Erik Voorhees is among the top-recognised serial entrepreneurs in Bitcoin, which he views as one of the most important inventions ever created. Erik has been at the centre of the Bitcoin movement since April 2011. He is well known for his vocal advocacy of the “separation of Money and State”.
It seems one of the greatest challenges facing Bitcoin is not technical, but educational.
The world is having a hard time coping with its new discovery. Economist and professor Peter Morici, writing for Fox News on 3rd March, has written one of the worst bitcoin articles of the year, and it must be addressed.
Gleefully simmering in our fabricated despair, Morici betrays his agenda immediately:
“Bitcoin believers were shaken to their digital souls when Mt. Gox, the world’s largest exchange, defaulted… and closed.”
In his very first sentence, facts are disregarded. Mt. Gox was barely the third largest by the time of its demise. But it’s not facts upon which Morici’s argument fails, it’s theory and philosophy.
Quantifying value
“Money,” Morici says, “provides a secure place to keep your wealth.”
Incorrect, sir. Money is a measurement of value. It is not a place, and it is not in itself “secure” any more than inches and yards are a secure location to store one’s measurements, or than minutes themselves might be entrusted to secure one’s time. He continues:
“Bitcoin traded for $1,117 on December 4, and now commands only about half that amount.”
Morici’s willingness to ignore bitcoin’s long-term track record (one of appreciation unmatched by any other asset class, anywhere) reveals the extent to which he has blinded himself.
“[Bitcoin is no place for your children’s college fund or retirement savings.” With this I must agree, but then neither is fiat, which in its best case, over a period of twenty years will scarcely measure half of its original.
“The earliest currencies were coins …” he says (wrong again, professor, but that’s not my true gripe), “often with the face of the sovereign stamped on gold or silver to instill confidence.”
Here is where petty disagreement changes to serious contention. Gold and silver needed no sovereigns stamped on them to “instill confidence.” It was the metal itself, valuable as a commodity, which made the coins desirable. Caesar’s visage was little more than marketing for the tyrant.
The fraud of fiat
Morici writes, “The Chinese issued paper money more than 2,000 years ago.”
Yes, and the vast majority of them collapsed in hyperinflation, as have over two dozen fiat currencies in only the past hundred years. That the fraud of fiat is as old as time does not mean we should continue falling victim.
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And to matters of inflation, “Bitcoin advocates are riveted by the temptation of government to print too much and destroy its value through inflation.”
True, we tend to prefer money without perpetual debasement, which seems to put us at odds with professors (who, upon achieving tenure, have difficulty determining why their raise feels inadequate).
“However, inflation is hardly a problem in the United States, Europe and Japan, and central banks in other countries hold dollars, euro, and yen to back up their currencies.”
Okay professor, just as it would be hardly a problem if I took but a few percent of your assets each year for my own, indeed you may not even notice.
Morisi laments that “There is no ‘Bitland’ where a government has declared the Bitcoin legal tender to buy goods and pay taxes.” Are we in such a dismal state that even trade itself must be ordained by a king for legitimacy, professor?
Might I be permitted to breathe without a license or speak without permission of your preferred politicians? Why not then may I trade without their approval?
What anointed property is bestowed upon “dollars” which, being absent from bitcoins, precludes their usefulness? If you would not even eat your supper without the government first giving you its blessing, then I feel sad for you, for you are truly under a dismal spell and, and suffer a strange kind of man-in-the-sky worship.
Issues of privacy
Here though I must admire Morici, at least briefly, for not condemning the privacy of Bitcoin as a sign of reclusive and improper behaviour. But, it seems he resists the temptation to vilify privacy by claiming that Bitcoin simply offers none of it.
“Transactions can be spied by hackers or government security agencies through its fairly open payments system, the government can subpoena your Bitcoin records or those of your exchange when it needs.”
Professor, is it not a welcome improvement in human decency that a government must now subpoena for records, instead of calling upon its Orwellian spy arsenal – the NSA?
And while an individual, once named, can certainly have guns drawn upon him by Government, have you ever tried obtaining the name belonging to a Bitcoin account? Such a feat is not so easy, and thank goodness that at least several more barriers have been placed between the people and their rulers.
Though this is so far shallow, for the above is Morici’s basic pretense for his real thesis, displayed so eloquently at the end.
“Detractors of paper money have always been fixated by the absence of gold to back it up, but they fail to recognize what really makes a currency accepted and secure – the government guarantee and the good sense of the sovereign not to abuse its franchise.”
And he finishes with grand vision, “It’s not the gold but the face of Caesar – the promise his image carries – that makes a coin money.”
With this final beautiful prose, despite my stubborn resistance, Morici may have ultimately convinced me of his opinion.
And this is why, from this day forward, I shall with diligence stamp the face of Caesar into each slice of my bread, and carve it delicately upon my door, so that my food may always be rich and sustaining, and my home may be guaranteed its utility forever.
Bitcoin may fail for a great many reasons, Mr Morici. But if it does, it will not be for want of a tyrant’s face behind it.
Roman Coin image via Shutterstock