, “[f]lows of commodities, capital, labor, and information always render boundar- ies porous” (Harvey, 2000, 35). Even more important to the geographic constel- lation of currencies is the simple fact that nation-states do not have a monopoly over money. Bitcoin was by no means the first alternative currency in opposition to fiat- based money (Hileman, 2014; Rodima-Taylor & Grimes, 2018; Scott, 2018). Non-state currencies have been used across varying geographies such as the localised Brixton Pound in South London (North & Longhurst, 2013; Taylor, 2014), Ithaca Hours in New York (Jacob et al., 2004; Hermann, 2006), and the more wide-reaching M-Pesa that transcends many African countries. This last one is a mobile telephone airtime credit that evolved into a monetary form after a predecessor started being used for economic transactions in Uganda, Ghana,
- 54. 36 MONEY CODE SPACE 3 6 and Botswana (McKemey et al., 2003). The network providers Safaricom and Vodacom later developed M-Pesa: a ‘company-backed’ token that largely leapfrogged traditional banking systems in Kenya (Maurer & Swartz, 2015; O’Dwyer, 2015a).5 To a lesser extent, it later penetrated Tanzania, South Africa, Afghanistan, India, Romania, and Albania (Taylor, 2014, 2015), whereas lob- bying by banks stifled its success in Nigeria (Scott, 2016). Mobile phones have saturated these national markets whereas banking facilities remain absent to the majority, thereby providing fertile ground for M-Pesa to thrive. Today it is used by tens of millions of people daily (Rodima-Taylor & Grimes, 2018) and is the “conduit for half of Kenya’s GDP” (Lanchester, 2016). M-Pesa was not thrust upon these populations as a currency; nor did it start as money in-and-of-itself; rather, it arose as such through dense cultural-economic networks. Bitcoin, on the other hand, was conceptualised from the offset as an alter- native currency. Unlike its predecessors, its designer(s) aspired to create a sub- stitution for fiat currencies not limited to localised geographic areas: a global alternative currency. Existing on distributed ledgers scattered across the infra- structure of the Internet, cryptocurrencies therefore challenge the role of the central bank and claim to overcome existing patterns of financial exclusion (see Castells, 1993; Lash & Urry, 1994; Leyshon & Thrift, 1994, 1995, 1996; Leyshon, 1995). Because banks profit more by catering for the rich, financial services and correlative wealth tend not to trickle down to poorer communities. Algorithmic decentralisation via cryptocurrencies has been championed as a solution to this problem, bypassing financial institutions in developing countries and allowing citizens to become their own banks. The penetration of cellular devices within poor populations has presented an opportunity for entrepre- neurial start-up companies to design inclusive ‘decentralised’ banking models accessed via mobile phones (Rodima-Taylor & Grimes, 2018). The success rate of these ‘solutions’ will be heavily dependent on how they navigate the complex relationships found in monetary networks. With all of its promises, Bitcoin, as a form of non-institutionalised code- money, has played a role in challenging contemporary monetary assump- tions: questioning concepts of value and offering a currency system allegedly existing outside of networks controlled by centralised institutions. Words like ‘decentalised,’ ‘peer-to-peer,’ ‘shared,’ ‘distributed,’ ‘dispersed,’ ‘open source,’ ‘digital,’ ‘transparent,’ ‘networked,’ and ‘global’ fill its articulatory toolkit. This vocabulary tends to suggest a border-transcending currency without any locus of control, rhetorically stripping away localities of power from its imaginary. Even the tagline given to Bitcoin by its proponents, “Strength in Numbers,” pro- motes a trust in the reliability of mathematics (the algorithmic architecture of its blockchain)asopposedtotheficklenessofpeople.Sequesteringdiscoursetothe realms of autonomous calculation (designed to defuse and diffuse governance)
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- 56. "What's his name?" she asked. "Benjamin Oresky." "What's that?—say it again." Edward repeated his friend's name, but the good Irish lady could not grasp it, and she said: "Sure, that's a Jew, your friend is, and look out for him; he may be an exception, but people that killed Christ are not good people. It's me that do tell you this, and kape it to yourself." At noon when Ben came, Edward told him of his conversation with their landlady, and they both bad much fun about it; and all during their lunch they could not help but smile at the way she looked at Ben. After lunch Ben went back to his work, and later Edward was on his way to Nellie's place. This time he was firmly decided to speak business and find out if Nellie could help him get a situation at once. "I can't live on love," he said to himself, as he stood at her door. When Nellie came in the boudoir where Edward was waiting, she noticed the change in his face. He was pale, and the dark rings around his eyes told of sleepless nights. She greeted him with more cordiality than ever, if possible, and Edward felt her charm creep upon him like the sensation which follows drinking old wine. "Poor boy," she said, holding his right hand in hers, "I am afraid you don't feel well, or that you have been worrying," and she looked him straight in the eyes.
