Lee, Seung Cheol (2020)
Cultural Studies, Online.
Abstract. First, it was just tech people. Now, literally everyone is interested in bitcoin’, said CNN News while reporting on the bitcoin mania that haunted South Korean society in the winter of 2017–2018. This study takes that speculative frenzy as an entry point for exploring lay bitcoin investors’ experiences and the ‘magical’ features of contemporary financial capitalism. It first situates the bitcoin investment boom in the contexts of South Korea’s post-developmental transition and the rise of mass investment culture. Drawing upon participant observation of online communities for South Korea’s bitcoin investors, this study then demonstrates how lay bitcoin investors’ daily beliefs and practices are distinguished from more traditional economic subjectivities – namely, disciplined workers and rational investors. Lay bitcoin investors present themselves not simply as calculative investors but also as enchanted gamblers who often rely upon magical formulas and rituals that express their hopes and despairs in the face of an uncertain future. Instead of dismissing their beliefs and rituals as ‘irrational exuberance’, this study argues that their cultural practices should be understood as a reflexive response to the ‘magical’ mechanisms of the financial market based on self-referential valuation and self-fulfilling performativity. In examining how the logics of uncertainty and magic are returned at the heart of contemporary capitalism, this study consequently seeks to situate the lay investors’ struggles in dealing with the ambiguous future within the broader transformation of the human condition during the triumphant rise of financial capitalism.”
Extract: “In a word, without any consensual objective value, the price of bitcoin is determined and swayed by what market participants think about the value of bitcoin. As André Orléan (2014) argues, this self-referential condition – in which the prices/values of financial commodities are determined self-referentially by the market’s estimation without any external standard – is not an exception but a rule in all financial markets. Keynes once deftly described the financial market’s self-referential condition through his famous example of a newspaper beauty contest in which the readers are asked to guess the future winner of a beauty contest from pictures:
‘Professional investment may be likened to those newspaper competitions in which the competitors have to pick out the six prettiest faces from a hundred photographs, the prize being awarded to the competitor whose choice most nearly corresponds to the average preferences of the competitors as a whole; so that each competitor has to pick, not those faces which he himself finds the prettiest, but those which he thinks likeliest to catch the fancy of the other competitors.” (Keynes 1936, p. 156)
That is to say, in this type of self-referential game, what matters is neither individual preferences nor the ‘intrinsic’ beauty of the beauty-contest participants. Players instead have to work out which participant (or commodity) might be perceived as the most beautiful (most valuable) by the majority of the other players. The correct answer that players seek to find is then determined not by ‘objective’ criteria or external references but by the other players’ choices. Orléan (2014, p. 224) argues that, by the same token, in the self-referential financial market, ‘one does not act in accordance with what one believes, but with his expectation of what the market believes’. To thrive in financial markets, investors must anticipate the opinions of other market participants. What determines the price of a financial commodity is thus people’s beliefs about what other people believe, or collective belief on collective belief (Orléan 2004, 2014, LiPuma 2016).” (p. 16)