All in one room
Updated: Oct 23, 2019
Yesterday I watched a the Oct 16, 2019 CC Forum featuring Brock Pierce, Nouriel Roubini, Tone Vays, Bobby Lee and Craig Wright at https://www.youtube.com/watch?v=rlyO5_3o7Gc
For me, the most interesting aspect of the forum was the massive disconnect between the views of classical economists such as Roubini and the views of Bitcoin proponents like Tone Vays and Bobby Lee.
The list of fundamental disagreements is long, so I will address them roughly in chronological order.
Roubini gave a brief description of what he saw as the upcoming challenges to the global economy. Bobby Lee stated that modern currencies are not asset backed, and that gave central bankers "tremendous power" since they could print money and render an individual's savings worthless. Tone Vays leap in to say "Bitcoin fixes that!". Later Roubini became very annoyed at this proposition, and it is worth saying that modern central banks operate within strict guidelines. Roubini pointed out, inflation is not a problem except in a handful of countries with exceptional bad governments like Venezuela or Zimbabwe. So, for the majority of the world, it is fair to say Bitcoin solves a problem that does not exist.
Roubini: 1, Tone & Bobby: 0.
Roubini stated that fintech was revolutionising payments with Alipay in China, UPI in India, M-Pesa in Africa, but the payment revolution has nothing to do with cryptocurrencies. He then went on to claim that cryptocurrencies are not currencies, which did not go down well with Bobby and Tone. Roubini gave his (pretty standard) definition of a currency: it must
be a unit of account - i.e. items must be able to priced in it. I.e act as a numéraire.
provide a means of payment - which must be scalable and secure.
be a stable store of value.
By these criteria, Roubini claimed that cryptocurrencies were not currencies. Predicatably Bobby and Tone interjected by claiming that a $100 bill was not a stable store of value since it lost value at about 2% a year. Roubini compared that with cryptocurrencies that had lost 90% of their value in a matter of months. (At this point, Roubini started using the term shitcoin)
So who made the most sense? Take Bitcoin (BTC) as the exemplar.
Is BTC a unit of account? Arguably it is, although an extremely illiquid one. If someone wants to price a banana, then one would have to acquire the fiat cash price, and then convert that to BTC ...
Does it provide a scalable and secure means of payment, where scalable means 50,000 transaction per second at a minimum? Not yet.
Is it a stable store of value? Would you want to keep $100 of BTC in your wallet for a week if you needed it to buy food at the end of that week? No.
Cryptocurrencies therefore fail the traditional definition of a currency. But does that matter?
Roubini: 1.5, Tone & Bobby: 0.