This last few months have sparked my interest in cryptocurrencies, which has also been an amazing time to observe and decrypt human behaviors. The dawn of a new system causes the surfacing of thinking patterns that are generally hidden under the thin envelope of everyone’s habits. The rise and fall of Bitcoin’s value is also the opportunity to witness the anxiety and the panic that every change in the system indubitably creates. Among my favorite patterns holding people in the past, the sudden popularity of Bitcoin emphasized one in particular that I needed to talk about : the illusion of control. This psychological phenomenon explains a lot of things you hear and see around Bitcoin.
Technology is magic
In the summer of 2017, I contemplated seriously for the time investing in Bitcoin. I bought a few decimals and I started reading about the subject. I had free time and I wanted to understand how Bitcoin, cryptocurrencies and the blockchain work. As soon as I had a good grasp on the concept, I started taking part in conversations with the average fellow human being about cryptocurrencies. This is when I began making interesting observations about people thought patterns.
In the first place, Bitcoin confirmed an idea I had for quite a while : people don’t understand technologies they use every day. And I am not only talking about Bitcoin. When I wanted to explain the blockchain, I went to the basics.
“ -Do you know what a peer-to-peer system is ?”
“You know that software you use to download movies for free ?”
“-Oh yeah !”
“-It works on a peer-to-peer system”.
After a while, I gave up explaining what the proof of work mechanism or the hash are. Most of the people have zero knowledge in technology. They don’t know how the Internet works, how the cellphone network works, how an LCD screen or a microprocessor work. I am not blaming them, they are just parts of a system where it is more important to teach children who dead kings were instead of learning about how the Internet works. They then know everything that happened in the Middle Ages, but they treat their smartphone as a shiny block of metal that displays stuff when they touch the glass.
This is then no wonder if they are wary of Bitcoin. From their point of view, Bitcoin is just some virtual non-existent piece of modern witchcraft you buy online that can lose its value in a few minutes. Without the right knowledge, they cannot understand the revolution that the blockchain is. They are kept in a state that forces them to see the Internet only as a place to buy cheap stuff, chat for hours about nonsense and dream of a life they will never have through Instagram. Imagine what would happen if everyone had the knowledge to build a web server and create a website…
Any sufficiently advanced technology is indistinguishable from magic.
(Arthur C. Clarke)
You probably read this quote often to illustrate the first encounter between tribes living in the jungle and the modern world, but it is still applicable to the average first-world-country citizen. For them, technology is magic, you press some buttons and you get what you want, whatever happens inside the machine.
Money is not real
The second major issue when you explain Bitcoin to people is that they think their paper money is real ! They can touch it, they can go to the ATM and withdraw it whenever they want, they see the right number on the banking app, it’s here.
Now imagine one second you wake up in the morning. You check your banking app. It shows 0. You think there must be an error. You go to the ATM. The ATM is out of order. The bank branch office is closed. The phone line is disconnected. The bank website is down. Still feel like your money is yours ? Yes, of course, you can go and sue the bank with the rest of their customers (although you also need money for that). But it takes time. You find a few coins between the couch cushions, enough to buy some bread. You start asking yourself if that money was really yours. You watch the news. People in Venezuela are desperate because their national currency they were touching and holding in their hands has become a worthless piece of paper.
Long story short : you don’t own your money. You freely give all your money to the bank hoping they will give it back to you because a few pieces of paper assure you they will (hahaha!) You work for the bank. But in order to make you work for the bank, you must be immersed in a system that makes you believe you have money. While you see numbers on the banking app, the bank is actually playing with your money, investing it, buying stuff, because they know well you don’t need access to all your money 24/7. The bank and the system around it want you to believe it is your money so you don’t question the whole system. That way, you keep bringing your hard-gained money every month and give it to the bankers, no question asked…
The illusion of no control
Because banks give people the illusion they are in control of their money for decades, it is very hard to imagine a system where people don’t need banks. No one likes the banks. However no one wants to get rid of them. This brings us to the title of this article : the thing delaying the extinction of the bank system is the illusion of no control given by Bitcoin.
The illusion of control is a well-known phenomenon. People are more likely to partake in risky activities if they feel like they have some kind of control over the activity. For this reason, a lot of people are scared to fly (because they cannot control anything once the plane is up in the air) while virtually no one is scared of driving a car, even though the risk of dying in a car accident is thousands of times higher than the one of dying in a plane crash.
What I call the illusion of no control for Bitcoin is the fear of embracing Bitcoin and the blockchain technology because of a lack of knowledge about them. The cryptocurrency system is at the opposite spectrum of the bank system : in a bank system, you delegate the responsibility of managing your money to a third party by actually giving your money away and hoping you can get it back so you can continue your futile activities ; in a cryptocurrency system, you are in total control of your money, you decide where it goes, what it does and you are responsible for it. However, this also implies that you are responsible for your mistakes. If you send bitcoins to an Ethereum address and lose them, there is no one else to blame but yourself.
Bitcoin ultimately shows that people are kept in a childhood state where they are deprived of their responsibilities (and their money) by the banks and the governments, that the knowledge that may bring them to adulthood is presented as too complex and futile and that actually a lot of them are happy to be treated like children : they don’t have to make big decisions and when something goes wrong, there is always somebody else to blame…