Normally, this would not be even close newsworthy these days. A three-way conversation, a dual interview, conducted on ABC National’s “Late Night” radio program by host Phillip Adams with Andreas Antonopoulos. With the audio clip posted on Yanis Varoufakis’ blog back in March of 2014, the program itself seems to have taken place late in 2013. The bitcoin price was constantly referred to as $1000 USD per Bitcoin, which hasn’t been the case since late 2013. Only an awful lot has changed since the time of this debate/interview, which makes this seemingly old news extremely relevant as 2015 heads into full bloom.
Bitcoin since this time has seen US Dollar values drop approximately 80%. On the other hand, it has signed Microsoft, Dish Network, ESPN, PayPal, and many other industry leaders to partnerships, and has also seen record venture capital in 2014 and 2015. And Andreas Antonopoulos has written a book on “Mastering Bitcoin”, been called to the Canadian Senate to advise them on Bitcoin in their future, and has solidified himself as the leading voice on digital currency worldwide.
After listening to this half hour interview/debate, in which host Adams asks Antonopoulos a question, then asks Varoufakis a different question, or asks for a direct response, I’m struck by the “skepticism” of Varoufakis. Not once, but twice he likens Bitcoin to “Tulip-mania”, the 17th-century economic boom-and-bust revolving around the famous flower.
“What (Bitcoin and the Block Chain) is not is a sound foundation for alternative money,” says Varoufakis in describing Bitcoin. “There is a big tragedy here with Bitcoin, which has two folds. My lot, economist, fail to recognize the brilliance of it, the brilliance of the algorithm. And the Bitcoin cheerleaders, who abide by a very primitive and flawed economic theory of money, and lure (people) into a kind of “Tulip-mania. Presented as an alternate form of money, it’s not even a currency!”
Later on in the interview brings up Bitcoin as some pyramid scheme:
“There is a Bitcoin aristocracy, the Bitcoin early adopters, who accumulated very cheaply Bitcoins from the beginning. They have every reason to talk this thing up and lure people into like a Tulip-like mania or a pyramid, making extravagant claims, and to invoking the (people of Cyprus), going through their economic crisis, to (open and use a new Bitcoin ATM). This was all just hype.”
BTW, Bitcoin values did triple during the infamous “bank bail-in” in Cyprus, bringing USD values close to $250 at the time. Gold and silver values were unaffected.
He also makes some wild assertions that the Gold Standard caused the epic 1929 stock market crash, which is just historically wrong. The Gold Standard did hurt the U.S. in the Depression, due just as much to government mismanagement of the banking interest rates as anything else, but the crash had nothing to do with the Gold Standard itself.
Varoufakis is right in some respects. In a macro-economic, national currency point of view, Bitcoin is not ready for or designed for, taking over a nation’s economy. From what I have seen, Bitcoin is not designed to be easily integrated into national politics, centralized banking paradigms, or to be built around one nation’s GDP. No one is saying it should either.
Varoufakis likes to use the word “flawed” in this interview, and no system is more “flawed” than the world’s current economic model. Every country makes up as much money as they want, modeled after the United States’ system, which operates as the global reserve currency, controlled purely by fiat. Problem is the U.S. gets to gain economic power with the strength and influence of its currency worldwide while at the same time exporting its inflation to all other nations. And when other nations make too much funny money, like their U.S. masters do, and they aren’t the Global Reserve Currency, their economies invariably collapse. It’s good to be an American. All the perks; none of the responsibility.
The only problem is this is a slippery slope. Now, the U.S. has corrupted the system so thoroughly, with currency debasement, indebtedness, and dependency, that the genie can’t be put back into the bottle. Now, the U.S. economy depends on a 0% interest rate to survive, and has trade deficits with every nation on Earth. The bubble is getting bigger, typified by the current state of the Stock Market, which is on an unprecedented Bull Run of going on six years. Any person of any economic salt sees a looming financial bubble growing so large that it makes 2008 look like a walk in the park. The U.S. economy should have collapsed in 2008, and this bubble will finish the job. The economy has never recovered from 2008. The only pyramid going on is managed by those who say, “we are in a recovery” or a “green chute”.
Now, it’s time for him to show-and-prove that this fiat-currency-based, non-Gold standard supported, centralized banking model is clearly a better way forward, especially for Greece. It’ll be interesting to see who’s left standing five years from now, Bitcoin’s “Tulip” story or Greece’s desperate grasps at economic sovereignty.
Yanis, the floor is yours.
What do think of the commentary by Varoufakis? Can he turn Greece around, and get them solvent economically once again? Share above and comment below.
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Last modified (UTC): February 18, 2015 15:06