#62: Peak Pegasus
A South Korean company called Shinil Group recently created a cryptocurrency called Shinil Gold Coin after announcing that it had a discovered a 100-year-old Russian shipwreck containing 200 tons of gold bullion. The company attracted more than 100,000 investors in its token by promising to pay out dividends backed by the $125 billion (!) in gold that it had pulled from the shipwreck. What followed wasn't surprising: "The company announced that it had failed to identify the gold it had previously believed to be aboard the sunken ship." Footage of the wreck's discovery disappeared from YouTube, the coin's website went offline, and a fraud investigation commenced. The notion of nonexistent gold backing a cryptocurrency is little more than a new twist on a traditional scam, but it presents an interesting contrast with other efforts to harvest money in imaginary places. Video game currencies, for example, accrue real-world value, driving unsavory practices such as sweatshop-like gold farming and using Clash of Clans to launder money. By many pre-digital standards, Shinil Gold Coin and game currencies seem superficially similar—neither is "real"—but each occupies a different position on the value spectrum, suggesting one is actually more real than the other.
Another ship appeared in the news last week for an amusing reason: An American bulk carrier, the Peak Pegasus, has spent the last month sailing in circles with its cargo ($20 million worth of beans) after narrowly failing to deliver them to China before new tariffs between the two countries kicked in. The penalty for making the delivery is steep enough that it's worthwhile for ship to keep roaming for several more months while the cargo's owners search for alternate buyers. If there's a common thread between this vessel and the fraudulent gold ship, it's that the world's oceans are yet another bizarre theater for the increasingly cryptic operations of financial abstraction in the tangible world. This has always been true—history is full of strange monuments to bygone incentive systems—but the opaque algorithmic nature of the present day yields outcomes that seem especially weird.
Again, abstract forces and "algorithms" are as old as civilization itself, and have always helped to shape the world. Every abstraction that lasts long enough eventually becomes something we collectively accept as real. Matt Levine, describing how attitudes toward the US dollar have evolved, pointed out that the end of the gold standard didn't undermine the currency because nobody was really exchanging dollars for gold anyway: "Now the pieces of paper work because they work, not because they reference some other thing." The internet is already accepted as part of the "real world" in a way it wasn't twenty years ago, but other virtual real estate, from blockchains to video game universes, are still en route to similar acceptance. Marvel at the weird interplay between those environments and familiar institutions like shipping while you still can; eventually it will all be part of the same landscape.
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