An interesting article about Bitcoin in the Guardian today by Will Hutton. He seems to like it but he says it will never be quite the same as regular money as it is far too volatile for that.
But blockchain changes everything. It becomes a means to transfer digital cash – or crypto-currencies, of which the best known is bitcoin – in vast amounts, across any border, instantaneously. The blockchain makes sure bitcoin is spent once; indeed, blockchain was first invented by the originators of bitcoin to make sure there was no fraud. No £30 limits. No credit or debit card necessary; no central bank or government needed to guarantee the value of the money. Just buy your bitcoin from an online broker and you have buying power in your digital wallet: better still, it may go up in value, giving you more buying power still. The whole analogue apparatus of the financial system could be as severely challenged as newspapers and retailers are by online reading and internet shopping.
The question is whether banks are going to reinvent themselves using the blockchain as a key tool and become crypto-currency brokers before others. The trouble is that bitcoin, like other crypto-currencies, is not a reliable way of storing value – a key function of money – when its price can nearly halve in a week, as it did last week. Better not to think of bitcoin as money; rather, as a commodity that uses blockchain to make settlements faster, but it can’t – and never can – be a way for the mass of workers to get paid or make their purchases. It could take millions of transactions away from banks and badly wound them, but it’s unlikely to replace them.
But it could still represent a huge shock. Blockchain will administer similar shocks to insurance, healthcare and all mass payment systems. Intermediaries in the service industries will face a new world in which their routine functions will be performed by machines, programmed by artificial intelligence, while the blockchain becomes the new means to do business safely, faster and less riskily. There will be new concentrations of economic power because, like the Fangs, the blockchain economic model is more efficient and more effective the larger the network. Moving ever more economic activity into this universe, with its anonymised transactions and secret keys, may please the ultra libertarians – but there remains a public interest in ensuring accountability, justice and fairness. We have, in short, to understand and shape this new world before it shapes us. There are precious few signs of that.
The Guardian
Ten years in, nobody has come up with a use for blockchain
ReplyDeletehttps://hackernoon.com/ten-years-in-nobody-has-come-up-with-a-use-case-for-blockchain-ee98c180100
Blockchain, the fidget-spinner of technology.
ReplyDelete"Bitcoin is a bubble, but the technology behind it could transform the world"
ReplyDeleteKaivey, you, as someone who writes at a MMT, should know better.
You should know that both bitcoin and blockchain are not what people think they are. Both bitcoin and blockchain do not keep up with their promises. They are not the future or important in any meaningful way.
Hi Andre, could you supply some links for me to read, I'm interested? Thank you.
DeleteHere is a MMT view about cryptocurrency. Although bitcoins are the main subject, it applies to all other cryptocurrencies:
Deletehttp://neweconomicperspectives.org/2013/12/bitcoin-system-additional-problems.html
Some interesting sentences:
"It looks like the bitcoin creator’s views on money were shaped by the old and erroneous idea that 'gold is money.'"
"The bitcoin supply is fixed"
"The supply of bitcoin is arbitrary"
"Why are miners paid BTC 25 now? Why did they get a pay cut from BTC50 to BTC 25 and why will pay cuts continue? I have no idea. The consequence is that the maximum amount of bitcoin will be reached in in 2140. Why aiming for 2140? I have no idea. It does not make any economic sense"
"In addition, the supply of bitcoin is based on a bonanza, think lottery winnings, rather than the needs of the payment system for more bitcoins. That does not promote a smoothly working of the payment system."
"There is no deposit insurance, no lender of last resort, and fraud does occur and it is difficult to offset its consequences."
Another post, writeen by a bitcoin enthusiast, explains why blockchain makes no sense without bitcoin:
"Instead of pondering why blockchain without bitcoin (or another native token) made no sense (and admitting that blockchain was just abused as a snake-oil marketing buzzword), many of the projects originally touted to "bring blockchain to finance" flippantly shifted to DLT."
"Nobody has really figured out what this DLT chimera is about or which problem it should solve. (Yet, we have been told it could reduce banks' infrastructural costs by $20bn). Even the European Securities Market Authorities (ESMA) wonders about its applicability."
Here is another post, exclusively about block chain:
https://www.kaspersky.com/blog/bitcoin-blockchain-issues/18019/
It states some obvious facts, like that blockchain is excessively inefficient:
"There is no paralleling, no synergy, and no mutual assistance. There is only instant, millionfold duplication. It’s the opposite of efficient — and that’s important, as we’ll see later on."
"Myth #3: The blockchain is effective and scalable. Conventional money will soon disappear"
"Some people may be blinded, some may simply not understand how the technology works, and others may see and realize everything but feel the system is working for them. It’s worth considering that many of those who have purchased bitcoins begin advertising and advocating them — as in a pyramid scheme. Why disclose that the technologies have disadvantages if you’re counting on the growth of the exchange rate?"
For some reason I did not write the link to the second post. Here it is:
Deletehttps://www.coindesk.com/2017-will-prove-blockchain-bad-idea/amp/
Thanks for the links. Stephanie Kelton in a recent interview said she was neutral on Bitcoin as she doesn't understand it enough at the moment. I'm too neutral on the subject. I put out pro and anti Bitcoin posts here that I find interesting.
ReplyDeleteI read recently that 20% of Bitcoin owners have lost their keys and their Bitcoins are not recoverable.
ReplyDelete