All of the buzz around Bitcoin has disturbed me since Dan Backer filed with the FEC to allow his tea party groups to accept Bitcoin for contributions and expenditures. It struck me then, as it does now, that creating a shadow market for unregulated and largely worthless currency doesn't work to the benefit of ordinary people who need to pay their rent, bills, and buy groceries.
Yet if one lives by buzz alone, you would think Bitcoin was the best new thing in the world. Never mind the wild value fluctuations from day to day, the fact that it is at best a thing that has no basis in reality and no value until someone declares it should have value. Never mind all that, because it's unregulated, techie, global, and therefore cool. Cool enough to justify a $25 million investment by Silicon Valley investors to dress it up and give it some street credibility.
Alex Payne has a serious reality check for anyone concerned with reality and income inequality.
Far from a “breakthrough”, Bitcoin is viewed by many technologists as an intellectual sinkhole. A person’s sincere interest in Bitcoin is evidence that they are disconnected from the financial problems most people face while lacking a fundamental understanding of the role and function of central banking. The only thing “profound” about Bitcoin is its community’s near-total obliviousness to reality.
On the magical thinking that comes with Bitcoin love:
Economic inequality is perhaps the defining issue of our age, as trumpeted by everyone from the TED crowd to the Pope. Our culture is fixated on inequality, and rightly so. From science fiction futures toWoody Allen character sketches, we’re simultaneously alarmed and paralyzingly transfixed by the disappearance of our middle class. A story about young people dying in competition with one another just to continue lives of quiet desperation isn’t radical left-wing journalism, it’s the pop fiction on every teenager’s nightstand and in every cinema right now.
With this backdrop of looming poverty, nobody can reasonably deny that the euphemistically “underbanked” are in desperate need of financial services that empower them to participate fully in the global economy without fear of exploitation. What’s unclear is the role that Bitcoin or a similar cryptocurrency could play in rectifying this dire situation.
The push toward Bitcoin comes largely from the libertarian portion of the technology community who believe that regulation stands in the way of both progress and profit. Unfortunately, this alarmingly magical thinking has little basis in economic reality. The gradual dismantling of much of the US and international financial regulatory safety net is nowregarded as a major catalyst for the Great Recession. The “financial or political constraints” many of the underbanked find themselves in are the result of unchecked predatory capitalism, not a symptom of a terminal lack of software.
Unchecked predatory capitalism is a libertarian's dream, and Bitcoin is the mechanism to take them to that place. Far from sticking it to the man, it just bulks up the rich guy's bank account at the expense of those least able to afford it.
Thank heavens someone is finally saying so.