- 57. A smile of beatitude spread over Edward's face under the influence of her gaze, and he answered: "To tell the truth, Nellie, I have been a little anxious about my future, but I guess it will be all right." "Of course it will be all right," she said, and inviting him to be seated, she asked him if he would not like to become an actor. "An actor?" he repeated, "I be an actor? I never thought of it, and then, how could I become an actor in the States when I can hardly speak English correctly?" "That part of it is all right, Ed. I have a friend, who is now writing a new play, and there will be a Frenchman in it, and you would be just the man to take that role." "Well, but I have never done any acting; in fact, I know absolutely nothing about it," he said. "There is a beginning to everything. Your voice is good. You are tall and handsome,'' she added smilingly. "Oh, bosh! Nellie, you are making fun of me. I know I was not born to be an actor, and never will be one." "Won't you try for my sake?" she asked him pleadingly. "For your sake, Nellie, I would do anything, but please don't ask me to make a fool of myself." "No, no, nothing of the kind, Edward. You can take lessons in elocution, and later try the role I spoke about."
- 58. "Take lessons in elocution? Dear, it takes money and time to do these things, and while I have the time I lack the other. "I will loan you the money, Edward, and later, when you make lots of it, you will pay it back to me. Can I tell my friend, the author, that I have his man for the role of the Frenchman?" "I don't know, Nellie; I must have time to think it over," answered Edward, who was too surprised to grasp the full meaning of this proposition. "All right, you will let me know to-morrow, won't you, Ed? and please take my advice and accept this chance to become an actor. I feel that you would succeed on the stage—truly, I do, Ed." After talking over this new scheme, Edward left Nellie, and went to his boardinghouse, where he wanted to consult with his friend Ben. The Russian saw no reason why Edward should not follow Nellie's advice, and he strongly encouraged him to do so; but to Edward, there were many points to consider. What would his parents say? What would Marie Louise think of him, if she learned that he wanted to become an actor? Had she not in her last letters begged of him to be good and true to his promises? He had not answered that part in which she also complained of the chilliness of his late letters. Another point that he felt keenly, was the eventual necessity to accept pecuniary help from Nellie; of course, he reasoned that it was to be paid back, but his sensitive nature made him realize that even then it would leave him under moral obligations to her, and his spirit of independence revolted strongly. But what was he to do?
- 59. "Try it on condition that if you don't like it, you'll go into something else," suggested the Russian, and Edward made up his mind to do so. The next day, Nellie was delighted to learn from Ed ward that he had decided to follow her advice. She immediately gave him two hundred dollars, which he accepted after much hesitation. He wanted to give her his note, but she would not have it. They went to the writer of the new play, and Edward was introduced to him as the gentleman who was to fill the role of the Frenchman. The author seemed pleased with Edward's appearance, and predicted success for him. The next thing was to find a professor of elocution. Nellie knew where to find one, so they went to him, and it was agreed that Edward was to take three lessons a week; and he felt much encouraged himself. That night Edward wrote home that he had found employment, but failed to give any details, and it was with much difficulty that he succeeded in writing a few pages to Marie Louise and these were certainly disconnected, and lacked considerable of the old lover's style which he used in other days. In a postscript he pleaded nervousness as an excuse for the nature of the letter, and hoped that she would not mistrust him. During the following day, he settled down to work with all his energy, with the result that he had very little time to worry. The more he studied the play in which he was to take part, and of which he had been given a copy, the more he liked it.
