Bitcoin is Still Economically Useless = Economist

[Abiky]

It's not something new that economists are trying to label Bitcoin as a ponzi scheme. It has been happening since the early days of Bitcoin, and what I can say is that people who listened and followed the advice of such economists have lost a big opportunity not only to make a profitable online investment, but also lost the chance of finding jobs opportunities on the internet paying in BTC.

Fact is that only time can prove who is right and who is wrong on this story. And so far, time has been at the side of Bitcoin enthusiasts. Let's see where we are going to head on the following years.

I'm pretty confident. If Bitcoin were something useless, it would have already failed and the whales who are heavily investing on it would have never adopted the idea.

Exactly. Economists won't admit Bitcoin is a real currency, especially when they're tied to the corrupt Fiat money system. It's in their best interests to side with banks. Not even the institutionalization of Bitcoin will convince them. If you're smart, just ignore these jerks. Time has proven them wrong as Bitcoin becomes bigger and stronger than ever. Adoption is rising, with some countries going as far as making it legal tender. It doesn't seem BTC will be going anywhere soon.

What will fail is Fiat as inflation continues to undermine people's trust in central banks. Once the vast majority of people worldwide start using Bitcoin on top of Fiat currencies, banks will be doomed. At least, that's what many bitcoiners dream of. Who knows what the future will bring?

[anarkiboy]

Only few will get rich from cryptocurrencies, it's just economically impossible for everyone to become rich.

Simple fact.

[legendbtc]

It's not something new that economists are trying to label Bitcoin as a ponzi scheme. It has been happening since the early days of Bitcoin, and what I can say is that people who listened and followed the advice of such economists have lost a big opportunity not only to make a profitable online investment, but also lost the chance of finding jobs opportunities on the internet paying in BTC.

Fact is that only time can prove who is right and who is wrong on this story. And so far, time has been at the side of Bitcoin enthusiasts. Let's see where we are going to head on the following years.

I'm pretty confident. If Bitcoin were something useless, it would have already failed and the whales who are heavily investing on it would have never adopted the idea.

I don't know who those economists are and what remarkable achievements they have achieved. But I believe people like Elon, Trump, Larry Fink or Michael J. Saylor would not be stupid to invest billions of dollars in BTC for no reason. I don't think so-called billionaires are stupid enough to not know what they are doing when they spend billions of dollars investing in bitcoin.

Bitcoin is useless to those who missed the opportunity with it, who were not able to make significant profits from it and now they started spreading negative things about it with many wishing people to become like them. Those are just selfish, jealous actions of losers, not fair comments from an economist.

[Agbamoni]

An economist making such a statement about an asset such as bitcoin fails from the standard of economist practice, because if he can make such a statement about bitcoin not having economic value how much more will he say about gold and other none non-transferable assets?

Trump's support for crypto was born out of his convictions about the technology and what role bitcoin can play in increasing the economic values in the state, take El Salvador for example, how far they have gone in their bitcoin state reserve.

Don't forget that these economists are divided into two those who accept realities and support them while the others are those who are critics of evolution and advancement. Since the evolution of the financial system, some of economics are doing so much to see that its won't work out well.  The idea is that the traditional system has been working for years now and moving into the digital system they are scared that the practice of Bitcoin and another digital system of money is not safe and is dangerous to the financial system. One main reason the government funds cannot be converted to Bitcoin, USDT, or any other digital currencies is because they do not want to take a chance for scams, and hacks in their system. Few clicks and billions of moneys has been swept off from the country's treasury.

[legiteum]

He's right that Bitcoin (and generally, cryptos) do not serve any mainstream purpose outside of speculation.

Besides investing in bitcoin, I am still using bitcoin to transfer money and make payments to some overseas customers and services, so is he correct in saying that bitcoin is only used for speculative purposes?

No, he's saying it is not used for mainstream purposes, e.g. replacing everyday credit card and cash transactions for instance. After 14 years and hundreds of billions of dollars, Bitcoin processes perhaps 0.00001% of the world's transactions on a daily basis.

Blockchain is a great architecture for what it was designed to do, but the problem it was trying to solve is very narrow.

Bitcoin was not created to be a speculative asset, but we turned it into a speculative asset.

So clearly you and he are wrong in saying that bitcoin doesn't serve any mainstream purpose. It was our behavior and usage that distorted the original concept of bitcoin's creation and now we blame it, LOL.

I agree with all of that--and that was the whole point of my post: that Bitcoin is almost exclusively a speculation instrument today, not anything Satoshi envision.

