Who: Kenneth Rogoff - Economics professor at Harvard

Context

Rogoff has written several economics policy books, the latest of which appears to be The Curse of Cash, which posits that large denomination bills aid in tax evasion and ‘constrain monetary policy.’ Notably, this line appears in the copy for the book:

[…] when it comes to currency, the private sector may innovate but eventually the government regulates and appropriates.

He advocates for moving to a ‘cash-less’ society. He was previously Chief Economist for the International Monetary Fund (2001-2003). He was the recipient of the 2011 Deutsche Bank Prize in Financial Economics, which is awarded for ‘influential contributions to research in the fields of finance and money and macroeconomics[…].’

Article: Harvard crypto skeptic call Bitcoin a ‘hedge against dystopia’

Link: Harvard crypto skeptic calls Bitcoin a ‘hedge against dystopia’ (cointelegraph.com)

Commentary

I read this the other day and I was kind of amazed at, and I’m being charitable, how utterly fucking blind this dude is to what’s going on.

Where to start?

It’s conceivable, you know, it could have some use in a dystopian future, but I think the governments are not going to allow pseudonymous transactions on a big scale.

It’s conceivable? What, you can squint and kind of see a place where the peasants aren’t under the boot complete financial control of the government? Where they can be self-banked, if they wish? I think I know what this guy means when he says “dystopian future” and it isn’t robots murdering everyone or some other popular rise of the machines. I bet he means a future where the existing financial powers have lost control, both of the literal system and the narrative around the system.

Where can I look for evidence of this ‘dystopia’ but…well, right now! We, currently, right now already have large scale transactions happening with low or no government oversight. While Mr. Rogoff wasn’t looking, the future appears to have arrived!

I know, I know, to him ‘big scale’ means trillions and trillions of dollars' worth of financial movement. Indeed, we aren’t there yet. It’s merely tens of billions of dollars. What’s a couple of orders of magnitude between friends, eh?

Joking aside, this isn’t getting smaller, and it isn’t going away. It’s here, now. Which makes the rest of his statement even more ironic:

The regulation will come in. the government will win. It doesn’t matter what the technology is.

One of the cool things about Bitcoin (and essentially every other blockchain) is that it is permissionless! I don’t require the government’s permission to transact it! The United States government, for example, regulates Bitcoin under several different premises (confusingly), and really only where it comes into ‘contact’ with fiat money. If you’re able to acquire Bitcoin by other means, and you use it smartly, you can do so without the knowledge of any government. Yes, this means that some people aren’t going to pay taxes on capital gains. But this notion that any government is going to be able to come in and suppress Bitcoin (much less an actual privacy coin like Monero) is vastly overstating the power of government in this particular domain.

This notion that that it doesn’t matter what the technology is baffles me completely. Has Rogoff been awake for the past 20 years? Does he think that any government controls the Internet as a whole? When is that ‘government win’ on reigning in the Internet going to happen?

And has he been dozing while value locked in DeFi has risen to over $25 billion from approximately fuck all in the space of a year? This guy.

It gets better though:

“I’ve been a Bitcoin skeptic, and certainly, the price has gone up, but there’s sort of an ultimate question of what’s the use. Is it just valuable because people think it’s valuable? That is a bubble that would blow up.”

Did the Econ professor just ask if the currency was valuable because people think it is? Isn’t that, essentially, the entire premise of fiat currency? That people trust in a government and it’s economic and military and social capital? Why would this be any different, by that measure? Why is that easily accepted in the case of fiat but a lame rhetorical when applied to crypto?

Something I read recently, and I unfortunately can’t find the source, was that any item or commodity that wants to be a currency undergoes shifts during that evolution. One of those stages was acting as a store of value; the premise was that until the ‘value’ of the item is determined by the market, it cannot then go on to act as a medium of exchange. This ‘discovery’ process is volatile and natural. People treating it in a speculative manner is ‘working as intended.’ The market will either decide the value is ≈0 (tulip bulbs), or the value will stabilize and the true use as a currency can emerge. People instinctively understand this: they’re loathe to spend their BTC while the price is in flux. Criticizing Bitcoin as a ‘bubble’ that will ‘blow up’ is both true and completely missing the point. At worse it’s actually disingenuous, intending to be FUD.

“I think, over the long run, if there’s not a use, yes, the bubble will burst,” Rogoff posited. “I hope there’s not such a valuable use, but I suppose it’s a hedge against dystopia."

He hopes there isn’t such a valuable use. I suppose the nice reading of this is “the world where this would be useful is Very Bad. Bad I say!” Again, when I think of what he likely means when he says ‘dystopia’ though, and I can’t help but think:

Sounds like the right future to me