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The majority of the organizing systems we’ve seen so far have focused on organizing “things”, whether they are physical objects (a book), digital surrogates for those objects (an item in a library catalog), or digital resources that do not have any parallel in the physical world (an eBook). But given that an organizing system is “a collection of resources and the interactions they support,” if the definition of “resource” is stretched to include concepts, almost any social, cultural, or political establishment may be categorized as an organizing system. Through this process of reframing social structures through the lens of an organizing system, we can gain new insight into the underlying rules and categories that define – often covertly or even subconsciously – much of our daily interaction with the world.

One of the more interesting examples is the economy. Although economic systems do arise organically, as with primitive bartering systems, the American economy very much intentionally arranged – the Federal Reserve, the SEC, and other supervisory agencies determine how money should be created and what we can do with it. They also define and regulate the interactions supported by the system, some of which are “buying”, “saving”, and “borrowing”. But identifying the resources component of an economy-turned-organizing system is not as easy. You could say that the “collection of resources” is all of the money in the U.S. economy, but the nature of a single resource in that collection depends on the unit of analysis – is it the penny, the dollar, or something more abstract like a share of stock or a loan?  Furthermore, the same unit of money can exist in multiple forms, which blurs the distinction between primary, secondary, and
even tertiary resources.  Until the U.S. ended the gold standard in 1971, paper and coin money acted as a physical surrogate for another tangible resource, an amount of gold or silver. And from the ’50s onward, these surrogate resources have themselves been represented by digital resources in a bank or credit account. At present, there are many more “dollars” in accounts than there are in the physical world, and the vast majority of transactions are digital, both of which indicate that the digital representations of money are now the primary resources of our economy, and actual tender is a rare example of physical metadata.

If the resources in our economic organizing system are digital in nature, do we even need a physical surrogate? Can money be born digital? Furthermore, once all money is digital, will the economy still need human intervention, or can we create “smart currency” that is self-regulating and thus decentralized? These are the questions posited by proponents of Bitcoin, the only “alternative” currency to gain any substantial attention from mainstream audiences. In this article, “The Rise and Fall of Bitcoin,” author Benjamin Wallace outlines both the achievements of Bitcoin and the challenges the currency has encountered in its short history. In looking at both of these sections, it becomes apparent that both the rise and the fall of Bitcoin can be correlated with how well the technology met the requirements of its role as an economic organizing system.

The primary success of Bitcoin is how it handles the problem of resource creation. An economy cannot have resources created arbitrarily, or else inflation ensues. The algorithm behind Bitcoin is complex, but the metaphor is simple: Bitcoin is mined, the output of computer running through complex puzzles, at a rate of about 50 coins every 10 minutes. Another Bitcoin achievement is how the system is maintained: each transaction is anonymously logged and broadcast to the network, which ensures that coins are not forged and also negates the need for centralized regulation.

The primary failure of Bitcoin, on the other hand, is that it does not enforce an access policy. It is up to the user to store their Bitcoins in a way that they don’t get stolen. In the real world, this is less of a problem because we entrust our currency to banks, which employ security measures beyond what one individual can afford. But there is no (trustworthy) company that does the same for Bitcoin, and money that is purely digital and always online is a far too tempting target for hackers. If the current trends continue, it is likely that one day we will no longer use physical currency or in-person banks, and at that time we will probably see the same security measures (and FDIC guarantees) for digital resources as we do with physical ones and their surrogates. But until that happens, a pure digital currency is not viable because it does not meet all of the requirements of an economic organizing system.