- 60. He called upon the author, with whom he at once became on friendly terms, and met many actors there, who seemed to be very nice people; gradually Edward became more and more one of them. Every day he spent some time with Nellie, who was most pleased with his success, and once more the world seemed to be right. The company of which Nellie was the star was billed to in New York City about a week later, and when Nellie told him that she would be absent for four weeks, they felt that they would much miss each other, but agreed to write every day, and then four weeks would soon pass. While Nellie was gone, Edward was induced to join an actor's club, and was given an opportunity to study the life of that class of society. Edward spent much of his leisure time in the club rooms, where he could read many journals published in the interest of stage people. The membership of this club was composed of actors out of employment or playing in the city. Edward became acquainted with a great many of them and was surprised at the number of bright young men who were wasting their time, apparently waiting for a mere chances of some engagement. Some of them were young in years, beardless yet, but they looked old, and were "old-youngs," showing upon their faces the ravages of fast life. The walls of the club rooms were covered with lithographs of modern actors, among which Edward noticed Nellie's. Among the members of the club he felt a special liking for an old man, who; in turn, seemed to take much interest in him. This old actor, past sixty, had been at one time a very famous man; in fact, had enjoyed a national reputation-but unfortunate speculations and old age had
- 61. reduced him to poverty, and he was living on a pension paid him by some benevolent actors' society. He offered to help Edward in his work, and was so kind to him that Edward made a confidant of him. When the old man heard Edward's story, tears came to his eyes and he said: "Poor boy—my life was started like yours—and I pray you to abandon the idea of going on the stage. The life of an actor is the most miserable any one can live—of course, there are exceptions; men who are born actors, and find success at each step—but they are not many, and even among them you will often find unfortunate beings whose life is a drudgery. You are young, you left good parents who expect much of you; you have a sweetheart in your little native village, whose love is of the truest kind. Hers is not the result of a passing fancy and you don't want to break her heart, do you?" "No," said Edward, greatly affected by the old man's talk. "And," continued the old actor, "suppose you should meet with some success on the stage. That does not mean that you will make money, no, the salary that you will command for the next ten years, granting that you will be successful, will not be more than enough to pay your expenses; and remember, my boy, once an actor, you will never be good for anything else; unless you are an exceptional man. Of course, you are starting under good auspices. Miss King is a great singer, and somewhat of an actress, but she does not know how soon her voice will fail her. She is of an erratic nature and possesses a golden heart, but she is a mere slave to her emotions, and the proof is the way she became interested in you, my boy. I do not want to be harsh on her—no—she has befriended me more than once; but, Edward, she has a right to cause her own misfortune, not
- 62. yours. It was through an accident of this kind that the doors of the stage were opened to me. I was young then, young as you are. I loved a woman, and she said she loved me. I left everything to follow her on the stage, and the only sunshine of my life was during the first few years of our married life. But what is a couple of years of happiness when a whole life of misfortune is to follow? I will not tell you what happened," said the old man, feelingly, "but she tired of me. Her emotional soul made her heart beat for another, and we parted! She died a miserable death—craving my pardon, which I gave her, because she was not to blame. It was her nature, and her vocation was conducive to such things: I have never told this story to another, and to-night, when I tell you, it is because I want to save you-for your sake, for your parents' sake—for your sweetheart's sake!" Edward was stunned. He could not speak; he simply stared at the speaker, who wiped his eyes. After a moment of silence he said, "My God, what will I do?" "Young man, what would you have done had you not met that woman?" "I would have gone West," he answered. "Well—go West now. Go, before she comes back and has you under her influence. Go, and you will feel all the better in time." "But it would be dishonorable to go in this way, with her money," said Edward.
- 63. "Ah! would it not be much more dishonorable to use her money to bring unhappiness to her and to yourself? And you can repay that money later—in fact, you will repay her much sooner if you go away than if you stay and go on the stage." In his heart Edward felt that his adviser was right, and he thought he could bear the voice of Marie Louise saying, "He is right." "I'll follow your advice," said Edward, shaking the old man's hand tenderly. "God bless you, my boy! I feel that I have done a good act in my late days of life, and I know that you will thank the day you met me when later you think of this. Where will you go?" "I don't know," answered Edward; trying to smile. "I have a friend out in Montana who owns a big ranch. He is an old classmate of mine and I often go and spend the summer months with him. I will write a letter which you will take to him. He will give you something to do; it may not be very fine work, but I will guarantee that it will be healthy and conducive to happiness. Do you like horses?" "Do I?" spoke up Edward, brightening considerably; "I should say I do." "Good! Meet me here to-night at eight o'clock," and the old man walked out. Edward lingered at the club for a short time, then went to his boarding-house, where he found his friend Ben waiting for him.
