Cryptocurrencies: Different communities, different motivations

This blog post is part of the Finthropology series Digital Human Finance. We present qualitative research to showcase the kind of insights that can come from deeper, human-focused studies and how they can be used to build new sustainable financial solutions. We focus on the story and its potential in each presented publication. 

The world is increasingly becoming digital. Many people already spend much time with like minded digital connections—either on social media or in the virtual worlds of gaming. As digital and decentral financial services evolve both in the real world and in the Metaverse, we need a deeper understanding of how people find their place in this new environment. This blog post introduces the findings from two articles studying communities built around cryptocurrencies. 

Hodlers and mentors in Prague and Bratislava

Martin Tremcinsky did ethnographic research over three years from 2017 to 2020 in Prague and Bratislava. The research included both observations of online communities and three months of participant observation in a café that encouraged payments in Bitcoins and had a Bitcoin ATM on the premises. He anchors his findings in the general theory of money as a means of payment, a store of value and a unit of accounts, but in this blog, we focus on his findings on community comportment.

Tremcinsky observes that members of the Bitcoin community are usually people between twenty and forty years of age, often self-employed or consultants in information technology, or else students. He observes that though anyone can be part of these communities there is a core group of active participants of about one hundred people. 

Most community members were politically right wing, believing in as little economic state intervention as possible, which is why they were drawn to the idea of Bitcoin as an anonymous currency based on a system that does not require trust in an issuing state. 

Through his observations, Tremcinsky identifies two different practices of use or consumption of Bitcoins. One is individual consumption in which people consider Bitcoins to be a store of value that is likely to grow in value (and therefore as a good investment). The other is social consumption with the mission of putting Bitcoins to use as a means of exchange (making purchases). 

Individual consumption: Hodling (store of value)

This group was observed to believe that there would be a general long term price rise in Bitcoin due to its limited availability. So despite very high short term price volatility, they would hold the coins even through periods of low prices. The term “hodl”—an anagram for ‘hold’—was developed in despair in 2013 by an inebriated community member sharing his decision to keep his position on Bitcoins despite high losses. 

Tremcinsky identified a particular case of individual consumption among a group of Bitcoin holders who try to add to the value of their holding by actively trading coins during periods of high volatility. He mentions that one of these groups was actually named “Bitcoin gamblers and speculators”. 

Social consumption: Spending (means of exchange)

Community members who viewed Bitcon as a means of exchange, rather than as an investment, played a completely different role as they tried to extend the use of Bitcoins to new users by teaching them how to pay with them, while also talking about the importance of Bitcoins as non-state trustless payment.  

Tremcinsky made these observations while doing participant observations as a volunteer in a café that accepted Bitcoins as payments. He tells the story of the “crypto-apostle” Mat’ko who spent hours in the café introducing customers to Bitcoins. As an enthusiast, he taught people how to create a wallet, how to buy Bitcoin, and how to buy drinks with them in the café using QR codes. Mat’ko also informedvisitors about the community and the advantages of avoiding state intervention. 

Though the two groups appear different, they share the enthusiasm for Bitcoins long term value. Even the social consumers who actually spend Bitcoins tend to replenish their holdings on Bitcoins quite quickly after. 

Dealing with volatility

Studying the outlook of people holding cryptocurrencies, Yathukulan Yogarajah did digital ethnography on cryptocurrency user groups in 4chan and Reddit. She uses narratives to analyze how these “netizens”, as she calls them, deal with the uncertainty and price volatility that characterizes these coins. 

Referring to the same story about ‘hodling’ as Tremcynscky, Yogarajah argues that cryptocurrencies in general may be productively analysed as a kind of storytelling where participants share experiences as part of the development of this new money form. She explains how this is done through the development and exchange of “memes” that help community members deal with the price volatility of cryptocurrencies. These memetic stories can be likened to folk and fairy tales. She groups them in three different types: despair, courage and comedy. 

As an example of despair, Yogarajah tells the story of Pink Wojak, a cartoon figure that is often depicted in cryptocurrency memes with tension lines on his face and blood streaming from his eyes and nose in pain. He forms the basis of shared stories of loss and inequality from community members.

As an example of courage, Yogarajah reverts to the “hodling” story, with HODL acronymized as ‘hold on for dear life’. This idea of the ultimate holder of crypto currencies who is not tempted to trade in the volatile market—even against economic reasoning—is the image of courage.

Finally, comedy is exemplified through the memes based on the Dogecoin and relate to the original tweet from the later founder of the coin. In this tweet he relates to the Dogecoin—a  hypothetical coin as a misspelling of dog. Memes have continued to  appear. They are used to critique and mock cryptocurrencies as a parody of the very serious communities described in the despair and courage stories.

Insights from cryptnography

The insights from the studies of crypto communities throw light on human communication on the subject of money and investments. Both articles show how the—mostly digital—communities of cryptocurrencies do not only see cryptocurrencies as a new form of money, but rather as a step towards a different financial intermediation.  

Tremčinský’s ethnography in cafés shows the ways in which people attempt to build networks of support in face-to-face settings. Yogarajah particularly illustrates how people turn to digital communities for advice on money matters, support and consolation, rather than to friends and family. And both researchers find a link between these digital communities and earlier real communities in trying to make sense of change together.

Since the community members consider themselves alternatives to traditional financial service providers (FSPs), you might ask if these insights are relevant for FSPs at all. But clearly, most FSPs will need to consider how best to support customers as they enter digital communities in the Metaverse.  

Tremčinský, M. (2022). Bitcoin and its spheres of consumption: Transactional orders of consuming money in the Czech and Slovak Bitcoin community. Economic Anthropology, 9(1). https://doi.org/10.1002/sea2.12189

Yogarajah, Y. (2022). ‘Hodling’ on: Memetic storytelling and digital folklore within a cryptocurrency world. Economy and Society, 51(3). https://doi.org/10.1080/03085147.2022.2091316