I don't really understand enough about the economic theory of currency to tell whether
Nouriel Roubini is correct in how he says Bitcoin won't work, but here is part of it anyway:
Cryptocurrencies have
no intrinsic value, whereas fiat currencies certainly do, because they
can be used to pay taxes. Fiat currencies are also protected from value
debasement by central banks committed to price stability; and if a fiat
currency loses credibility, as in some weak monetary systems with high
inflation, it will be swapped out for more stable foreign fiat
currencies or real assets.
As it happens,
Bitcoin’s supposed advantage is also its Achilles’s heel, because even
if it actually did have a steady-state supply of 21 million units, that
would disqualify it as a viable currency. Unless the supply of a
currency tracks potential nominal GDP, prices will undergo deflation.
That means if a
steady-state supply of Bitcoin really did gradually replace a fiat
currency, the price index of all goods and services would continuously
fall. By extension, any nominal debt contract denominated in Bitcoin
would rise in real value over time, leading to the kind of debt
deflation that economist Irving Fisher believed precipitated
the Great Depression. At the same time, nominal wages in Bitcoin would
increase forever in real terms, regardless of productivity growth,
adding further to the likelihood of an economic disaster.
But not only that, he believes that blockchain is a bit of a crock too:
As for the underlying blockchain technology, there are still massive obstacles standing in its way, even if it has more potential than cryptocurrencies. Chief among them is that it lacks the kind of basic common and universal protocols that made the Internet universally accessible (TCP-IP, HTML, and so forth). More fundamentally, its promise of decentralized transactions with no intermediary authority amounts to an untested, Utopian pipedream. No wonder blockchain is ranked close to the peak of the hype cycle of technologies with inflated expectations.
Yes, I strongly suspect that blockchain technology is being way over-hyped. It's working great to get RMIT professors who have given up on noting
"no statistically significant increase in temperatures" and
warning about Keynesian induced stagflation invitations to international conferences, though.
1 comment:
Messrs David Andofatto and Glasner have both given it a serve as has John Quiggin.
might give it a miss.
I get a lot of e-mails to buy this and it matters not when you unsuscribe
Post a Comment