Maybe, just maybe, it's not Adam Smith who hates bitcoin like this misleading title suggest, but Krugman.
The guy may have a nobel prize, but his strong leftist views seems to be clouding his judgement.
Never before in history was there anthing like bitcoin. It's not a commodity like gold - is is pure fiat money, fully based on trust. Hoarding gold or silver or any metal or rare thing was a bad idea because of the alternative uses which where then prevented.
There is nothing inherent to bitcoin that may hamper a "country to convert a great part of this dead stock into active and productive stock".
In fact, by reducing friction, making transaction costs almost negligible, it will help this very thing!
How could Adam Smith may have hated something that did not exist back then, and that many economists had previously advocated for - a single worldwide fiat currency.
The only real problem is for governments, who won't be able to use the seignorage tax anymore, ie inflation, ie printing money out of thin air at the detriment of currency owners, to coerce people to do things or lose money.
Bitcoin is a game changer, the end of a tyranny - the use of force to make people work, instead of being able to live with what they have without the fear that the government will decide to reduce the purchasing power of what one owns by 20% overnight, through inflation or plain just stealing (as in Cyprus) to "transfer that wealth", reverse Robin Hood style, to their well connected and too big to fall fat-cat friends.
Also, it's quite fun that a system based on trust, of the people, by the people, is not trusting the government. It's something the founding fathers would certainly be quite proud of :-)
EDIT: And to those who argue the amount of computing power and electricity to run the bitcoin network is insane, just think for a second about Moore law, or how much GDP goes to the finance sectors. IIRC it is around 10%. That sure is a whole lot of money for the simple job of allocating resources (currency, saving, investment, transaction, etc).
It seems ripe for disruption.
A bitcoin economy will be able to do the same job for a fraction of these cost, thus allowing capital to be best spent on other uses (say actually advancing technology, or building real stuff) ie human capital and physical capital, which according to mainstream economic growth theory (from Solow to Romer) is essential for economic growth - real economic growth.
If you have some data and some time to spend, draw a graph of the log of gdp per capital and the percentage of the gdp spend on the finance sector. You'll see a strange recent trend - less growth, and more gdp for the finance sector. I'm not arguing a causation, but that's some food for throughts.
Just like Gandhi say - first they ignore you, then they fight you, then you win. We are currently at step #2. I expect the heat against bitcoin to raise in the next weeks. It's a big threat for the current establishment cash cow. It's a blessing to anyone who can provide value.
The guy may have a nobel prize, but his strong leftist views seems to be clouding his judgement.
Never before in history was there anthing like bitcoin. It's not a commodity like gold - is is pure fiat money, fully based on trust. Hoarding gold or silver or any metal or rare thing was a bad idea because of the alternative uses which where then prevented.
There is nothing inherent to bitcoin that may hamper a "country to convert a great part of this dead stock into active and productive stock".
In fact, by reducing friction, making transaction costs almost negligible, it will help this very thing!
How could Adam Smith may have hated something that did not exist back then, and that many economists had previously advocated for - a single worldwide fiat currency.
The only real problem is for governments, who won't be able to use the seignorage tax anymore, ie inflation, ie printing money out of thin air at the detriment of currency owners, to coerce people to do things or lose money.
Bitcoin is a game changer, the end of a tyranny - the use of force to make people work, instead of being able to live with what they have without the fear that the government will decide to reduce the purchasing power of what one owns by 20% overnight, through inflation or plain just stealing (as in Cyprus) to "transfer that wealth", reverse Robin Hood style, to their well connected and too big to fall fat-cat friends.
Also, it's quite fun that a system based on trust, of the people, by the people, is not trusting the government. It's something the founding fathers would certainly be quite proud of :-)
EDIT: And to those who argue the amount of computing power and electricity to run the bitcoin network is insane, just think for a second about Moore law, or how much GDP goes to the finance sectors. IIRC it is around 10%. That sure is a whole lot of money for the simple job of allocating resources (currency, saving, investment, transaction, etc).
It seems ripe for disruption.
A bitcoin economy will be able to do the same job for a fraction of these cost, thus allowing capital to be best spent on other uses (say actually advancing technology, or building real stuff) ie human capital and physical capital, which according to mainstream economic growth theory (from Solow to Romer) is essential for economic growth - real economic growth.
If you have some data and some time to spend, draw a graph of the log of gdp per capital and the percentage of the gdp spend on the finance sector. You'll see a strange recent trend - less growth, and more gdp for the finance sector. I'm not arguing a causation, but that's some food for throughts.
Just like Gandhi say - first they ignore you, then they fight you, then you win. We are currently at step #2. I expect the heat against bitcoin to raise in the next weeks. It's a big threat for the current establishment cash cow. It's a blessing to anyone who can provide value.