In October 2020, PayPal added the option for some major cryptocurrencies to its platform where according to the press release “migration toward digital payments and digital representations of value continues to accelerate”, and recently the Swiss Government provided their comprehensive regulatory framework for cryptocurrencies. The U.S. Securities and Exchange Commission (SEC) is also increasing its regulatory actions around the emerging technology known as the blockchain which is the general term for the even more technical description, digital ledger based on cryptography.
Over the past year, and particularly the past few months, Bitcoin and the large field of cryptocurrencies have seen a market cap touching $1.5 trillion as Bitcoin is nearing the total market capitalization of silver or $920 trillion and $1.4 trillion respectively. Some expect Bitcoin to take the place of gold, which has a market capitalization of approximately $11 trillion. Bitcoin is being called digital gold due to the cryptographic security that makes it an asset where wealth can be stored, while other cryptocurrencies are trying to solve the difficult problem of scaling to large transaction flows per second.
Bitcoin has shown itself to be one of the most important open science projects and one of the most resilient technologies. In the original whitepaper by the pseudonymous Satoshi Nakamoto, which is likely a group of developers, Bitcoin is described as a cash system based on the cryptographic digital ledger (blockchain), while in actuality it is becoming an effective store of value or hedge. Within the whitepaper there is also the distributed production of Bitcoin with a home “mining” ability for those who would commit their own computer power to verification of the blocks of transactions as they were produced. This aspect of the experiment looks to have been an attempt to get money to those who needed it as the 2008 Global Financial Crisis hit. While Bitcoin did not achieve the full idea, due to the takeover of mining by large mining centers with massive computer arrays, the idea of the distribution of money is there. Coupling the idea of the distribution of money with cryptography may prove to be one of the most important innovations in money and at a time of ongoing economic crisis.
Under current conditions, like the Bitcoin white paper suggests, people need the money that can be used as cash. To do this, a cryptocurrency must be capable of many transactions per second such that the velocity of money can increase. There have been the community or parallel currencies of the past that have served to increase the velocity of money effectively, for instance, the 1930s Wörgl Experiment in Tyrol, Austria, but none have had the technical ability or system in place to create something as sophisticated as the blockchain of today. In 2014, while at the P2P Foundation, thinking that the problem was velocity, I had suggested a possible cryptocurrency with a spend-date on it. To do this, a technical adjustment on a blockchain for the wallets could be applied that would blacklist any transfers from wallets that hold rather than spend. I had thought that such a currency would be effective for people to use and to create new, small enterprises such as in villages with access to the Internet.
In this interview, I discuss the topic of currency, money, and the current economic situation with Steve Keen, an economist and political thinker who works on economic and ecological dynamics along with modern monetary theory.
Steve Keen is an economist and political thinker working in the main area of econometrics. He is a Minsky Honorary Research Fellow and is the author of the 2001 (2011 2nd ed.) book "Debunking Economics". Professor Keen can be found at:www.patreon.com/ProfSteveKeen
Layne Hartsell is a research professor in the Department of Philosophy, Center for Ethics in Science and Technology, at Chulalongkorn University in Bangkok and at the Asia Institute in Seoul. His work is in energy, economy, and the environment.
