The biggest cryptocurrency has gained notable attention lately, and as the technical and social foundations of the blockchain-based currency seem very uncertain even to the crypto investors themselves, critical analysis can be found all over regardless of political position.
As times goes by without the crypto ecosystem totally failing, an educated mind would raise the bar and demand more and more sophisticated explanations and less repetition of just same old comparisons to tulip bubble. It is not a novel approach either to claim that a volatile asset could not serve as a currency and basis for economic calculation for the whole world. The current boom of crypto investing within the core community as such is a manifestation that people do not treat it as a major currency, despite the possibility to perform some payments with it.
An economic commentator "Mr Money Mustache" strongly criticizes bitcoin in the Guardian, a media with left leanings. As some of you may have noticed, political left is more concerned about the underlying libertarianism and free market attitudes behind crypto scene. For example, Paul Krugman called bitcoin "evil" for its potential disruption against statist establishment. Even the scarce thought leaders of the right have not acknowledged this nor praised it despite their friendlier attitude towards free markets.
I am not going to go through the full text and analyze each point which I could agree or disagree. It is merely one especially interesting notion that sheds light on the economic understanding of his frame group:
"Government-issued currencies have value because they represent human trust and cooperation."
It is true that government institutionalization is a big factor that improves status of an asset or currency. However, it is the violence monopoly and enforcement that is the difference, not trust. Taxes are collected in fiat currencies such as euros and dollars, which have an official status. Their demand is driven up by force.
An economist named Ludwig von Mises defined it nearly a hundred years ago: "the state is an apparatus of coercion and compulsion". Even though you "trust" in the existence and ability of force to secure the monopoly status of a currency, there is not much actual "human trust" or "cooperation" in comparison to voluntary exchange.
In fact, the markets for cryptocurrencies and other more traditional assets without a monopoly status are more based on "human trust" and "cooperation". If the left wanted to improve their economic literacy and show it in discussions about bitcoin, they should merely stay honest and not mix beautiful words like "human trust" and "cooperation" with compulsion and coercion.
Think of a bully who leaves a bullied kid alone for the fact that his big brother is big, furious and ready to visit with a baseball bat. According to the logic of the left, the relationship between this bully and the bullied could be defined as "human trust" and "cooperation". It is really the big brother and his strength that are trusted here. Inability to realize this fundamental difference is related to the problems that make people trust planned economies and political schemes that have a disastrous track record in the past.