What is Bitcoin and what it can do, we need evaluation from the world community. None of us have the right to judge anything about it, you or that guy or I don't represent other people or this world. [...]

Absolutely wrong. That was true before the Bitcoin whales started asking for government handouts.

Now that that Bitcoin is political, every citizen needs to form an opinion about it since we all have to pay for this.

Live by the sword, die by the sword...

He absolutely did not envision Bitcoin being used in a mainstream way for everyday transactions, and the technical architecture of blockchain makes that impossible.

The current system where every user is a network node is not the intended configuration for large scale.  That would be like every Usenet user runs their own NNTP server.  The design supports letting users just be users.  The more burden it is to run a node, the fewer nodes there will be.  Those few nodes will be big server farms.  The rest will be client nodes that only do transactions and don't generate.

See? He used even those words: "large scale". And also "big server farms". If he didn't think about mainstream, why he used words like that?

His idea of "large scale" here was thousands of users, not billions. If you told Satoshi that he designed a system that would replace the world's daily credit card transactions he'd say you were out of your mind.

Satoshi wasn't a moron, and he knew very well that blockchain would never scale to anything close to mainstream.

Satoshi never meant to Bitcoin to be used by "everybody", or even a "lot" of people: the problem Bitcoin (and blockchain generally) solves is an extremely narrow one.

Simplified Payment Verification is for lightweight client-only users who only do transactions and don't generate and don't participate in the node network.  They wouldn't need to download blocks, just the hash chain, which is currently about 2MB and very quick to verify (less than a second to verify the whole chain).  If the network becomes very large, like over 100,000 nodes, this is what we'll use to allow common users to do transactions without being full blown nodes.  At that stage, most users should start running client-only software and only the specialist server farms keep running full network nodes, kind of like how the usenet network has consolidated.

So, is it "a lot of people", when you think about "over 100,000 nodes"? And again, there are "the specialist server farms" mentioned.

Nodes are not users. The network cannot process mainstream loads no matter how many nodes are on it.

Edit:

Eventually at most only 21 million coins for 6.8 billion people in the world if it really gets huge.

See? When typing "for 6.8 billion people" of course he thought only about a small niche.

No, he's making the point that the system would never scale to that level.

[shield132]

This guy may have made sense, though I suspect he's a Democrat. Apart from early holders making a killing off Bitcoin, how has it benefitted the world economy? Your opinion though...

Nobel Prize-winning economist Paul Krugman said that Tech-bro's support for Trump and Vance seems to be related to cryptocurrency/ He said that in reality. Bitcoin is still economically useless and useful just for money laundering and extortion. He described Trump's call for the creation of some kind of national Bitcoin reserve as equivalent to the government rescuing a scandal-ridden, value- and environment-destroying industry.

https://www.nytimes.com/2024/07/29/opinion/vance-trump-cryptocurrency.html 

Bitcoin is the worst currency for money laundering because blockchain is an open book and every transaction is listed publicly. Also, blockchain analysis technologies are advanced in tracing and if anyone tries to launder money, they are usually traced and discovered.
Paul Krugman has no idea what he is talking about and that's a huge problem with many famous people. Bitcoin has many benefits and one of them is the decentralization of this currency, it gives you the possibility to be your own bank and it also solves the problem of trusting a 3rd party while making transactions online. Isn't this a revolutionary?

I do not expect a nobel prize-winning economist to say something like this. They will not know anything about bitcoin but prefer to start misinforming people and feeding them with wrong information.

I think that they are either:
1. Bored.
2. Have their own interests.
3. Someone pays them to say stupid things about Bitcoin.

[Blitzboy]

An economist making such a statement about an asset such as bitcoin fails from the standard of economist practice, because if he can make such a statement about bitcoin not having economic value how much more will he say about gold and other none non-transferable assets?

Trump's support for crypto was born out of his convictions about the technology and what role bitcoin can play in increasing the economic values in the state, take El Salvador for example, how far they have gone in their bitcoin state reserve.

Don't forget that these economists are divided into two those who accept realities and support them while the others are those who are critics of evolution and advancement. Since the evolution of the financial system, some of economics are doing so much to see that its won't work out well.  The idea is that the traditional system has been working for years now and moving into the digital system they are scared that the practice of Bitcoin and another digital system of money is not safe and is dangerous to the financial system. One main reason the government funds cannot be converted to Bitcoin, USDT, or any other digital currencies is because they do not want to take a chance for scams, and hacks in their system. Few clicks and billions of moneys has been swept off from the country's treasury.

