- This is Not Paper Money -
This is Mathematically Verifiable Proven Ledger Entries
On May 21, 2018, Project Syndicate, an online news magazine, published a commentary by Robert Schiller in which the professor claims that Bitcoin and cryptocurrencies will be another failed money experiment. Professor Schiller, of Yale University, is a renowned American Nobel Laureate, author, economist, grandson of immigrants and overall a great mind. Schiller called out the Internet Bubble back in 2000 as well as predicted the U.S. Housing Market Crash of 2008 when he published "Bubble Trouble" in 2007.
Professor Schiller is a very accomplished and respected economists. He is ranked among the World's most influential economists alive today. When Robert Schiller speaks or publishes, whether it is directly or through his company's reports, World Markets and Governments listen. His influential work and revolutionary thinking in economics has been on going since the early 1980's and has predicted that last two major economic bubbles and crashes. He has also recently predicted another possible economic collapse in an Intereview due to global trade wars.
Now with his most recent publication on Project Syndicate, he is questioning the very existence of cryptocurrencies. Schiller explains that money is simply paper used as a medium of exchange that is "rich in mystique" and who's value is really based on faith. In his commentary, he opens with salvos against a more recently created currency, the Euro. He explains that the Euro was hopelessly created more as a social experiment to foster change towards unity amongst the nations of Europe, which it obviously has failed to do.
Schiller then gives several examples of earlier failed attempts at revolutionizing money and the exchange of value. He goes back to 1827 when Josiah Warren attempted to invent a medium of exchange he called "Labor Notes" that could be used at his store, called the Cincinnati Time Store, to buy retail goods. This money experiment ended three years later with the store closure.
Schiller also points out other failures at revolutionizing money. During the 1930's depression era, two ideas that emerged were to base money on a metric of energy called the erg while a few years later it was proposed to take the Dollar off the Gold Standard and instead back it by the commodity of electricity. Ultimately, these technologically revolutionary attempts at transforming money failed.
Now fast forward to today and we have Bitcoin along with about two thousand other cryptocurrencies. Schiller explains that again as in the past there is a great sense of revolution from the community involved. He claims that the enthusiasm of change along with the technological innovations of cryptocurrencies have again driven communities to "faithfully" believe in this new money. The underlying premise here is that like before, these are nice ideas to believed in, but ultimately cryptocurrency will fail as other revolutionary money has before.
This time Robert Schiller is wrong. What Professor Schiller fails to understand is that Bitcoin was the first technological innovation that allowed for a verifiable medium of exchange of value without the need of a trusted third party. In other words, Bitcoin can be accepted for a value, and two parties can exchange that value using Bitcoin without need a trusted third party such as escrow because Bitcoin is both mathematically proven and cannot be counterfeited. And in my opinion, Bitcoin's greatest value is simply that it cannot be counterfeited due to computational math, unlike any other monetary unit before.
Money or currency has come in different forms thoughout the ages. Sea shells, cacao beans, metal coinage and paper money have been used as money and all have in one way or another been duplicated or counterfeited. Sea shells were dyed to the more expensive color, fake painted clay "beans" would be mixed in with a batch of cacao beans and coins were plated to resemble solid coins while paper of course in simply copied to this very day. Granted, modern currency has many anti-counterfeit measures, but they are nonetheless still susceptible to the talents of modern day counterfeiters.
So the next time someone tells you that cryptocurrencies are a fad, have no intrinsic value and will ultimately fail as money, you can tell them that for the first time in the history of mediums of exchange, two parties can safely transact without the need of any trusted third party, be it an escrow company, bank, or government. It is this solution and innovation that makes the idea of Bitcoin and cryptocurrency so revolutionary that it will forever change the future of money.
Sources:
Project Syndicate
Schiller interview
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