Also, Peter Surda's thesis on Bitcoin which draws heavily on Austrian economics is here.
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Silas stops by here to pester every once in a while, and one thing he used to pester me on was Bitcoin. He seemed to have it in his head that I would have a problem with it. I have no idea why. Why would I have a problem with private currencies? I see no obvious reason for me to. I think he just thought I wouldn't like it because he did like it. If a libertarian likes something Daniel Kuehn couldn't possibly like it!
I get this with private spaceflight, private roads, and vouchers as well. Sometimes someone that really doesn't know me follows this sort of logic on constitutionally limited government too (I like it, so Daniel must not!).
But it raises an interesting point about these "A such-and-such perspective on X" statements. Bitcoin is largely a "libertarian thing". As a result, a lot of the criticism has been by non-libertarians on the blindspots of libertarians (most notably, concerns about bubbles and questions of the elasticity of the currency). That's understandable because these criticisms come up in the context of an adversarial dialogue.
But what is a general non-libertarian take on Bitcoin? J.P. Koning offers one from the perspective of the Fed. Any other ideas? The most obvious reason why a Keynesian would like Bitcoin is simply that it's more money out there. Sure it's inelastic but right now we don't have to rely just on Bitcoin. And presumably Bitcoin could be made elastic and still maintain all its other desirable properties (just make an announcement that all owners of number X will on such and such a date also own the title to Bitcoin number X + 21 million).
I don't have strong opinions or expectations about the future of Bitcoin. What I do know is that I think what's going on now is great, but I also know that I'm personally sticking with dollars :)
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People probably assume you don't like it b/c Krugman doesn't like it.
ReplyDeletehttp://krugman.blogs.nytimes.com/2013/04/12/adam-smith-hates-bitcoin/
http://www.nytimes.com/2013/04/15/opinion/krugman-the-antisocial-network.html?_r=0
JP's posts on bitcoin are great (and natch more insightful and informed than PK's; notice how PK totally ignores the speed & cost advantages of BTC commerce/transfers in the 2nd link). I'd also recommend JP's post on Ripple, another cryptocurrency which imo has more potential to shake up money and finance than bitcoin.
http://jpkoning.blogspot.kr/2013/02/ripple-or-bills-of-exchange-20.html
Bitcoin might end up like Myspace, but the cryptocurrency concept will live on.
Some shameless self promotion, here's a post of mine on Krugman's take: Costs of Money. I thought you may be interested.
DeleteBut what is a general non-libertarian take on Bitcoin?
ReplyDeleteIt is securities fraud, for the same reason that memberships in golf clubs can be securities fraud.
Bitcoin is a scheme intended to make people think they can profit by putting their money into, making it a security.
You need to read Warren Buffett explaining why gold is also a fraud, except that Warren doesn't call it such.
http://thebizoflife.blogspot.com/2012/03/quote-of-day-warren-buffett-on-gold.html
It is no accident that the founder took the money and ran.
DeleteIt will be interesting to see if the facilitation of money transactions that are illegal or otherwise difficult or expensive will be enough to keep Bitcoin going. The fact that it is fiat currency is not a problem, per se. The fact that it is scarce could be. Instead of limiting the number of Bitcoins, its growth rate could be controlled, as Friedman might have suggested. (In fact, the limit is what alerted me to the possibility of a scam, because if Bitcoin caught on, early "miners" would almost be guaranteed to make a killing, which they did.)
The mere fact that someone suggested a Bitcoin ought to have altered you to the fact that it was a fraud. When you have people who are attempting to profit by playing upon the fears, doubts, and uncertainties of people---that's a pretty good sign of a private fraud.
DeletePeople ought to have the good sense to say of people who urge things like bitcoins or who talk about currency using loaded terms like "fiat money" or fractional reserved banking are con men and that a scheme is being executed.
The mere fact that someone suggested a Bitcoin ought to have altered you to the fact that it was a fraud. When you have people who are attempting to profit by playing upon the fears, doubts, and uncertainties of people---that's a pretty good sign of a private fraud.
DeletePeople ought to have the good sense to say of people who urge things like bitcoins or who talk about currency using loaded terms like "fiat money" or fractional reserved banking are con men and that a scheme is being executed.
Fraud is misrepresentation. BitCoin has a protocol anyone can read, and open-source clients. Where is the fraud?
DeleteI should note that I don't own any BC and don't entirely understand how it came to have positive value at all (J. P. Koenig has noted it poses problems for a number of theories of money), but there's a big difference between "things I don't understand" and "things that are fraud".
Bitcoin is an open source project in addition to the primary network implementing it. It was announced, and described and justified in a paper, long before mining and block generation began.
DeleteThat seems to contradict your ... strange speculation about it.
More on gold not being an investment
ReplyDeletehttp://marginalrevolution.com/marginalrevolution/2013/04/the-golden-dilemma.html
"But what is a general non-libertarian take on Bitcoin?"
ReplyDeleteA distributed ledger, which is really what bitcoin is, is just a tool. When we invented the fire was there a libertarian take or a non-libertarian take on the potential for fire? The wheel? Guns? I guess so. To me, fires, wheels, guns, and distributed ledgers are just tools. Not sure if we should get too ideological over them.
If Bitcoin were simply a distributed ledger, there would not be a problem, would there? :)
DeleteMaybe instead of speculation, you should read the actual reasons I gave when spoke to you about Bitcoin? About how it has mechanisms that prevent arbitrary currency inflation (or deflation), and therefore prevents CBs from using money illusion to trick people into accepting lower consumption?
ReplyDeleteIt had nothing to do with some bizarre belief that you must hate everything private (although I'm sure you've said something to that effect before, only to backpedal).
And presumably Bitcoin could be made elastic and still maintain all its other desirable properties
ReplyDeleteWith a better understanding of the system, you would perhaps have phrased that as "Bitcoin-like 'competing' currencies could arise that use a more expansionary, less rigid monetary policy that bitcoin by forking the code and promoting their own network to those who think that system is better."
Certainly you didn't seriously advocate trying to stiff all the users who started using Bitcoin *specifically* because the money supply would be so rigid and predictable by retroactively changing the rules! (Not that that would be possible, anyway, since you'd have to get the users to adopt your plan en masse.)