Bad Bitcoin
It was fun discussing the positives and potential of Bitcoin in class, though Bitcoin has many negatives to discuss as well. We did touch upon them, but I thought I’d highlight them here. Although Bitcoin seems to be the talk of the town these days, it comes with imperfections.
I will note that only 4 hours ago, an article was posted in Coindesk with a Columbia economist’s opinion on Bitcoin. Joseph Stiglitz argued that Bitcoin should actually be outlawed, because it “it doesn’t serve any socially useful function” and exists solely to circumvent regulation. Stiglitz believes in digital currency, but he believes it should be government-controlled.
Stiglitz remarked in an interview that Bitcoin is “only a bubble” and that we “ought to go back to what we always have had.” I see merit in the former statement, but I often find that the latter statement is one of the most harmful sentiments made in our political landscape.
To Stiglitz’s point, Bitcoin does seem like a bubble right now. As Stiglitz remarked, “The value of a Bitcoin today is expectations of what the Bitcoin is going to be [worth] tomorrow.” Right now, Bitcoin has very little intrinsic value that would bring sense to its absurd price; very few things can be purchased with BTC, and most purchasers of Bitcoin during this excitement don’t actually plan to use or spend it. It is simply being bought as stock on hype.
Like any bubble, the Bitcoin bubble may burst. I think it’s overly bold for Stiglitz to assert that it must burst, and I think his interviewer calling Bitcoin entirely “smoke and mirrors” seems like a bit of a Luddite.
What do you all think? Is Bitcoin safe? Is it at all valuable? Does it have a future, or are we fooling ourselves?
Mike Smith
December 6, 2017 @ 6:17 pm
The interview reminds me of what the phone company said about packet switching. It’s dangerous to have a closed mind about the future and believe everything you’re doing today is the best that can be done for all time.
I wrote about my concerns with bitcoin and the other cyrptocurrencies in my post this week. You should also look through the posts of your fellow students. There were quite a few good ones this week.
Thank you for a wonderful semester, and I hope to see you around campus!