I have, for a long time, been deeply cynical about Bitcoin. There are good reasons to be so.
The first is the so-called production process. Not only is it profoundly environmentally undesirable, what really worries me is that no one actually knows who gets the literal accounting credit (or profit) from the process. We know a supposed asset is created. But who by? And at what profit? The unanswerability of that question is, for me, deeply troubling.
Then there is the fact that this is not a currency at all. That's not just because of its limited exchange ability, but simply because it is not a promise to pay, which is all that gives any true currency its value.
Third, there has been its obvious speculative quality. It is not a measure of value. Its value is speculated. The paradox is apparent: it cannot be both at once and so has none of the traits of currency.
All that has always added up to such ‘currencies' appearing to be little more than Ponzi schemes to me. So long as the fool and their money have been willing to be parted Bitcoin has worked. The moment any economic substance has come near the arrangement value has been hard to find.
Yesterday anther element of that suggested value - the apparent indifference of the Chinese government towards Bitcoin production - departed the scene and the value fell by 30%. That Tesla has also decided after a brief dalliance with Bitcoin to now refuse payment in it only added to the woes.
I was asked recently to summarise what I thought of Bitcoin and similar ‘assets'. My summary is that I think they are valueless opportunities for exploitation of the unwary because of the opacity that surrounds the whole process of the process production and those who benefit from it and as such I believe that they have no role in the real economy. If people want to speculate in them that is their choice, but the number of people doing that does not indicate that there is value in that process, anymore than other forms of speculation do not create value. Bitcoin is just a gamble, at best, and has never looked to be a very good one.
And as far the chance that such a ‘currency' will replace government backed only - dream on, is m suggestion.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
I remember Steve Bannon mentioned cryptocurrencies. He was on a rant about globalisation. He failed to explain how Bitcoin and the rest would be so disruptive to global economies – the bullshit was coming thick and fast, but I suspect the reason had to do with control. The most extreme right wing ideologues believe in a utopia of no government regulation. No tax. No workers’ rights. No control over environmental damage. A survival of the fittest contest with no limits. I’d guess he saw cryptocurrencies as a means of subverting governments’ control of the regulatory environment. He probably saw them as “democratic” too, owned by no-one and controlled by no-one. I’m sure his dream of a deregulated paradise of extreme inequality would fall at the first hurdle. As you say, Bitcoin lacks a promise to pay, so has no intrinsic value. But to people like Bannon, the lure of subversion and disruption are irresistible. Perhaps this kind of Goldfinger thinking is a factor in the rise of cryptocurrencies?
Bitcoin uses massive amounts of computing resources, it’s not only a Ponzi scheme but its a huge waste of scarce resources and environmentally unsound (I thought you might have picked that up, too, with your Green credentials Richard)
https://www.newscientist.com/article/mg23631503-300-bitcoin-what-a-waste-of-resources/
I realise that all computing activity could be condemned on the same grounds, but at least some of it is useful. I wonder how it compares in environmental terms with the use of old fashioned technologies such as paper?
He did pick it up ‘profoundly environmentally undesirable’. At least, that is what I took it to mean
Frances Coppola posted on her blog a good article about the mindless proponents of a return to hard money.
These people gloss over the misery of deflation and the ensuing privation, preferring to spout specious claims about Weimar and Venezuela.
Ignorance and greed, it would seem, are a heady cocktail.
https://www.coppolacomment.com/2021/05/david-and-goliath.html?m=1
In the Chinese press, bitcoin is referred to as a digital gambling asset. That just about sums it up.
If Blockchain is the mother of Bitcoin are we not a bit too early discounting the latter?
https://www.irishtimes.com/news/science/beyond-bitcoin-blockchain-will-change-finance-science-and-the-world-1.4556196
No
And I am not at all convinced by the anonymity of blockchain either
Nor will the public be
Forget your password and lose your money…..
Crypto currencies are surely just one manifestation of the broader problem of so called shadow banking, which seems to be the label for the vast oceans of funds swashing around the globe seeking, largely speculative, returns, comprising mainly corporate , but also sovereign, funds. Apple’s ‘cash mountain’ is one of myriad examples. When you add the liquidity supplied by the prevalent model of QE , the inflationary spiral of markets in general is self-evidently explained. The demise of one in or all crypto currencies will not obviate this problem, a prime source of global instability serving only the greed of a tiny elite. Of course, any discussions spill over into the sources of this vast wealth, tax evasion and avoidance, tax havens and a range of essentially political problems screaming for resolution.