- 64. "Ben, I am going to leave the city," he said, after sitting down. "Going to New York, I suppose," answered the Russian, smiling, and thinking that Edward had decided to follow Nellie. "No, sir, I am going West. I have decided to quit the idea of going on the stage." "What! Going West? What's the matter; Ed, are you crazy?" "No, I don't think I am crazy, but I may have been," and then he explained the whole thing to his astonished friend, who finally agreed with him, but was sorry to part with Edward, and told him so. "Never mind, old boy, we will meet again, when we have settled in life," said Edward, beginning to arrange his trunk for his early departure. After supper he and the Russian walked to the Actors' Club, where the old man was waiting, with a letter addressed to Mr. Frank Goodnow, Grass Village, Montana. The three sat and talked until late. The Russian took a great fancy to the old actor, who in turn was favorably impressed by Ben. This meeting was the beginning of their friendship, and they visited each other, finding much pleasure in their relations. It was decided that Edward would leave the next morning, and the old actor agreed to be at the station to bid him good-by.
- 65. When they returned to their room, Ben went to bed, but Edward sat down writing letters until late in the night. Among these letters, one was difficult to write satisfactorily, and he wrote many before he was satisfied with the one he was to send to Nellie. He bad decided not to let her know his whereabouts; this, at the suggestion of his friend, the old actor. The letter he decided to mail to Nellie, read as follows: "DEAR AND KIND FRIEND NELLIE: After much thinking, I have come to the conclusion that I was not born to be an actor, and furthermore, that it would not be right for you and me to carry on our little romance. Life is not a dream, and while I have greatly enjoyed our little trip in dreamland, I foresee the day when we would both have to face life in its reality, and I feel that bright as life has been with you thus far, the day is not far distant when we both would see the clouds of unhappiness accumulate over our heads— and I know it is better to part in sunshine than in the shadow of unhappiness. I cannot find words to express how grateful I feel toward you for your extreme kindness to me. I leave it to your kind heart to imagine the greatness of my gratitude, and the immensity of the sacrifice I now make. The moments spent in your presence were the happiest of my life, and my soul never knew how much a human being could enjoy the happy dreams of life until I came under your influence. I will always remember you as the brightest star in the firmament of my life, and I will pray that you may never know the bitterness of misfortune. With a last loving kiss, good-by, and forgive me! My friend, Ben Oresky, will some day pay you back the loans you made me. "Yours, with best wishes for your future happiness, EDWARD."
- 66. He could not help but shed tears as he sealed this letter, but at the same time he felt satisfied. He felt like a man after accomplishing a hard duty; but it was done and he was almost proud of the fact. The next morning, at the station where Ben accompanied him, they met the old actor who, true to his word, was there to bid him good-by. Once more Edward was carried to an unknown country, but this time he felt easy. He was strong with the feeling of having sacrificed much for the sake of his duty, and already there seemed to be much more room in his heart for Marie Louise, of whom he could not think without blushing. After a day and a half of fast traveling he arrived at Grass Village where he was met by Mr. Goodnow, to whom he had written. This gentleman was a real western type, and Edward was pleased with the cordial manner in which he was received. After being taken to the house, Edward gave Mr. Goodnow his letter of recommendation from his old friend, and went upstairs to a room to wash himself. When he came down, he met the whole family, and felt at home from the first. While Edward was getting acquainted with his new duties, his letter to Nellie had reached her, and as she read it, she felt hot tears come to her eyes, and for an instant her heart felt as if pierced by an arrow. She had never realized until then how much she really loved that young man. As she eat holding his letter in her hands, she saw her dream of anticipated happiness crumbled to pieces, and such a despair as had never before entered her soul came to her. "My God! My God!" she said, and then closed her eyes.
