Another problem with Bitcoin
When it comes to public discourse about cryptocurrency, the primary objection to it is its environmental impact. And sure, that’s something to be concerned about. But a lot of the pro-Bitcoin arguments come from a really weird position of policy absolutism that doesn’t get discussed very much — a position that is inherent to cryptocurrency and which can’t be fixed by green energy or proof-of-stake 1 .
See, it’s impossible for the government to mint more Bitcoin if it feels the need to. Central banks can’t perform open market operations using BTC. Fractional-reserve banking becomes impossible, since banks can no longer loan out money they don’t have.
Many cryptocurrency advocates tout these as good things — they say that fiat currency is bad anyway. This is a very fringe economic position, but it’s one which is baked into the fabric of cryptocurrency. If Bitcoin becomes a properly mainstream, then its radical policy prescriptions will become irrevocable. No government can walk them back, for any reason, because Bitcoin is out of their control.
This is in keeping with the radical libertarian principle that money should flow free from government intervention; that the ebb and flow of the market is the supreme authority in our economy, in every situation. To some extent, cryptocurrency is a project to take this fringe position and impose it on society from without. Radical economic policies are risky enough even when we have an escape hatch; even when the next administration can undo them if need be. Bitcoin’s vision of permanent, extreme libertarianism is terrifying.
— Pan-fried, 2021-03-07. Back to main page