Bitcoin Cometh: Why Digital Money Is Bound To Take Over

Though physical money will still be around for a while, the spread of digital money is inevitable for four basic reasons: efficiency, hygiene, durability - and anonymity.

Physical representation of the Bitcoin digital currency
Physical representation of the Bitcoin digital currency
Fernando Chávez*

MEXICO CITY — The history of currency has entered a surprising and mysterious phase, with the arrival of digital money, presented like some novelty feature in a sci-fi film. The media has amplified this fascinating leg of financial history as their noisy vocation requires, mixing fact and fiction while reporting on Bitcoin, that has become the digital money most in demand in the world (there are others).

But beyond the hyperbole, this is a development that may soon become a major issue for central banks, precisely because it is bound to weaken their positions as exclusive emitters of money.

The costs and benefits of this digital innovation, we must all admit, are still far from clear. I suspect, however, that there will be a growing international consensus that such money forms will impose themselves, without the imminent disappearence of “our” money — coins and bills — and even less so credit and debit cards or electronic transfers. The writing of checks, on the other hand, is already about to enter a display case for the money museums.

It is not about money disappearing then, but changing: from physical to virtual or digital. While the money we have known for hundreds of years may be palpable, money of the future will only be valuable. This will actually be far less traumatic as when humanity passed from merchandise-money to bank money – a currency ultimately based on confidence.

We may cite here two indisputable examples from centuries ago. Cocoa beans were used as money in ancient Mexico — and if people grew tired of handling them, they could always consume them, hot or cold. Or a more extreme case from the distant past, when a female slave could be used for payment in the Roman world, to become a companion or wife.

While change from merchandise-money to fiduciary money was traumatic, going from physical to digital money will have more benefits than problems. It is cheap to make and move, efficient as a means of payment, hygienic and as durable as can be. Clearly it would also be as vulnerable to forgery or theft as is money today. To suppose it would not, would be to suppose that human nature will change.

Let's be very clear: the coming monetary change is only technical in nature, not social; a matter of form, not content.

Of bubbles, and criminals

Before this new monetary future arrives, what will happen to digital money like Bitcoin? One can already say that is highly volatile. Digital bubbles can be seen ahead: this new financial asset has seen its value rise in the past year (it skyrocketed from $15 in January to just over $1,000 on Nov. 27, plunging again this week below $600), in the financially developed world and with the Chinese — who else? — attentive as always to such speculative movements.

It is also more or less clear that those fuelling a significant demand for this type of money are crime bosses, for whom this is a practical, very efficient and anonymous currency with no legal framework yet in place.

And as those tasked with controlling the legal monetary mass, what do the central bankers think? They are cautious, but optimistic. The most important one, Ben Bernanke, said that it may hold "long-term promise" if pertinent innovations ensure "a faster, more secure and more efficient payment system."

For these master regulators, any means of payment that is out of their direct or indirect control is of concern, above all if these will create inflationary pressures. I spoke some months back to a free-market economist who told me with some annoyance that the little exchange markets emerging in Mexico, with their illegal money use, were not efficient. I doubt it, I said, because if that were the case they would not exist, even if they contravene Mexico's money laws.

The physical money we use today, whose value is based on confidence among its users and the evolution of prices, will gradually move toward their own place in the money museums, as well. We don't know when, but it will. As far as I know my own Central Bank here in Mexico has no position yet on digital money, though I hope we shall soon hear what they think.

And what do our private banks and bankers think? They're already involved in all this, though arguably the best thing for them is that nobody controls monetary emission, so money can become an even more lucrative business. Economists on the right have proposed as much, though paradoxically, central banks, the state organs with the monopoly on regulating money emission, are absolutely packed with people who think this way. Imagine the Catholic Church in Luther's hands.

Technological changes are initially awesome, as was the case with the first people to ride a horse, or drive a cart, travel by train and board an airplane. There are no technological changes without pain, even if we later gorge ourselves on the welfare they generate. That's also how it is likely to wind up some day, not too far away, with digital money .

*Economist Fernando Chávez is a lecturer at Mexico City's Autonomous Metropolitan University.

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The Food Truck, A Sign That The White And Wealthy Are Moving In

In San Diego, California, a researcher tracked how in the city's low-income neighborhoods that have traditionally lacked dining options, when interesting eateries arrive the gentrification of white, affluent and college-educated people has begun.

Balboa Park Spring Fling Food Truck festival

San Diego Food Trucks via Facebook
Pascale Joassart-Marcelli

SAN DIEGO — Everybody, it seems, welcomes the arrival of new restaurants, cafés, food trucks and farmers markets.

What could be the downside of fresh veggies, homemade empanadas and a pop-up restaurant specializing in banh mis?

But when they appear in unexpected places – think inner-city areas populated by immigrants – they're often the first salvo in a broader effort to rebrand and remake the community. As a result, these neighborhoods can quickly become unaffordable and unrecognizable to longtime residents.

An appetite for gentrification

I live in San Diego, where I teach courses on urban and food geographies and conduct research on the relationship between food and ethnicity in urban contexts.

In recent years, I started to notice a pattern playing out in the city's low-income neighborhoods that have traditionally lacked food options. More ethnic restaurants, street vendors, community gardens and farmers markets were cropping up. These, in turn, spurred growing numbers of white, affluent and college-educated people to venture into areas they had long avoided.

This observation inspired me to write a book, titled The $16 Taco, about how food – including what's seen as "ethnic," "authentic" or "alternative" – often serves as a spearhead for gentrification.

