Martin Wolf: The Libertarian Fantasies of Cryptocurrencies: "the state can be a dangerous monster. But it is also essential: it is humanity’s ultimate insurance mechanism. The world of anarchy is one of competing bandits. It is far better to have just one, as the late Mancur Olson argued in Power and Prosperity. Moreover, he added, liberal democracy helps tame that bandit. States exist to provide essential public goods. Money is a public good par excellence. That is why dispensing with the role of governments in money is a fantasy. The history of the so-called cryptocurrencies demonstrates this.... The best way to view cryptocurrencies is as speculative tokens of no intrinsic value. One could have value if it became the currency of choice of a jurisdiction. Yet there is a compelling reason why, in normal circumstances, people use the currency of their own government.... As the Financial Times’ Izabella Kaminska and Martin Walker of the Center for Evidence-Based Management argued in evidence for the House of Commons Treasury committee, so far the cryptocurrency craze has made online criminality easier, created bubbles, fleeced naive investors, imposed grotesque waste in so-called 'mining', offered funding for malfeasance and facilitated tax evasion.... It is no longer enough to bleat in favour of 'innovation' or 'freedom'...

“Distributed ledger technology” including “blockchain” might prove valuable in making activities dependent on safe record-keeping, notably finance, more efficient and secure.... Replacing cash with digital tokens of some kind would be relatively simple. It would mainly raise questions about the degree of anonymity of such replacements. Far more potentially revolutionary and destabilising possibilities would arise if the public at large were able to switch from deposits at commercial banks to absolutely safe accounts at the central bank. This radical idea has obvious attractions since it would remove the privileged access of one class of businesses, banks, to the monetary services of the state’s bank.... As everywhere else, innovation is transforming monetary possibilities. But not all changes are for the better. Some seem clearly for the worse. The right way forward is to reject libertarian fantasy, but not change itself: our monetary system is far too defective for that. We should adapt. But, history reminds us, we must do so carefully...


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