Me: I agree that block chain/crypto-currencies are not secure and are an energetic deflection away from the real problem. The real problem being the domination of Finance, not Finance itself which is a legitimate business model. However, in order for the triangular/tripartite concept of Money/Banks/Debt to stabilize the system the dominating and virtually monopolistic paradigm of Debt Only….must yield to a new one. Dominating Finance is a Leviathan and will wriggle free if we do not deal with it terminatedly.
CG: It seems somewhat inconsistent of you (Steve Keen) to criticise neoclassical economics by pointing at incompatibilities with empirical evidence, and then to criticise bitcoin on the basis that multiple copies could be made, and thus (extending your argument) the value be diluted to zero. Yes there are a great many competing blockchains out there, but most have a very small market size (or monetary base if you prefer), and in total they are roughly the same size combined as bitcoin right now. So despite 10s or 100s of copy-paste blockchains emerging, bitcoin still remains dominant. Hence to me that particular argument is on shaky ground given the empirical evidence from over 8 years of bitcoin’s existence. My view is that there is a network effect at work here, i.e. similar to the reason a copy-paste of facebook.com wouldn’t take anything like 50% of facebook’s traffic over night (intellectual property concerns aside!) – see google+! On bitcoin energy usage the situation may not be as dire as you’re making out. The max energy expenditure possible is given by taking the total mining rewards in bitcoin (currently around 1800 BTC/day), multiplying by the market rate (currently approx $6000), and spending all of that money on energy, i.e. assuming no other costs. Yes that’s a *lot* of energy, but (A) the per-block reward will eventually drop to zero, leaving only transaction fee income. Also competition will drive out all but cheapest energy sources, or rather, those with the lowest marginal costs such as hydro, solar and wind; thus the energy usage over time may have very low CO2 emissions. Bear in mind that if bitcoin continues to succeed as a store of value, then there will be an incentive to build energy farms (solar in particular) in places that may not be viable right now, e.g. desert sites nowhere near any population centers that could use the energy. I’m not saying bitcoin doesn’t have issues, but I think you’d do well to think about what those issues are in more depth. I see both bitcoin and your own research as having a common genesis, i.e. as responses to serious deficiencies in the global financial system, so to me it’s something I feel should be on the ‘Steve Keen’s list of stuff to give serious consideration to’ 🙂 I would add that I think the likelihood is that bitcoin is experiencing a bubble right now, but is not inherently a bubble technology. The dotcom bubble burst but the internet continued and grew.
Me: Even though it may be well intentioned the reason why Bitcoin does not really need much consideration is because it is still attached to the aspect of the old paradigm of money being a commodity. Its thrusts toward individuality and saturation within and throughout the economy are actually correct, but as the money system is fiat, monetary and (potentially) fully distributive, and these are all aspects of the new paradigm….those are the realities and the direction thinking should go.
CG: Bitcoin was born out of the realisation that you could form a distributed electronic system that acted as both a store of value and a means of transferring value, by combining three key technologies – peer to peer file sharing protocols/networks, public/private key cryptography and proof of work. It stands as a novel idea and a store of value with a sufficiently distinct set of features and risks as to set it apart from any existing store of value and thus in that aspect alone it is worthy asset class (IMO). However, bitcoin is a prototype, a proof of concept of that core idea, from there we can consider its qualities and how it may be modified to improve it with respect to any number of goals, but to date no such modification (alt coin) has made changes substantive enough to dislodge bitcoin as the pimary crypto-currency (or whatever you want to call it). By all means dismiss it if you wish, but there is a debate going on and something interesting is happening, and as such I would encourage everyone with an interest in economics to pay attention. At the very least bitcoin has gotten a lot of people thinking about what exactly is money? How can something so clearly absent of any backing by traditional means have spontaneously obtained value?
Me: Both the money system and the pricing system are digital in the sense that a given amount of money/credit will liquidate an equivalent amount of debt balance or price so it’s potentially distributive already. All these systems require is a policy potent and thorough enough that it resolves the problem of continual debt build up which is currently required and yet still does not stabilize the system. And that way we could have a true fiat monetary paradigm change instead of trying to place the square never actually working peg of commodity money into the round hole of the fiat endogenous money system.