Tuesday, January 16, 2018

Steve Keen on Cryptocurrencies

Steve Keen gives a talk here on the nature of money and cryptocurrencies:

My own post on Bitcoin can be read here.


  1. Bitcoin may not be a fully-fledged currency yet, but this does not mean that it (or some of its successors) will not become one. It is practically perfect in terms of the qualities which any money must possess: infinitely divisible, no weight or volume (portable), does not decay/decompose at all, infinitely homogeneous. All these qualities come from the fact that it is an abstract (a number). It has negatives of course. It is being produced (negative) and a lot of resources (electricity) is used for that purpose. It is volatile, which however is due to the fact that at present it is mostly a speculative asset. The latter may change if at a certain point the market decides that it can be used for a unit of account. Furthermore, the number of transactions per unit of time is low.

    Overall: Bitcoin has negatives, but they can be improved in the future, which is very likely, since it is an entirely market-controlled creature. It has a very good potential to become real money in the future.

  2. With standard currencies, the entity which creates new money profits in the process (seigniorage). This means that where private banks are creating about 97% of a nation’s new money, the seigniorage associated with that process goes to the shareholders of the bank - who may not even be citizens of the nation whose currency is being created. In my opinion, this is a swindle.
    Bitcoin, I suppose, being a kind of private currency (in the sense of not being a public asset like national currencies) is less troublesome than privately-created national currencies in this way - ie there is no taking of seigniorage that should really be going to the public purse by private corporations.
    Furthermore, as I understand it, new Bitcoins are not created as interest bearing loans. Another advantage over standard currency.,