Am I the only one who slapped his forehead and guffawed when coming across these statements from a Federal Reserve Bank official?
Today, Minneapolis Federal Reserve Bank President, Neel Kashkari, while speaking at a technology conference, took what I found to be an especially ironic poke at cryptocurrencies:
"The problem I have [with bitcoin] is while it says, by design, you're limiting the number of bitcoins that can be created, it doesn’t stop me from creating NeelCoin or somebody from creating Bobcoin or Marycoin or Susiecoin."
http://www.coindesk.com/feds-kashkari-says-blockchain-potential-bitcoin/
Yet, it seems perfectly fine for central banks to print essentially limitless amounts of paper currency. At last check, according to usdebtclock.org, U.S. national debt is just shy of $20 trillion. Total market capitalization for all cryptocurrencies combined? About $52.7 billion (source: coinmarketcap.com). Looks like I better get started on my own crypto pronto (maybe I'll call it "Pronto" or "Prontocoin"), and I'll be sure to tell all my friends and their friends to get hopping, too - we've all got a long ways to go, before we even begin to approach $20 trillion...
You know what, though? Mr. Kashkari's remarks made me realize an important difference between government fiat currency and (decentralized) cryptocurrencies. In the end, it actually doesn't matter how many people and their pets generate their own altcoins. You literally could have 7 billion plus varieties of altcoins, one for every person on the planet, and that scenario wouldn't necessarily be inflationary. Why? The establishment (and maintenance) of a currency's value depends upon its general acceptance - consensus. Bitcoin (market cap: $29 billion) has more value than, say, Trollcoin (market cap: $220,000), because far more people acknowledge, accept, and use Bitcoin. A consensus of many people have given Bitcoin significant value. Trollcoin, not so much (I will admit, though, I'm impressed that Trollcoin is worth as much as it is). Just because I make a coin doesn't mean anyone's going to use it. Very few cryptocurrencies will ever achieve sustainable, meaningful value. With government-issued currency, however, the relationship is inverted. You have a relatively small number of entities printing and distributing money, and instead of value being determined and established by the users of the currency coming to a consensus, value and consensus are imputed/asserted/imposed by an issuing entity with established authority, and is maintained until enough people lose faith in the currency. Until then, we assume it has value, because the government said so. Unlike the government, I can't just say so. So much for my Prontocoins.
Anyway, just my two cents... Or should I say, Prontocoins?