- 67. The heart of a woman is a strange thing, and Nellie's heart was one of the strangest. Having never before known what love was, she had all at once felt her whole being infected by a mighty passion, a passion such as no human being can feel twice, and now the object of her love had vanished. He was gone without even saying where. Her sorrow was almost as great as her love, and from this time Nellie King was a different woman. She broke her engagement in New York and came back to Chicago, where she tried in vain to learn where Edward had gone. The Russian had promised Edward not to reveal where he was, and he was true to his promise, hard as it was to refuse Nellie, to whom he owed his situation. For twelve months Edward had lived on Mr. Goodnow's ranch, and his reputation as the best and most fearless rider on the ranch, as well as the most graceful, was a recognized fact, and that was enough to make him popular. His little mare, a perfect type of that class of horses, called "bronchos;" was the prettiest and swiftest on the ranch, and he had named her "Nellie," and indeed, any woman would have been proud to give her name to such a beauty. There were twelve cowboys on Goodnow's ranch, and every week, one of them had a day off, which was spent at his own discretion. Cowboys as a class are a queer lot of men. They are fearless and brave to excess, and being isolated from society so much, they are often eccentric; but their eccentricity has its charms. The fraternal feeling which exists among these men is of the genuine kind, and they are exceedingly generous in helping each other in case of misfortune. They practice all sorts of manly sports, and the feats they can accomplish on horseback are wonderful. It is an easy matter for some of them to lean on one side of their saddle
- 68. while going at a great rate of speed, and pick up a small object on the ground. They are skillful shots in many ways, and one way that never fails to impress the "tenderfoot," is the shooting of a clay pipe at a distance of twenty-five feet, while held in the mouth of one of them, who apparently does not see much excitement in the act. It is great fun for them to "break in" a "tenderfoot," by which name they call any aspirant to the vocation of cowboy. The meanest bucking bronco is brought to him to ride and behold! if the poor candidate cannot hold on to the saddle while the kicking brute is playing circus, the cowboys add to the excitement by their yells, often throwing small stones at the bucking cayuse. Edward went through all their initiatory proceedings, and came out with the respect of the lookers-on; his popularity counted from that time. Since his departure from Chicago, Edward had received many letters from his Russian friend, but very little had been said about Nellie. He was now a different man, not only in his general appearance, which was much improved by the open air life, but also morally. He had sent two hundred dollars to Ben, who paid it over to Nellie, and while he still felt more than a kindly feeling toward her, it was nothing like the old passion. On their "day off" cowboys usually go to some saloon, where they drink and play cards, and generally have as exciting a time as they can to make up for the monotony of their life in the field; but Edward preferred spending these days at the home of his employer, whose daughter Grace showed much partiality for the French lad, or French Ed, as he was now called by every one on the ranch.
- 69. Mr. Goodnow's only daughter Grace was a splendid young lady of eighteen, and quite a musician. She was very small and her face was too baby-like to be called real pretty, but her large blue eyes were soft and full of melancholy. She was a very interesting talker, and her horsemanship could not be excelled. She never failed to cause a smile of satisfaction on her father's face whenever she mounted Topsy, her spirited little thoroughbred black mare. Grace always looked ahead to the time when French Ed was to come into town, because she took much pleasure in his company. It was great fun for her to ride his mare Nell, while he rode Topsy. Together, they would take long rides, sometimes taking their lunch with them, and stopping by some little running brook, where in the shade of some tree they would eat and enjoy life. Grace was very much interested in everything that pertained to Edward's life. She too questioned him about his past, his schooldays, his folks, and one day she gave him one of her pictures to send to his sister. She never seemed to tire of hearing him talk, and he always found much pleasure in talking to her. She admired him with that admiration that often leads to love, while he liked her with that feeling that is more than friendship and still cannot be called love. At times, Edward thought that he would like to take her little baby face in his hands and kiss her on the lips; but he knew what the result would be, and he contented himself in imagining how good it would be. Once, while Edward was singing a new song with Grace at the piano, he bent to see the notes, until his face rubbed against hers, and then he felt a strange dizziness come to his brain, and was raising his arms to put them around her neck,
