During last year's World Economic Forum's Annual Meeting in Davos, Nobel laureate Joseph Stiglitz claimed that the US should phase out physical currency and move towards a digital economy. This year, Bitcoin was on trial, and the Nobel verdict was even more severe.
Joseph Stiglitz has claimed that in the long run, phasing out cash in a move towards a digital economy would have "benefits that outweigh the cost," but the price was unimaginable to the many Indias whos lives or jobs were severely affected by Modi's cash ban.
“I believe very strongly that countries like the United States could and should move to a digital currency,” he said, “so that you would have the ability to trace this kind of corruption. There are important issues of privacy, cyber-security, but it would certainly have big advantages.”
The Columbia University professor argues that legal and technical restructuring on a global level is necessary to close the 'secrecy havens' that 'facilitate or incentivize crime'. He believes the US should digitize in order to be able to trace everything.
But wouldn't this take authority over one's savings away from the people and into the hands of a government authority? That's not 'land of the free' is about.
Recently, a Fellow at Sound Money Project, Nicolás Cachanosky, PhD argued that the 'what-do-you-have-to-hide objection assumes one is guilty until proven innocent' and therefore betrays the basic civic liberty of presumption of innocence.
There are, in fact, many legitimate reasons for conducting transactions in cash. Some might hope to avoid bank fees. Others might rely on cash as a mechanism to stay on budget. But perhaps the best response to the “What do you have to hide?” objection is “None of your business!” Some of us still value financial privacy.
Excerpt from Social Europe article
...the problem of a Bitcoin economy is that in times of financial crisis, which one can be sure will arise again, there is a generalized flight into liquidity. That’s when a central bank is needed to provide all the liquidity needed. In its absence, individuals scrambling for liquidity sell assets, leading to asset deflation and insolvency of many. A Bitcoin economy does not have this flexibility and therefore will not withstand financial crises. A Bitcoin economy will not last in a capitalistic system, which regularly generates financial crises.
Today the Bitcoin bubble is sustained by the belief that this cryptocurrency has intrinsic value; a value that derives from the belief that it is the money of the future which in addition will be available in limited quantities. When enough people come to the realization that Bitcoins and other cryptocurrencies have no future as means of payments, it will be clear that Bitcoin has no intrinsic value, that the “emperor has no clothes”. Then the Bitcoin bubble will burst and there will be a lot of handwringing of the speculators who have stepped into the bubble too late.
“Bitcoin is another really clever idea, I’m impressed with the technology, but it seems to me that it’s technology for something else…. I tend to think of Bitcoin as an interesting experiment, it’s not a permanent feature of our lives."
Excerpt from WEF article
There was also scepticism from Cecilia Skingsley, Deputy Governor at the Swedish Central Bank. In her opinion, Bitcoin doesn’t even count as a currency.
Cryptocurrencies “don’t meet criteria to be called money: they don’t store value, they fluctuate, and they’re not at a stable rate of exchange,” she said.
That didn’t mean that we’ll carry coins and notes about with is forever. There was broad agreement on the panel that the future of cash would look very different...
Cachanosky, Nicolás, PhD. 'The War on Cash: What Do You Have to Hide?' November 28, 2017. Accessed February 07, 2018.
Chainey, Ross. "The US should get rid of cash and move to a digital currency, says this Nobel Laureate economist." World Economic Forum. January 17, 2017. Accessed February 05, 2018.
Parker, Ceri. "Robert Shiller: Bitcoin is just an 'interesting experiment'." World Economic Forum. January 25, 2018. Accessed February 07, 2018.
Grauwe, Paul De. "Bitcoin Is Not The Currency Of The Future." Social Europe. January 03, 2018. Accessed February 07, 2018.