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Two Technical Images: Blockchain and High-Frequency Trading

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Abstract

The article examines two digital phenomena linked to money and finance, which are the bitcoin (in particular the blockchain technology it is founded on) and high-frequency trading, through the lens of Vilém Flusser’s concept of technical image. Flusser’s theory highlights three aspects of technical images: they are engendered by the act of organizing particles, are produced by people who operate devices through keys, and are mediated by code, which is linear and pertains to the era of written text, which Flusser conflates with the notion of history. In this article, the argument focuses on the aspects of high-frequency trading and the blockchain that relate to the idea of images. The sections investigate how money has historically operated in the logic of Flusser’s description of symbol manipulation in relation to consciousness and temporality: from the circular time of magical consciousness to the linear time of historical consciousness, and more recently, to the non-dimensional time of post-historical consciousness. The article argues that there are two levels, or layers, in the images involved in cryptocurrencies or algorithmic trading, but only one of them is visible to the human operator or viewer, in the form of a price. The other, which indeed represents the operations in the system, is only accessible to the machines themselves. The questions raised concern the role of these recent digital financial and monetary forms in the development of a reality dominated by apparatuses and technical images.

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Notes

  1. For a critique of the concept of disruption, cf. Stiegler (2016)

  2. A noteworthy project involving the blockchain is Ethereum (www.ethereum.org)

  3. Spoofing has led to the sentencing of the trader Michael Coscia. This was the first conviction to be based in the Dodd-Franck act, designed to regulate finance after the 2008 crisis. (http://www.bloomberg.com/news/articles/2016-07-13/first-trader-convicted-of-spoofing-gets-three-year-prison-term)

  4. At this point, one should note the grim prospects Debord (1967) foresaw for such a relationship: the spectacle, as he calls it, is “not a collection of images, but a social relation” (Debord, 1967, p. 3), whereby life is experienced first as the source for images, rather than a direct experience, an event. As Flusser writes, it is a world in which a politician’s speech, or a football match, is performed above all in order to be broadcasted, not attended (Flusser, 2011a, b, p. 111)

  5. Once again, it is the work of Harun Farocki that sheds the most illuminating light on the topic of warfare through images. The most noteworthy of his films on this subject is War Always Finds a Way (2005).

  6. These two features of money correspond roughly to the Marxian distinction between the general equivalent and the money-form of capital. But Marx (1983) derives the latter from the former, which indicates a partial allegiance to the commodity theory of money (cf. Moseley, 2005).

  7. Barry Eichengreen (1996) narrates in detail the tumultuous history of the gold standard during the first half of the twentieth century. Much suffering in Europe can be traced to the decision by the British and other governments to stick to the gold standard in times of recession.

  8. These and other characteristics are listed in the US congressional report “High-Frequency Trading: Background, Concerns, and Regulatory Developments” (Shorter & Miller, 2014).

  9. Spoofing is a practice by which the bids and offers are placed with the previous intention of canceling them in order to create false impressions of tendencies in the market. Front running occurs when a broker has privileged information and trades on account of this knowledge. The speed with which an algorithm can detect tendencies may favor front running.

  10. As in the British Government Office for Science report claims, rather alarmingly (cf. Flusser 2011a, b, p. 8).

  11. There were other similar events, in a smaller scale: in 2013, the Associated Press Twitter account was hacked and published fake news about a terrorist attack to the White House in which the President Barack Obama would have been wounded. Once again, within a few minutes US$ 136 billion had vanished from the S&P index. A third flash crash took place on 23rd August 2015, causing a 7% drop in the Dow Jones index.

  12. The film can be seen at: https://www.youtube.com/watch?v=GEAGdwHXfLQ

  13. Gil Scott-Heron sings that “the revolution will not be televised”; a really disruptive revolution would have to subvert the very production of images that gives sense to the reality that is being revolved. The flash crash, at least, does not appear on Lauer’s computer screen.

  14. The financial press seems particularly keen on speculating about Bitcoin as the future of money. For example, Forbes (http://www.forbes.com/sites/paularosenblum/2014/01/27/bitcoin-the-currency-of-the-future/), Bloomberg (http://www.bloombergview.com/articles/2015-09-22/central-banker-sees-future-of-money-and-rates-in-bitcoin), and Investopedia (http://www.investopedia.com/financial-edge/0212/bitcoin-may-be-the-currency-of-the-future.aspx) have run stories about this prediction.

  15. Perhaps the most remarkable case is that of Rick Falkvinge, of the Swedish Pirate Party. In 2011, Falkvinge not only invested his whole savings in bitcoin. He also contracted a loan in order to invest more. Falkvinge believes that cryptocurrencies will ultimately replace the contemporary banking system: http://falkvinge.net/2011/05/29/why-im- putting-all-my-savings-into-bitcoin/.

  16. The hash algorithm used for Bitcoin is called SHA-256 and was developed by the American National Security Agency (NSA).

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Correspondence to Diego Viana.

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I thank Diego Dolph Johnson for his comments and corrections to the article.

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Viana, D. Two Technical Images: Blockchain and High-Frequency Trading. Philos. Technol. 31, 77–102 (2018). https://doi.org/10.1007/s13347-016-0247-x

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