Bitcoin and USDT are discussed a lot, and the economic world is divided. Traditionalists are wary about change since they've always done things a certain way. Innovators believe these new technologies can transform our banking systems.

Now I get security worries. We all know hacker and fraud horror stories. But let's not let those stories obscure digital currency' amazing benefits. Higher transparency, lower transaction costs, and global financial inclusion are our goals. This possibility to democratize finance is worth fighting for.

I've always innovated. I think digital currencies are future. But we must do it well. We need strict laws and security to mitigate those threats. People must be taught how to utilize these devices safely and ethically.

[Wakate]

This guy may have made sense, though I suspect he's a Democrat. Apart from early holders making a killing off Bitcoin, how has it benefitted the world economy? Your opinion though...

Nobel Prize-winning economist Paul Krugman said that Tech-bro's support for Trump and Vance seems to be related to cryptocurrency/ He said that in reality. Bitcoin is still economically useless and useful just for money laundering and extortion. He described Trump's call for the creation of some kind of national Bitcoin reserve as equivalent to the government rescuing a scandal-ridden, value- and environment-destroying industry.

https://www.nytimes.com/2024/07/29/opinion/vance-trump-cryptocurrency.html 

We can all give our own opinion about Bitcoin but it wouldn't make sense when we are trying to tag Bitcoin to look bad in the eyes of people that have less knowledge about it. If he thinks he hate Bitcoin, that's fine but it must not be to this extent. There are countries that are holding high amounts of Bitcoin in their portfolio and the value keep increasing as the price of Bitcoin keeps going bullish. I think he should talk more about Bitcoin not adding value but we have seen many holders that have made a lot of money from Bitcoin. Just imagine buying Bitcoin at low price and selling at a very high price, this is profits and no one wants to think that Bitcoin has no value at all when their are so many investors making huge money from it.

[$weetne$$]

This guy may have made sense, though I suspect he's a Democrat. Apart from early holders making a killing off Bitcoin, how has it benefitted the world economy? Your opinion though...

The benefits are small but it is only small as Bitcoin has not been adopted globally. People can use Bitcoin for buying and selling in some part of the world but it is not widely accepted yet therefore there is not much Bitcoin can do to the economy but because of the profits that people are getting from their investment in Bitcoin or from trading, they are using those profits to buy things or make establishment that contribute to the economy as they are paying taxes and hiring workers which they also pay them. Bitcoin is not economically useless, those words are just coming from an economist that do not understand Bitcoin therefore he is going to call Bitcoin useless. Bitcoin is a valuable assets and anybody that owns Bitcoin can testify to this fact because they have experience what Bitcoin can do.

[CryptoHeadlineNews]

Not everybody needs to see the importance of Bitcoin as a decentralized digital currency, and it's very okay for such people, because weather they believe in Bitcoin or not, it can never affect its price value, which is one quality I so much love about the currency. So regarding the statement said by the economist who called Bitcoin useless, I'm very happy another well renowned author and economist, in the person of Robert Kiyosaki was able to recognize the importance of Bitcoin as an asset worthy of investment for long term.

Robert Kiyosaki
@theRealKiyosaki
Why GOLD, SILVER, BITCOIN will rise in price when TRUMP becomes President again.

I predict gold will rise from $2,400 an ounce to $ 3,300:  silver from $29.00 an ounce to $ 79.00:  and  Bitcoin from $67,400 per coin to $105,000 by August 2025.

   

[Silberman]

This guy may have made sense, though I suspect he's a Democrat. Apart from early holders making a killing off Bitcoin, how has it benefitted the world economy? Your opinion though...

Nobel Prize-winning economist Paul Krugman said that Tech-bro's support for Trump and Vance seems to be related to cryptocurrency/ He said that in reality. Bitcoin is still economically useless and useful just for money laundering and extortion. He described Trump's call for the creation of some kind of national Bitcoin reserve as equivalent to the government rescuing a scandal-ridden, value- and environment-destroying industry.

https://www.nytimes.com/2024/07/29/opinion/vance-trump-cryptocurrency.html  

Does it surprise you? Because I am not surprised at all, modern economists have forgotten completely the role that gold had and that it can still play on the current economy, so it is obvious that when they take a look at bitcoin which is an even better form of gold, they are not really going to appreciate it and instead they will attack it, as it has happened here, however a form of money that offers the ability to buy goods all over the world with it, with an improved level of privacy and that it can retain its value way better than fiat does is without a doubt valuable for a great deal of the population.

