I agree with @erikfinman that Bitcoin's energy consumption is not what will kill it. That's a relatively mundane technological problem, and you shouldn't bet against solutions to problems like those.
That said, I think Erik's core thesis is wrong.
A thread
That said, I think Erik's core thesis is wrong.
A thread
As I read Erik - he's saying:
1) that fiat money is a prerequisite to and cause of endless war/the military industrial complex
2) that when Bitcoin is adopted as a global currency, states will not have the capacity to print the money necessary to conduct endless war
1) that fiat money is a prerequisite to and cause of endless war/the military industrial complex
2) that when Bitcoin is adopted as a global currency, states will not have the capacity to print the money necessary to conduct endless war
First, that gets the causation precisely backwards
Technological advances and economic strength have created the strongest sovereigns to ever exist on the planet
Those sovereigns can credibly enforce legal tender laws and robust taxation regimes
That allows fiat money
Technological advances and economic strength have created the strongest sovereigns to ever exist on the planet
Those sovereigns can credibly enforce legal tender laws and robust taxation regimes
That allows fiat money
Weak sovereigns have trouble enforcing legal tender laws and collecting taxes
So when they create currencies, they can't credibly guarantee that the value won't plunge to zero
A credible taxation regime creates a demand floor for a fiat currency
So when they create currencies, they can't credibly guarantee that the value won't plunge to zero
A credible taxation regime creates a demand floor for a fiat currency
The above is a big reason why you don't see hyperinflation in developed, functioning economies
The demand floor - created by the fact that wealthy citizens need the fiat currency to pay taxes to a strong sovereign - prevents wild crashes in value
The demand floor - created by the fact that wealthy citizens need the fiat currency to pay taxes to a strong sovereign - prevents wild crashes in value
Where you see hyperinflation is places like post-war Germany and Zimbabwe - places where the sovereign and the economy are both weak, meaning that the demand floor for a fiat currency has disappeared
the conclusion: a strong sovereign with a robust economy can maintain a fiat currency regime indefinitely
It has no need to allow an algorithmic currency that it does not control to function as legal tender, or to accept tax payments in the algorithmic currency
It has no need to allow an algorithmic currency that it does not control to function as legal tender, or to accept tax payments in the algorithmic currency
If strong sovereigns won't adopt an algorithmic currency, the odds of it replacing the fiat currency in everyday use in that country are very low
Most people don't want to be fighting the state on a day-to-day basis
Most people don't want to be fighting the state on a day-to-day basis
Additionally, adopting an algorithmic currency is a lot like entering into a fixed-exchange rate regime or the gold standard
You lose the ability to manipulate the money supply and risk mass unemployment in the event of a serious economic issues
You lose the ability to manipulate the money supply and risk mass unemployment in the event of a serious economic issues
If you don't control your currency, and you hit rough times - guess what, you have to decrease spending
That's austerity
And people absolutely fucking hate austerity
They'll mutiny over it
en.wikipedia.org/wiki/Invergord…
That's austerity
And people absolutely fucking hate austerity
They'll mutiny over it
en.wikipedia.org/wiki/Invergord…
Europe is going through this right now
The Euro project has caused widespread unemployment throughout Southern Europe, which is not competitive with Germany et al. and can't let that competitive weakness manifest itself in a weaker currency
The Euro project has caused widespread unemployment throughout Southern Europe, which is not competitive with Germany et al. and can't let that competitive weakness manifest itself in a weaker currency
Thus, even if you somehow convinced major countries to adopt Bitcoin, the next recession would likely blow it out of the water as mass unemployment drove populist demands to return to the fiat currency
Remember William Jennings Bryan? "The Cross of Gold?"
Remember William Jennings Bryan? "The Cross of Gold?"
Anyway, to conclude:
-Strong sovereigns controlling strong economies allow fiat currencies, not the other way around
-Adoption of algorithmic currencies by strong sovereigns is unlikely
-If such adoption occurred, a recession would likely force the sovereign to reverse itself
-Strong sovereigns controlling strong economies allow fiat currencies, not the other way around
-Adoption of algorithmic currencies by strong sovereigns is unlikely
-If such adoption occurred, a recession would likely force the sovereign to reverse itself
FIN
