Economist VS Cypherpunk. The final battle for trust.
Money is trust. And that's all it is. When you exchange a tangible good or a service against "money", it is only because you trust that you'll be able to exchange it again for different goods or services. The stuff that is used for money as no intrinsic value if that trust goes away. Be it gold. Gold is pretty useless unless you find someone that is willing to accept it for payment. Even for jewellery. Who are you going to impress with a watch made of a worthless metal? It might as well just show the time.
So, really, it is trust that we are trading, when money is going around.
For an existing money, it is crucial for trust to be maintained. If people lose trust in the money, they will trade it for another curency more worthy of trust. That shit happens all the time in the third world. In Venezuela, you need a special permit to get foreign currency. That's because the government fears that there is little trust in the local money, and that people would convert their money to something else, given the opportunity. Venezuelan travellers just love it. So the Euro needs to stay trusted in order to keep existing. People need to trust that the Euros they have now will be worth the same (or more!) in the foreseeable future. The Central Bank of Europe is hard at work doing just that, by wrecking a punishing havoc on the Greek economy for example, as a strong message to the world that "a Euro borrowed is a due Euro".
For a new currency, the key is "earning trust". We'll take again the example of the Euro, that didn't even exist 15 years ago. Why would people trust a currency that just came into existence ? Well, the Euro was forced upon every single citizen of a huge portion of the Gross Global Producters. Not that I'm saying it was a bad idea or anything, but for a factory in China, taking payment in Euro is only acceptable because they know the whole population of the Eurozone is hostage of it, so it can't really collapse. Too big to fail.
What about Bitcoin? It came into existence a few years ago, and nobody is captive of it. Plus, it is backed by no "too big to fail" entity. So how would anyone want to trust it to have any sort of value ? Let's make a little digression.
When Apple released the iPhone, it was a huge gamble. Not only for them, but also for the customers. What if you buy a device for a small fortune, only to find that the commercial success doesn't live up to Apple's expectations. Then nobody will be developping apps for it. And one year later, Apple announces that they will not make a sequel to it and concentrate on making computers. Who would be crazy enough to be in the first million buyers ? Well, people turn to experts. People that know their shit go on TV and say that the iPhone is fucking awesome, that it's what the world has been waiting for, and that it's the future of computing and so on.
The capacity of an expert to leverage trust is key. And, in the case of Bitcoin, it is up to the experts to build the trust.
So, who are the experts ? Who are we going to trust when it comes to a computer-borne phenomenon, that is also a money ? Let's have a look at our contenders:
Computer knowledge: 10
Economy knowledge: 5
Vested interest: null
Looks like: a punk
Computer knowledge: 2
Economy knowledge: 7
Vested interest: Not sure...
Looks like: he would make a good husband for your daughter.
Twitching about the "7" in "knows about money"? Well, realize that economy is not an exact science, really. Economists are always hard at work trying to guesstimate economic stuff. And their rate of success is often undistinguishable from that of a coin toss. Subprime crisis? Nobody saw it coming. Greek crisis? Everybody did. Not just economists. There's just so much debt you can go into before the skies start falling. Not that economy is a scam. It's just that the accuracy of their instruments are comparable to those of weather scientists. So you might as well toss a coin. It's not me saying it, it's real scientists.
So, if we pit both our experts against each other on the ring, it looks like the cypherpunk will beat the crap out of the economist. But it is the exact opposite that happened. Even though cypherpunks have never lied to anyone, are motivated only by philosophical stuff like truth, freedom and equality ; while economists have been genuinely wrong time and time again, and are not unknown for actually lying if you pay them for it ; nobody listens when the cypherpunk talks, and all ears are on the economist.
Cypherpunks have been adamant for years now that crypto-currencies such as Bitcoin are a very safe and trustworthy mean of exchange for an internet-based economy. But it's only now that economists start saying the same thing that people are willing to hop on it.
You know why? It's preposterous, but it must be said. The economist wears a suit.
Enough already with blog articles?