Tuesday, January 30, 2018
How Bitcoins Are Something Like $100 Bills
Paul Krugman argues that bitcoins are like $100 bills in one respect. $100 bills account for 78% of US currency in circulation but we seldom see them. They are used primarily by drug dealers and others who are engaged in illegal transactions. It turns out the bitcoins serve a similar purpose. They are useful to those who want to disguise transactions for one reason or another. Krugman understands that early investors in bitcoins have made a lot of money. On the other hand, so have the early investors in Ponzi schemes. The Federal Reserve is in business to maintain a relatively constant value of the US dollar. They are pretty good at this. There is no similar organization in place to do the same thing for bitcoins.