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.

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