Public discussion about bitcoin reveals economic illiteracy
The biggest cryptocurrency has gained notable attention lately, and as the technical and social foundations of the blockchain-based currency seem very uncertain even to the crypto investors themselves, critical analysis can be found all over regardless of political position.
As times goes by without the crypto ecosystem totally failing, an educated mind would raise the bar and demand more and more sophisticated explanations and less repetition of just same old comparisons to tulip bubble. It is not a novel approach either to claim that a volatile asset could not serve as a currency and basis for economic calculation for the whole world. The current boom of crypto investing within the core community as such is a manifestation that people do not treat it as a major currency, despite the possibility to perform some payments with it.
An economic commentator "Mr Money Mustache" strongly criticizes bitcoin in the Guardian, a media with left leanings. As some of you may have noticed, political left is more concerned about the underlying libertarianism and free market attitudes behind crypto scene. For example, Paul Krugman called bitcoin "evil" for its potential disruption against statist establishment. Even the scarce thought leaders of the right have not acknowledged this nor praised it despite their friendlier attitude towards free markets.
I am not going to go through the full text and analyze each point which I could agree or disagree. It is merely one especially interesting notion that sheds light on the economic understanding of his frame group:
"Government-issued currencies have value because they represent human trust and cooperation."
It is true that government institutionalization is a big factor that improves status of an asset or currency. However, it is the violence monopoly and enforcement that is the difference, not trust. Taxes are collected in fiat currencies such as euros and dollars, which have an official status. Their demand is driven up by force.
An economist named Ludwig von Mises defined it nearly a hundred years ago: "the state is an apparatus of coercion and compulsion". Even though you "trust" in the existence and ability of force to secure the monopoly status of a currency, there is not much actual "human trust" or "cooperation" in comparison to voluntary exchange.
In fact, the markets for cryptocurrencies and other more traditional assets without a monopoly status are more based on "human trust" and "cooperation". If the left wanted to improve their economic literacy and show it in discussions about bitcoin, they should merely stay honest and not mix beautiful words like "human trust" and "cooperation" with compulsion and coercion.
Think of a bully who leaves a bullied kid alone for the fact that his big brother is big, furious and ready to visit with a baseball bat. According to the logic of the left, the relationship between this bully and the bullied could be defined as "human trust" and "cooperation". It is really the big brother and his strength that are trusted here. Inability to realize this fundamental difference is related to the problems that make people trust planned economies and political schemes that have a disastrous track record in the past.
The propaganda we learn in schools about how we VOLUNTARILY pay our taxes, and how the govern-cement is good, and noble, and necessary.
It really makes real and honest communication difficult. You can not just walk up to anyone and say "bitcoin is more about human trust and cooperation". Most will just reject you because they hear more lies about lies. And so, you need an article this long, to explain the simple concept.
I think it comes down to the reality that a good portion of humans trust authority. A few do not. Those who trust authority, who need authority, who crave authority to make them feel safe and secure, will create authority where none exists. They will imagine gods. They will imagine fate. They will imagine that god ordained certain men to rule. And, devoid of these fantasies, they will create a large bureaucratic structure, a large entity that essentially practices alchemy, in that through the machinations of this large bureaucratic entity the wisdom of men becomes magnified and surpasses the actual wisdom of men -- or at least, that's what they tell themselves.
And if you attack this political machine, they will round on you with the fury of true believers facing apostate heretics. Not because they see their belief in this entity as the equivalent of a religion, but because the urge to believe in this greater entity comes from the same place of inadequacy and fear that the creation of religion comes from. The fury you face when you try to demonstrate to them that their god is not holy or worthy of worship comes from their fear of losing the thing that makes them feel safe.
Only when humankind has enough space for the fearless to move and leave behind the fearful do the fearless come into their own. In this situation they thrive and prosper. But once humanity is bottled up and constrained, the fearful will always outnumber the fearless, and so society will take on the appearance of hierarchy that the fearful crave.
yes i agree with you.
@qami
Crypto World is highly volatile.
You didnt say anything about this with suriety.
@qami