[pooya87]

But Krugman is wrong to say that Bitcoin serves no economic purpose. Speculation is a valuable product, and one that has been in existence since human beings started trading with one another thousands of years ago. Bitcoin, as a meme investment, is useful for people, and will continue to be useful for people--as will meme investments in other cryptos, and other digital currencies.

And you are wrong as well.
Bitcoin is not for speculation. It is also not a "meme investment".

Bitcoin is a currency and a sophisticated payment system that is working globally and 24/7 without ever shutting down. That gives it the value that goes up and down then it attracts investors who see it only as an investment.

[legiteum]

And you are wrong as well.

Bitcoin is not for speculation. It is also not a "meme investment".

Bitcoin is a currency and a sophisticated payment system that is working globally and 24/7 without ever shutting down. That gives it the value that goes up and down then it attracts investors who see it only as an investment.

You might think that, but 99% of Bitcoin holders just see it as an investment instrument.

As a payment system, Bitcoin is terrible, costing up to $30 per transaction and taking up to 30 minutes. That's insane compared to an ordinary credit card transaction. That's why almost nobody uses it that way.

And Bitcoin isn't even private, and using Bitcoin for a payment is much more dangerous than using a credit card since your transaction is publicly viewable forever.

So Bitcoin does not have any unique practical use, thus it's only useful (and very useful at that) as an investment instrument. People buy "Bitcoin" because they thing "Bitcoin" will go up in value--and for almost no other reason.

[pooya87]

You might think that, but 99% of Bitcoin holders just see it as an investment instrument.

There is no way to measure that, so that number is purely your guess.

As a payment system, Bitcoin is terrible, costing up to $30 per transaction and taking up to 30 minutes. That's insane compared to an ordinary credit card transaction. That's why almost nobody uses it that way.

FYI credit card transactions take months to become finalized. Bitcoin's transactions take on average 10 minutes to become finalized (aka irreversible).
As for the cost, nobody ever claimed that Bitcoin is a "perfect" payment system. It has its shortcomings but it still is a payment system that works. The only decentralized payment system in fact. That's not to mention that credit card fees are percentage wise so unless you are paying for peanuts, it is going to cost a lot more than a bitcoin transaction that with current fee rates barely surpasses half a dollar.

And Bitcoin isn't even private, and using Bitcoin for a payment is much more dangerous than using a credit card since your transaction is publicly viewable forever.

Only if you live in a dictatorship without certain fundamental rights

[darkangel11]

What does it even mean that he calls these people "Tech-bro's" that's mocking and IMO is unbecoming of a Nobel Prize winner. So is tech investment a bad thing according to this man? Is it worse than buying bonds?
So, another guy claims that bitcoin is useless. I remember people saying the same thing about The Internet. I can tell you a story. My father used to be like that. I remember when I started going to the gym as a teenager, he found out and said that it's a useless activity. It will only make me tired, cost me time, I'll have health issues and I could be doing some house work instead. A few years later he could no longer carry heavy objects, so he'd ask me to do the lifting, but it evolved into literally every other thing that required strength. I'd unscrew rusty bolts for him and take doors of the hinges.
Bottom line, we often don't see uses of certain items and activities for a long time, until we actually get into a situation where they're needed. You think you don't need a fire extinguisher until something catches fire. Krugman has lived his whole life without bitcoin so he doesn't see the need for it, but nowadays we live in a different world than people in the 20th century.

[vjudeu]

His idea of "large scale" here was thousands of users, not billions. If you told Satoshi that he designed a system that would replace the world's daily credit card transactions he'd say you were out of your mind.

Satoshi wasn't a moron, and he knew very well that blockchain would never scale to anything close to mainstream.

Let's see: https://www.metzdowd.com/pipermail/cryptography/2008-November/014815.html

The bandwidth might not be as prohibitive as you think.  A typical transaction would be about 400 bytes (ECC is nicely compact).  Each transaction has to be broadcast twice, so lets say 1KB per transaction.  Visa processed 37 billion transactions in FY2008, or an average of 100 million transactions per day.  That many transactions would take 100GB of bandwidth, or the size of 12 DVD or 2 HD quality movies, or about $18 worth of bandwidth at current prices.

If the network were to get that big, it would take several years, and by then, sending 2 HD movies over the Internet would probably not seem like a big deal.

If he didn't think about billions of users, then why he used those comparisons with Visa?