- 70. when she suddenly stood up and looked him straight in the eyes, and said, "Ed—" Had she slapped him with her little hand he would not have felt nearly so bad as he did facing those large blue eyes, so reproachful and sad. "Play 'El Diavolo,'" he asked her trying to hide his embarrassment, and she did. Early the next morning Edward was on his way to his work. He had a distance of about twelve miles to ride, and the morning was so perfect that life seemed a blessing on such a day. It was one of those mornings that fill the soul with exhilaration, and makes you think of the greatness of the Creator of this wonderful world. The little wild flowers along the road were covered with dewdrops, which glistened under the first sun rays like millions of diamonds. The air was full of that sweet fragrance found nowhere but on the vast Western prairies, and Edward was thinking how good life was. He was nearing the place where thousands of steers were grazing, and was humming the air of a French song, when all at once he heard a rumbling noise. It was distant and much like the noise one hears when approaching the sea. Edward placed his hand to his ear and stopped the mare, in order to make out what was the meaning of that noise. Raising himself on his stirrups, he looked in the direction where the rumbling sound came from and saw a dark spot which kept growing as the noise increased, until a moment later the ground was actually trembling, while a big cloud of dust indicated the coming herd of crazed steers. It was a stampede—and while Edward had never seen one before, he knew its dangers. His little mare was now rearing and snorting with great evidence of fright,
- 71. and Edward hardly knew what to do. He knew that to try and stop the maddened steers was an utter impossibility, but felt that it was his duty to try and do something to prevent the terrible disaster which is always sure to follow a stampede, when thousands of valuable animals fall of exhaustion and are trampled to death by the others, or, as sometimes happens, they dash themselves to death from some high precipice, where the first ones to reach are pushed over by the oncoming, until thousands have been sent to destruction. Edward knew this and he also knew that the stampede was now heading toward a dangerous marsh where thousands would perish, unless something was done to prevent them from going in the direction they were then taking. It is a fact that the best way to stop a stampede is to get the animals circling round, and this is often done by the cowboys, who ride with the leaders of the stampede, and lash them on the head until they gradually keep turning; but it is one of the most dangerous actions that a cowboy can be called to do. A stumble of the horse and both rider and horse are sure to be trampled upon by the frenzied herd, and of course, that means destruction. Edward could soon distinguish some of the other cowboys, riding furiously by the side of the running herd, but apparently unable to reach the leaders, and in a moment he made up his mind to do it himself, and immediately starting his mare at a rather slow canter, he let the stampede come nearer and nearer until he could hear their hard breathing; then, taking his long lasso in his right band, he half turned himself on his saddle, and while at a very rapid gait, he kept striking the furious beasts in the face, until they began to alter their course, and turn to the right, which was exactly what he wanted. By this time the other cowboys had joined him, and the great moving mass was now beginning to circle around; but just
- 72. then Edward's mare missed her footing and fell forward, turning a complete somersault and breaking Edward's right arm above the elbow. It was almost miraculous that he never let go of the reins, which he held with his left hand, but was again on the saddle as soon as his mare was on her feet, his right arm banging limp by his side, and causing the most excruciating pain as it moved with every motion of the mare. His face was also badly bruised, blood flowed freely from his mouth and nose, and when some of the cowboys came to his rescue he was riding on his saddle like a drunken man. They made a sling with a piece of lasso, and after bathing his face in the water of a near-by spring, they decided that two of them would go back to the village with Edward, while the rest would remain and watch the still excited herd. They started very slowly, knowing that the motion caused by cantering or galloping would make Edward's arm pain him much more; but Edward, after inquiring if his mare was badly hurt, and being told that except for some blood running from her nose, she seemed to be all right, they were surprised to hear him say: "Boys, let's go a little faster or we will never reach home." The ends of the fractured bone could be heard grinding against each other at the galloping motion; but had it not been for the cold sweat that covered his pale face, no one would have known that Edward was suffering intense pain, except for the gritting of his teeth now and then. At last they reached Mr. Goodnow's, and when Edward was helped into the house, he was so exhausted that he could not speak. The two other cowboys told Mr. Goodnow of the occurrence and of the heroic action by which Edward had saved many thousands of dollars.
