His first points will come as no surprise to many in the Bitcoin community. But it’s his last point I want to focus on.
Williams spent an extended amount of time on his last point, stating:
If adopted in its current raw form, bitcoin has the potential to undermine the longstanding bond between sovereign and its currency.”
This is an interesting point to include in his list. The first nine points explain why the risk involved with Bitcoin will lead to its downfall, yet in this final point Williams seems to be open to the idea of Bitcoin becoming adopted throughout society. His fear is that mass adoption would lead to central banks losing their power to control monetary policy. This seems like a weak point considering the turmoil countries like Argentina and Venezuela are in at the moment.
“Governments exercise a monopoly power on currency creation with the understanding that doing so will provide its citizens with a greater level of economic stability.”
It’s a valid concern that “those who create the algorithm, protocol, manage the transactional ledger and mine virtual currencies.” It’s a lot of power for the miners to have. It’s easy to imagine a scenario where miners agree to create more Bitcoins because transactions fees aren’t enough compensation for their work. Miners have to keep in mind the economic majority when making decisions. Undermining the currency would be self-defeating.
It’s no surprise Williams has a deposition against virtual currency. In his definitions of virtual currencies he quotes Charlie Munger, Vice Chairman of Berkshire Hathaway, as saying, “Bitcoin is “Rat Poison” – Hardly a definition. His presentation raised more questions as to how well he understands what he’s talking about.
Williams last two arguments are on deflation, and that bad money drives out good money. Although the conventional wisdom says deflation is bad, there are counter arguments coming from different points of view. The final point is laughable. Williams fears people will spend Bitcoin and hoard USD. Just the opposite is true.
“If bitcoin were allowed to co-exist as ‘legal tender’ it could also create a situation where under Gresham’s Law ‘Bad money drives out good.’ In such a scenario, bad currency (bitcoin) would be used and good currency (US dollar) would be hoarded, creating greater economic instability.”
Once again, these logical inconsistencies bring to question Williams’ self-proclaimed knowledge on all things Bitcoin.
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Last modified: June 13, 2020 9:35 PM UTC