[legiteum]

FYI credit card transactions take months to become finalized.

Wow, seriously? You've never used a credit card before? Because if you had, you'd know a transaction takes a few seconds typically, not "months".

I really didn't think it was possible to exist in our modern world without using a credit card. Congratulations .

And Bitcoin isn't even private, and using Bitcoin for a payment is much more dangerous than using a credit card since your transaction is publicly viewable forever.

Only if you live in a dictatorship without certain fundamental rights

Huh? All human societies have criminals in them, and they exploit public ledgers like Bitcoin's in order to victimize people.

Simply "having" rights--as all people do--doesn't mean those rights are automatically protected. That requires a good government, good law enforcement, and personal diligence--and even a little luck.

If he didn't think about billions of users, then why he used those comparisons with Visa?

Because in terms of what it accomplishes, Bitcoin does, roughly, what Visa does--in terms of a single transaction.

In other words, Bitcoin could have been described (before the understanding of chain analysis) as, "like a Visa transaction that is resistant to government interference". That is just one narrow context though. You could describe anything like that, e.g. a bicycle is like a motorcycle you power yourself--but that doesn't mean its the same thing or has the same capabilities--and anybody, say, like Satoshi, using that analogy would assume you knew that...

[Abiky]

I don't know who those economists are and what remarkable achievements they have achieved. But I believe people like Elon, Trump, Larry Fink or Michael J. Saylor would not be stupid to invest billions of dollars in BTC for no reason. I don't think so-called billionaires are stupid enough to not know what they are doing when they spend billions of dollars investing in bitcoin.

Bitcoin is useless to those who missed the opportunity with it, who were not able to make significant profits from it and now they started spreading negative things about it with many wishing people to become like them. Those are just selfish, jealous actions of losers, not fair comments from an economist.

Calling Bitcoin "useless" is a means to scare people away from it. After all, big banks and governments don't want to lose their cut. They want the corrupt Fiat monetary system to keep chugging along as usual. If the aforementioned entities talked positively about Bitcoin, the masses would abandon Fiat. And that's something they don't want.

Economists saying that BTC is useless, are none other than "government puppets". Eventually, all of the world's governments will recognize BTC as an alternative currency the more it grows in popularity and mainstream adoption. They wouldn't want to miss the taxation benefits BTC provides, would they? Rich people already recognized Bitcoin's potential. So it should only be a matter of time before prices skyrocket. Are you ready for the next "pump"?

[Alpha Marine]

I do not expect a nobel prize-winning economist to say something like this. They will not know anything about bitcoin but prefer to start misinforming people and feeding them with wrong information.

People like this when you respect them better when you see them from afar. That way you'll continue to rate based on what they have done and the views you see than portray, but when you go deeper and see where they stand you might get disappointed.
We have a noble prize winner from my country too whom the whole country looked up to. Growing up he was used as the SI unit of intelligence (if you know what I mean). Fast forward to now, he's a strong supporter of our current government which is a disgrace. The government is so bad that whoever defends it sounds stupid and that's what this noble prize winner has turned to.

Another thing is these men are pretty old school and have refused to evolve. They believe in the traditional way of things. I read through the article and he makes sense to a certain degree and that's what I've come to conclude that it's just his opinion. I strongly always say that we shouldn't give people too much relevance in the Bitcoin space, not politicians like Trump. not Tech billionaires like Elon Musk, not Financial sector billions like Jamie Dimon, and certainly not noble prize winners like Paul Krugman.
Each of these people has their own opinions and their opinions are shaped by different things but its just their opinion, they're not bitcoin.

[Value.Virtue]

If you’ve never been in a situation where you have your money held hostage by banks or governments, you might not appreciate what Bitcoin has to offer. If you haven’t lived long enough to watch inflation change people’s quality of life, you might not appreciate what Bitcoin has to offer. If you’ve never had to send funds quickly to another country, you might not appreciate what Bitcoin has to offer. I’m guessing the author has lived a life void of real world experiences.

Absolutely correct Sir, Bitcoin renders Swift and remote access to our funds anywhere without restrictions and performs 24/7 on the clock ⌚,secures your wealth from thief and no one will even know how wealthy you are not even your spouse, it stabilizes you regardless of inflation rates even though there is a fall in price the numbers you are holding are still in tact and when there is a big rise in price you ain't gonna loose rather you may have double or multiple of your initial investment, I love transacting with BTC and cryptos and I also prefer it to transacting with banks except for reference purposes or in filing a suit or court cases when there is dispute between customers.