- 73. "To hell with the steers!" said the rancher. "I would rather have lost the whole damned lot of critters than see this boy crippled and suffering like this." When the doctor came, he said that Edward had sustained a compound fracture of the humerus and that it would take many weeks, in fact, two or three months before he would be able to use the arm. He also suggested giving chloroform, to reduce the fracture and set the arm, but Edward smiled faintly and said, "I guess I can stand a little more, doctor; go on with the job." After the arm was set, the doctor mentioned that it might be better if his patient was taken to the hospital, where he could see him every day. "No, sir—we'll take care of him here, Doc; and don't spare the expense. Come every day, and I'll stand the bill myself," said Goodnow, and Edward noticed an expression of satisfaction upon Grace's face. She washed his face carefully, and tenderly, and from this time she was his nurse, and a more faithful nurse never lived. When the doctor came the next day, he found that Ed ward had not slept all night, and that while his arm was not very painful, his head was a source of great suffering. After taking his temperature, the doctor anxiously examined his head and ordered ice-packs to be continually kept on it, and taking Mr. Goodnow aside, the doctor informed him that Edward was suffering from cerebral fever, and that he would likely become delirious very soon. Late in the afternoon, while Grace was placing fresh ice upon his head, he suddenly raised himself in bed, and grasping her hand he began to talk excitedly; but as he spoke in French, she could not
- 74. understand him. Still, from the strange look in his eyes, she knew that Ed ward was delirious, and she called her father in. "Lie down, Ed, lie down, like a good fellow," said Mr. Goodnow. Edward stared at him an instant, and then fell heavily back in bed, still speaking French. After a while, he sat up again, and this time excitedly began to talk in English, asking, "Where is Nellie?" "She is in the stable; lie down, Ed, lie down, my boy; Nellie is all right," said Mr. Goodnow, carefully pushing him back. "I want to talk to her—bring her in here-I want her to sing for me —please bring her in here!" "Poor fellow, he is completely out of his head—he wants to hear his mare sing," said Goodnow, who could not help but smile at the idea of Edward's mare singing. Then Grace came in, and when Edward saw her, he seemed pleased, and trying to raise himself, he said: "Please, Nellie, sing me that old song—I mean that French song, you know?" Grace looked at him, and tears came to her eyes when she noticed that tender and pleading expression on his face, and she hurried out of the room. "She is mad at me, or she would not refuse to sing for me—oh, just once—let me hear 'Rendez moi ma patrie'." From this time Edward was delirious and failed to know any one around him, and the doctor's prognosis was not very encouraging as to his ultimate mental recovery.
- 75. A great part of the time the poor fellow spoke French. It was much as if the cruel winds of adversity had blown back the pages of his life already lived, and he was apparently living them over again. He spoke of his mother, Marie Louise, Benjamin, Nellie, but seldom mentioned the name of Grace. During many weeks he remained delirious. His arm had got well enough to permit him to move it without pain, but the light of intelligence seemed to have left him forever. His face was emaciated, and his eyes had lost their old-time brightness. A strange phenomenon was gradually changing the color of his hair from brown to white, especially on one side, where he had struck the ground when his mare stumbled, and his appearance was that of a man at least ten years older than he was. During all this time many letters bad been received at his address, but when handed to him, he never displayed the least interest, or tried to read them. One day, Mr. Goodnow came back to the house with his friend, the old actor, who had taken so much interest in Edward, and it was really pitiful to witness the sorrowful expression on the actor's face as he held the hand of Edward, who failed to show any sign of recognition. When later, his old friend Ben came, it was the same thing, and the Russian cried like a child; but Edward showed no sign of any emotion, and his case was considered entirely hopeless. He got well enough to roam around, but he never was allowed to go alone, and Grace was his most constant companion. She led him to the most beautiful places on the ranch, and once, while sitting in the shade near a flowing brook, where she read to him, she felt sure that he had given sign of returning intelligence when he had said,
- 76. with a pleased smile, "Beautiful," but alas, it was only a flash, and his condition remained the same. A few days later, during the quiet of the night, the horrible word "fire" was heard in the Goodnow's house, and the next instant the flames were coming through some of the windows. It seemed evident that everybody in the house was doomed to destruction, and when a great crash was heard, Goodnow leaped from a second-story window, where he expected his wife to follow; but the poor woman, thinking of the danger of her daughter, walked to the other part of the house, reaching the girl's room in time to see her escaping through the window. Then, already suffocating, she only had strength to reach the same window, but not enough to raise herself and leap over it, and the next instant the flames had enveloped her and she died a victim of her motherly love. Grace, crazed by her anxiety for her parents, was running around and calling her mother and father, and when she found her father alone she knew that her mother was dead, because the part of the house where she slept was already nothing but a burning mass. Until then, no one had thought of Edward, as it seemed useless to think of saving anybody who might still be in the burning house, and when Grace cried out: "Edward! Edward! where is he?" As his room was on the ground floor she went near his window, and smashing it, called him by name, and God knows it was not too soon, as the fire, which had apparently neglected that part of the house, seemed to come to it with renewed energy, and a moment later the whole house was wrapped by the cruel flames. When some of the neighbors, attracted by the glare, came to offer assistance they saw the most pitiful spectacle possible.
