It seems that it’s impossible to be neutral on Bitcoin. You either look to it as the future of money and a revolutionary change in the way we will all interact, or you think that it’s pointless, or worse, immoral. Into this second group comes Joseph Stiglitz, former head of the World Bank and Nobel prize winning economist.

Bitcoin Ban

In an interview with Bloomberg Stiglitz claimed he could only see two reasons why people would want Bitcoin. First, that they are riding a price bubble where, “the value of a bitcoin today is expectations of what the Bitcoin is going to be tomorrow.” Second, that they are avoiding government oversight and engaging in some kind of illegal activity.

If those two assumptions are correct he saw no reason why the US government shouldn’t step in to ban it:

If the government says ‘the reason bitcoin is being used is circumvention,’ they could close it down at any moment. And then it collapses.”

Stiglitz claimed that he was not against innovation and increasing digitalisation, welcoming a move “into the 21st century of a digital economy”. However, his vision of this digital economy is crucially different to that of the Bitcoin community. In Stiglitz’s view money should still be controlled by governments.

That Bitcoin exists outside of government influence is of course one of the appeals of the currency. What Stiglitz thinks of as a bug is considered by the many to be a feature.

Reserve currency

In September Christine Lagarde, the head of the International Monetary Fund, outlined a possible future where cryptocurrencies could become the go-to safe haven in countries suffering from hyperinflation and economic mismanagement, a “Dollarization 2.0”. In fact, rather than a long term prediction this is already happening.

This is the big difference between the two sides. While Bitcoin might not be fulfilling an essential function in countries which are reasonably well run, not everyone is fortunate enough to live in America and get paid in dollars, the world economy’s reserve currency. In many countries Bitcoin is a safer alternative to “government money”, and it is the independence from government which makes it safe.

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