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Submission + - Why Bitcoin Is Doomed to Fail

Hugh Pickens DOT Com writes: Economist Edward Hadas writes in the NYT that developers of bitcoin are trying to show that money can be successfully privatized but money that is not issued by governments is always doomed to failure because money is inevitably a tool of the state. “Bitcoin exemplifies some of the problems of private money,” says Hadas. “Its value is uncertain, its legal status is unclear, and it could easily become valueless if users lose faith.” Besides, if bitcoin ever really started to take off, governments would either ban it or take over the system says Hadas. The authorities might be motivated by a genuine concern about the stability of a shadow monetary system or they might act out of self-preservation because tax evasion would be too easy in a parallel economy. “Part of the interest in virtual currencies like bitcoin is that their anonymity can provide a convenient cloak for criminal activity. Part is technological — this is a cool idea. And part is speculative — gamblers bet that bitcoin’s value will increase,” concludes Hadas. “Truly private money is an inferior alternative to the money that comes with the backing of a political authority. After all, no bank or bitcoin-emitter can be as public-minded as a government, and no private power can raise taxes or pass laws to unwind monetary excesses.”
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Why Bitcoin Is Doomed to Fail

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