I had this article in The Times yesterday.
A Bitcoin dealer offered an opposing view, which felt a little lame to me, but I do not have the right to reproduce it.
No
Richard Murphy, a professor at Sheffield University Management School
The answer to whether the government should be allowed to keep or invest in bitcoin is a very resounding no. Bitcoin is economically meaningless and there is no value to it. It has no known use except to facilitate illicit transactions, very largely in illicit substances.
Those who claim it can be used to make payments always ignore the fact that when doing so, its value is determined by translating it into another currency such as the pound.
So, why is bitcoin worth so much? That is the power of modern marketing. The myth has been sold that people need privacy in their finances from the government and that cryptocurrency will help deliver that.
They are also told that bitcoin is a hedge against inflation — but its massive price volatility proves it is anything but.
And they are also told that because bitcoin is in scarce supply, demand means that its price will go up, and it might just do, so long as the hype is maintained. But one day the bubble will burst, spectacularly, as such bubbles always do. Bitcoin is something I would not invest £1 in and nor should the UK government.
There are strong political reasons for the government steering clear. As all bitcoin enthusiasts make clear, their excitement about it is based on the claim that it undermines the money issued by governments.
Those enthusiasts want to destroy the government's control over the UK economy and deliver the services needed by its population.
That is bitcoin's destructive political goal and the UK government should have nothing to do with it.
Not least, that is because almost all bitcoins have now been mined. And so if the government were to buy more, it would have to do so second-hand from existing owners. It is estimated that 90 per cent of bitcoin is owned by just 2 per cent of the people who own cryptocurrencies.
Bitcoin wealth is, then, intensely concentrated amongst a few wealthy owners who are now desperate to find someone gullible enough to part with good money in exchange for their spurious tokens.
For the government to buy bitcoin, or hold on to the bitcoin it has recovered from criminals, would, therefore, reward the wealthy with real currency in exchange for their worthless assets. That is the last thing that a responsible government should be doing. Bitcoin is a con and the government should not fall for it.
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Bitcoin yet another example like quangos to “depoliticise” democratically accountable government where politicians can use government power to create money for the benefit of the many as opposed to the rich few.
Here in reality is how politicians who shill for the rich are not really that concerned about inflation in a fiat money system:-
“Trump and Republicans in Congress, she said (Stephanie Kelton), “did not allow perceived budget constraints to stand in their way” of a $1.5 trillion tax cut package which was passed in late 2017 and pushed the federal debt beyond $22 trillion.”
https://www.businessinsider.com/mmt-may-be-democrats-economic-cure-but-only-trump-got-the-memo-2019-8
I think for the Government it is simple protect the value of your fiat currency. Buying crypto would undermine that.
Parliament is sovereign.
If the government want to hold bitcoin, and parliament agrees, then they should be allowed to.
Blooming stupid idea as a investment or store of value, but we don’t have a constitution.
You can bet the rest of your career though that MI5 and MI6 already have a few fractions of bitcoin and a tor. Got to keep an eye on the country’s enemies after all. Smiles.
You do know we are allowed an opinion, don’t you?
Like any physical commodity it has a value which represents the price people are prepared to pay for it.
Just because it isn’t the same as conventional cash, does not mean it does not have value.
Oh dear
Another sucker who believes what they’re told waiting to be fleeced.
A Bitcoin is currently worth c. 84,000. If I wanted to sell a bitcoin or fraction thereof, that is what I convert my holding into. So bitcoin certainly has value. Of course there is no intrinsic value and tomorrow the value could be very different, but that doesn’t it mean it has no value.
And we don’t value other assets purely by their intrinsic value, so why should bitcoin be any different?
In other words, you agree with everything I say.
@Grant Howard
Bitcoin is not backed up by anything except demand.
They made a movie about this called “Tulip Fever”. You should watch it!
@BayTampaBay,
My input on tulip mania, or the lack of it; in the comments here:
https://www.taxresearch.org.uk/Blog/2025/01/24/the-bitcoin-bubble-is-being-hyped/
Note on the last comment, under my posts in the above: all parts of tulips are toxic, but especially the bulbs:
https://www.google.com/url?sa=t&source=web&rct=j&opi=89978449&url=https://www.poison.org/articles/tulip-bulb-toxicity-191&ved=2ahUKEwi0kKPV6Z2LAxU3TkEAHekSNP8QFnoECC8QAQ&usg=AOvVaw3Dcchh84-gnbBmudsjGO_N
Tulip Fever is a remarkably dull film, considering the cast and subject matter, and Rotten Tomatoes would appear to agree; they give it a 10% rating. Despite a relatively modest budget, it was a box office bomb.
@Drew Anderson
I enjoyed the movie. Not even to buy it but if it pops up on Amazon Prime, I would watch it again.
NO!
In fact, I’d go further and insist as a sovereign currency issuer that nobody is allowed to exchange it for my currency. Other goods and services maybe, but not currency.
The Central Bank of Central Banks is the Bank for International Settlement (BIS). It would be a simple task for it to declare that no freely convertible, sovereign fiat currency issuing member state Treasury; shall allow exchange any units of a crypto currency, into any units of a sovereign fiat currency. Simples! BTW. Crypto currency gains are subject to Capital Gains Tax.
Crypto gains (when realised) should be subject to CGT along with any other asset-based gains from shares, art or whatever. But how would they be detected? Or if investigated, how could one story, one account, literally (from the crypto ‘investor’) be validated, or else proven false by the tax fraud investigators? Since this all happens in encrypted ‘dark web’ type spaces…
It’s so sad when I hear of people drawn into this ‘demonic Ponzi scheme’ – thinking it’s a smart way to invest and build up the ‘value’ of their savings.
HMRC seeks data from the exchanges, but that is by no means reliable.
[…] By Richard Murphy, part-time Professor of Accounting Practice at Sheffield University Management School, director of the Corporate Accountability Network, member of Finance for the Future LLP, and director of Tax Research LLP. Originally published at Funding the Future. […]
Can you give your source for this bit, please: “It is estimated that 90 per cent of bitcoin is owned by just 2 per cent of the people who own cryptocurrencies.”
The FT, a few days ago.
Try Google.
What would make you change your mind ?
Nothing
Hi Richard,
Another argument that pro-bitcoiners make is that the bitcoin supply has a fixed upper limit, whereas more dollars and more pounds can be ‘created’ by central banks when necessary.
The ability of central banks to create more dollars and more pounds is inflationary (obviously) and presumably this can’t go on indefinitely. I totally agree that bitcoin is not the solution to this problem, but do you imagine some other system being adopted by western countries in the near future that would mean their currencies are once gain pinned to something with limited supply?
Or, is the current money printing system sustainable in some way?
Thank you,
Jason
Money is debt
It cannot be anything else
Pinning it to something else only favours those who create or hold that something else whilst harming all others and destroying creit, and so the modern economy
Why would you want to do that?
Thanks for the reply. In a system where all money is debt and that debt accrues interest, wouldn’t that mean that all the debt can never be repaid because the amount owed becomes bigger than the amount available? Thereby forcing people and companies into debt stress and bankruptcy. It also means that it is very tempting to continually create more debt which devalues the current supply. Is this the best we can do? Can this go on forever?
No
Interest takes what working people should enjoy and diverts it to the owners of what is called capital
It’s a transfer payment – not real income
And this will go on for ever – unless you think we can do without money – the true nature of which you are denying
Now go and read my blogs and videos on this issue before asking more obvious questions