- 77. Grace was crying and running around calling for her mother, while Goodnow stood by, sobbing like a child. At a little distance from the house, sitting near a large tree, was Edward, looking strangely at the burning house, as if fascinated by the sight; and now and then clapping his hands, he would say, "Good play, is it not, Ben? But why don't she come back and sing again?" A most horrible crash was heard, and Goodnow's home was no more. It was now nothing but a burning pile of cinders and it was with great difficulty that friends could induce Goodnow and his daughter to come away from the terrible scene, while Edward himself seemed to want to linger. At last they all went to the nearest neighbor, two miles from Goodnow's place. Later, they tried to find something of the remains of Mrs. Goodnow, but so well bad the fire done its work, that not a trace of the unfortunate woman could be found, nor anything of the old actor, who had failed to save himself from the fire. Goodnow, with the energy which is characteristic of the western ranchman, decided to rebuild at once, and while doing it, he sent his daughter to Flatville, the nearest city, where one of his brothers was living, and Edward to St. Mary's Hospital in the same city. Edward did not appear to realize that he was in a new place, and remained the same careless and helpless being, with the difference that he stayed in bed a great part of his time, while at Goodnow's home Grace used to make him take long strolls on the ranch. She was still his faithful friend, and every day she brought him flowers, and now and then she read to him as she used to. After he had been in the hospital two or three weeks, a new sister came, and took charge of Edward, among her other patients. Her
- 78. name was Sister Mary, and a sweeter face had never worn a hood. From the first time she came in Edward's room her voice seemed to have a peculiar effect upon him, and while she was near him his eyes always followed her, which fact was rather strange considering that he had, ever since his illness, paid no attention to any one. The doctor noticed this fact and jokingly told Sister Mary that she had come in time to save his patient. One day, Sister Mary was surprised to hear her patient ask her to sing, and as she looked at him, he said: "Please, Nellie, sing that old song, won't you?" Sister Mary turned pale and would have fallen to the floor, had the doctor not happened to be coming in. "Please, Nellie—sing, only once, won't you?" Edward was imploringly repeating. "Still wanting his old mare Nellie to sing for him," said the doctor, before he noticed Sister Mary; then seeing her reeling and ready to fall, he said: "What's the matter, sister? Are you sick?" and held her up. "Please help me out of this room, doctor," was all she said, and to the doctor's questions later, she answered that her name used to be Nellie, and that she used to sing, and she added. "I used to know him." The doctor saw at once that there was a romance somewhere, and in his anxiety to experiment, he begged sister Mary to come back to the room of his patient and sing for him.
- 79. "It may be the key that will open his brain to let in the rays of intelligence," he pleaded, and at last Sister Mary consented to go back and sing. "Edward, Nellie will sing for you," said the doctor to his patient, watching carefully the expression of his face. "Good!" said Edward, clapping his poor bony hands together, and showing evidence of great satisfaction upon his face. At the foot of the bed, facing the invalid, stood Sister Mary. Her face was pale and her lips were trembling, but by a supreme effort she sang: "Rendez-moi ma patrie, Ou laissez-moi mourrir, Rendez moi mon pays Ou laissez-moi mourrir." At the first sound of the sweet voice, Edward sat up in bed, and watching eagerly the face of the singer, his eyes filled with tears. When the voice ceased he fell back saying, "My God! Nellie!" "I have killed him," said Sister Mary. "No, you have saved him!" answered the doctor, bending over his patient, whose face was covered with cold sweat, and every nerve twitching. "Sing again," commanded the doctor, and once more the sweet and tender voice of Sister Mary was heard, and Edward opened his eyes.
- 80. When the song was over, he looked strangely at the doctor, and said, "Where am I? Where is Nellie?" "You are all right," said the doctor; and Sister Mary walked out of the room, going to the little chapel of the hospital, where she prayed the most fervent prayer of her life. "My God. Give me the strength to keep away from him," she prayed, and her prayer must have been heard, because Edward never saw Sister Mary again. From this time Edward's recovery was gradual and uninterrupted. From the time he first lost his reason he remembered nothing. A month later he was in Chicago visiting his friend, the Russian, and from there he went to his home in Canada, where no one ever expected to see him again, except Marie Louise, his first love, who said that she always felt that he would come back. "Tell me of your life," she asked him. "It would do you no good," he said, and never told her; but he often asked her to sing, "Rendez-moi ma patrie."
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