Take City Heights, a large multi-ethnic San Diego neighborhood where successive waves of refugees from places as far away as Vietnam and Somalia have resettled. In 2016, a dusty vacant lot on the busiest boulevard was converted into an outdoor international marketplace called Fair@44. There, food vendors gather in semi-permanent stalls to sell pupusas, lechon (roasted pig), single-sourced cold-brewed coffee, cupcakes and tamarind raspado (crushed ice) to neighborhood residents, along with tourists and visitors from other parts of the city.

Informal street vendors are casualties.

A public-private partnership called the City Heights Community Development Corporation, together with several nonprofits, launched the initiative to increase "access to healthy and culturally appropriate food" and serve as "a business incubator for local micro-entrepreneurs," including immigrants and refugees who live in the neighborhood.

On paper, this all sounds great.

But just a few blocks outside the gates, informal street vendors – who have long sold goods such as fruit, tamales and ice cream to residents who can't easily access supermarkets – now face heightened harassment. They've become causalities in a citywide crackdown on sidewalk vending spurred by complaints from business owners and residents in more affluent areas.

This isn't just happening in San Diego. The same tensions have been playing out in rapidly gentrifying areas like Los Angeles' Boyle Heights neighborhood, Chicago's Pilsen neighborhood, New York's Queens borough and East Austin, Texas.

In all of these places, because "ethnic," "authentic" and "exotic" foods are seen as cultural assets, they've become magnets for development.

Food vendor at outdoor international marketplace called Fair@44.

Fairat44 via Instagram

A call for food justice

Cities and neighborhoods have long sought to attract educated and affluent residents – people whom sociologist Richard Florida dubbed "the creative class." The thinking goes that these newcomers will spend their dollars and presumably contribute to economic growth and job creation.

Food, it seems, has become the perfect lure.

It's uncontroversial and has broad appeal. It taps into the American Dream and appeals to the multicultural values of many educated, wealthy foodies. Small food businesses, with their relatively low cost of entry, have been a cornerstone of ethnic entrepreneurship in American cities. And initiatives like farmers markets and street fairs don't require much in the way of public investment; instead, they rely on entrepreneurs and community-based organizations to do the heavy lifting.

In City Heights, the Community Development Corporation hosted its first annual City Heights Street Food Festival in 2019 to "get people together around table and food stalls to celebrate another year of community building." Other recent events have included African Restaurant Week, Dia de Los Muertos, New Year Lunar Festival, Soul Food Fest and Brazilian Carnival, all of which rely on food and drink to attract visitors and support local businesses.

Meanwhile, initiatives such as the New Roots Community Farm and the City Heights Farmers' Market have been launched by nonprofits with philanthropic support in the name of "food justice," with the goal of reducing racial disparities in access to healthy food and empowering residents – projects that are particularly appealing to highly educated people who value diversity and democracy.

Upending an existing foodscape

In media coverage of changing foodscapes in low-income neighborhoods like City Heights, you'll rarely find any complaints.

San Diego Magazine's neighborhood guide for City Heights, for example, emphasizes its "claim to authentic international eats, along with live music venues, craft beer, coffee, and outdoor fun." It recommends several ethnic restaurants and warns readers not to be fooled by appearances.

Longtime residents find themselves forced to compete against the "urban food machine"

But that doesn't mean objections don't exist.

Many longtime residents and small-business owners – mostly people of color and immigrants – have, for decades, lived, worked and struggled to feed their families in these neighborhoods. To do so, they've run convenience stores, opened ethnic restaurants, sold food in parks and alleys and created spaces to grow their own food.

All represent strategies to meet community needs in a place mostly ignored by mainstream retailers.

So what happens when new competitors come to town?

Food vendor at outdoor international marketplace called Fair@44.

Fairat44 via Instagram

Starting at a disadvantage

As I document in my book, these ethnic food businesses, because of a lack of financial and technical support, often struggle to compete with new enterprises that feature fresh façades, celebrity chefs, flashy marketing, bogus claims of authenticity and disproportionate media attention. Furthermore, following the arrival of more-affluent residents, existing ones find it increasingly difficult to stay.

My analysis of real estate ads for properties listed in City Heights and other gentrifying San Diego neighborhoods found that access to restaurants, cafés, farmers markets and outdoor dining is a common selling point. The listings I studied from 2019 often enticed potential buyers with lines like "shop at the local farmers' market," "join food truck festivals" and "participate in community food drives!"

San Diego Magazine's home buyer guide for the same year identified City Heights as an "up-and-coming neighborhood," attributing its appeal to its diverse population and eclectic "culinary landscape," including several restaurants and Fair@44.

When I see that City Heights' home prices rose 58% over the past three years, I'm not surprised.

Going up against the urban food machine

Longtime residents find themselves forced to compete against what I call the "urban food machine," a play on sociologist Harvey Molotch's "urban growth machine" – a term he coined more than 50 years ago to explain how cities were being shaped by a loose coalition of powerful elites who sought to profit off urban growth.

I argue that investors and developers use food as a tool for achieving the same ends.

When their work is done, what's left is a rather insipid and tasteless neighborhood, where foodscapes become more of a marketable mishmash of cultures than an ethnic enclave that's evolved organically to meet the needs of residents. The distinctions of time and place start to blur: An "ethnic food district" in San Diego looks no different than one in Chicago or Austin.

Meanwhile, the routines and rhythms of everyday life have changed so much that longtime residents no longer feel like they belong. Their stories and culture reduced to a selling point, they're forced to either recede to the shadows or leave altogether.

It's hard to see how that's a form of inclusion or empowerment.The Conversation


Pascale Joassart-Marcelli is a Professor of Geography and Director, Urban Studies and Food Studies Programs at San Diego State University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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