Why Bitcoin is not the future of money :

Why Bitcoin is not the future of money

The rise of cryptocurrency meets the old dream of Friedrich Hayek to fully liberalize monetary creation. But so far nothing has been better than entrusting central banks with this role to ensure the stability of our economies. Why, then, want to change?

In monetary terms, periods of economic slowdown are always good times for experimentation, and the 2008-2009 crisis is no exception. This is at least partly explained by the fact that the economic crises are due to monetary factors, and that a monetary solution is needed. Either there is too much liquidity, which leads to inflation, or there is too little, which leads to depression. This is why the actors of the monetary reforms want to avoid any disorder likely to harm the "real economy", in other words production and trade.

Established order
But they also want to avoid a much more radical questioning of the established order. To the extent that currency fluctuations are the main cause of economic fluctuations, it is enough to ensure that the amount of liquidity on the market meets the needs of the economy, and the state no longer needs to intervene. This is the main thesis of liberal economists.

We often forget that President Franklin D. Roosevelt's New Deal began with a phase of monetary easing. At the time of the gold standard, the US Treasury was buying gold to push up prices and increase the purchasing power of heavily indebted farmers. A policy that has often been deemed ineffective.

Monetary relaxation
But to counter the effects of the 2008 crisis, Ben Bernanke, the highly monetarist president of the US Federal Reserve, and other central bank officials have done the same by buying large amounts of government securities to revive the economy. . Although most of the liquidity thus created was hoarded or used for speculative purposes, the monetary easing avoided giving way to pressures for expansionary fiscal policy.

The crisis of 1930 and 2008 sparked strong calls for reform of the banking system. In 1933, in the United States, the Glass-Steagall Act prohibited the owners of commercial banks from using their clients' deposits to speculate. After 2008, the Dodd-Frank Act, the Vickers Report in the UK and the Liikanen Report for the EU called for making the banking system more "resilient" to "shocks". While these shocks were the consequence of the economic crisis, it was made as if they were the cause: "Restore the monetary and banking order and there will be no more crisis. "

Shorting the banks
It is in this context that we must understand the appearance of cryptocurrency, the latest monetary mode. These "peer-to-peer electronic cash systems" aim to solve economic problems through monetary measures, but bypassing banks. "Why use these mediocre sufferers", ask creators of cryptocurrency, while it is possible to create systems of transaction and electronic deposits secure and inaccessible to potential controllers?

The technical details of these new liquidity systems are difficult to grasp, but not what inspires them. The beginning of bitcoin in January 2009 coincides with the banking crisis. Banks went bankrupt or avoided it with taxpayers' money. So people have tried to put their money out of reach of the tax services, to avoid depositing it in banks and to carry out their transactions without going through them. The new cryptocurrency offered the solution.