If bitcoin is a specific case that exposes the general flaw in innovation economics, what other opportunities are being suppressed or missed because capital is being misallocated by innovation subsidies?
This article uses the example of Bitcoin to explain why government should not subsidize innovation. While nobody (for the most part) would argue that innovation is a bad thing, it is a little different when it comes to government picking the winners and losers. At the end of the day, government just does not have the ability or the motives to make the best choices.
When government taxes individuals to fund "innovation", there is an opportunity cost. Other innovation isn't happening because individuals or businesses were forced to give money that could have been used for such innovation to whomever the government decided was most deserving. Bitcoin, of course, has thrived despite all of this. It's not that privately funded innovation stops, it is just reduced. We all know that government would never fund a technology like Bitcoin in a private sense.
Whenever I think about government choosing the best candidates to get your money, I think of Solyndra. They were a solar energy company that received government loans and grants in the neighborhood of half a billion dollars. They went bankrupt without ever producing anything of substance. There are plenty of other examples. Even among the successes, there's hardly a guarantee of that being the best use of the money. In fact, it almost certainly isn't. Nevertheless, the government will claim credit for the great thing it did and use it as an excuse to spend even more of your money.