Skepticism towards Bitcoin: Economic Arguments vs Philosophical Views

I came across this article the other day and found it interesting. It takes on some award-winning economists' critiques of Bitcoin from a fresh angle. In this thread, I’ll sum up the article and throw in some extra info and my own thoughts to back up the philosophical counterarguments. I'll also share all my sources for anyone interested. You can check out the original piece here. So, what are these Nobel winners worried about when it comes to Bitcoin? Eugene F. Fama (Nobel 2013) Paul Krugman (Nobel 2008) Joseph Stiglitz (Nobel 2001) Robert J. Shiller (Nobel 2013) Based on their opinions, six main arguments popped up against Bitcoin: Charge | Bitcoin | No intrinsic value | Bitcoin yields nothing Extreme volatility | Its price is violently unstable Inefficiency | It burns power and settles slowly Speculative bubble | Driven by hype and herd behavior Criminal use | Attractive to money launderers and hackers

This article was a very nice read, I must say. I didn't realise when I came to the end of the article because I found it so interesting. Every currency in the world today is something that has value simply because people accept it to mean something. If the whole world saw a dollar as a piece of paper and as just numbers in our devices, it would mean nothing. Money is simply money because people believe it is. A hundred-dollar bill is just a very well-designed piece of paper if the US and the world recognised something else as its currency. So when people say things like "bitcoin has no intrinsic value' or "it was gotten out of nothing", remind them that every single currency in the world is simply printed out of nothing and only has value because the government and state accept it and believe it. Bitcoin, in this regard, is no different. The difference is that people didn't need a government or state to recognise it as a currency before it had value. People saw its features and saw the value it has, and believed in it, and as long as people still believe in it, it will not go to zero.

Interesting indeed. It is well-written too and doesn't feel like a 20 minute read. I share the same sentiment and you were able to put it into words nicely. In my opinion, the value of something depends on what you believe its worth truly is.

It's not strange that these Nobel Laureates speak shit about Bitcoin. They are suffering from intellectual ignorance. Bitcoin has defied most economic laws they are aware of, so they are just confused. Don't forget that some well-known economists have predicted the death of Bitcoin several times, and some of them have even died before Bitcoin. If you compare the effort and resources it takes to mine Bitcoin and what it takes to print fiat money, then you would know that they are biased.

I think it's because they strictly adhere to economic theories and statistical models. In an interview with Capitalisn't, Nobel Laureate Eugene Fama was asked this question: Fama has his concerns about how cryptocurrencies continue to challenge existing financial theories, stating that they might have to rethink monetary theory entirely if Bitcoin doesn't collapse. Care to provide any reference for this?

First they are old and second they don't have any idea about Bitcoin, so its not surprising to see them saying those things because at first place we could see that most of those dudes live in old era which they believe that traditional investment always better for them. But lots of changes happening and we are now in  modern age on which technology evolves and maybe this people don't understand that Bitcoin is part of the evolution. If they are still skeptical about this then its fine there are still many people support Bitcoin and its more good to discuss about them rather than arguing to those close minded people since for sure they won't listen.

In this same interview that I referenced in an earlier reply, Fama was actually open to admit that he might be wrong even at the age of 86. I appreciate the replies, but if you actually read the article or at least my summary, the point is not to attack these economists, but rather to debate their claims, albeit using a philosophical point of view.

They are not just suffering from intellectual ignorance they are suffering from stiffness and failure to realise that things are constantly evolving and advancing. Many of those guys can't come to terms with there being something they don't understand, when Bitcoin is beyond their scope of experience or knowledge they always say bad things about it but slowly they have not choice but to come to terms with it.

I kind of agree when you say that Bitcoin is beyond their scope. They are trying to apply theories from a system that is debt-driven and backed by the government, into a resource that has a limited supply of 21 million. This was addressed in the article as well:

To me I think It’s fair for Nobel winners to question Bitcoin, that’s their job. Dismissing them as old or ignorant misses the point. The better way is to debate their claims with data. Bitcoin isn’t backed by a state, but it is secured by math, energy and a global network. Whether that makes it a bubble or a new form of money is exactly the discussion worth having.

There's no point paying attention to what the mainstream economists keep saying about Bitcoin/crypto. They are all fiat money supporters, and they will keep repeating the same old "Bitcoin has no real value" and "Bitcoin is too volatile" type of BS. There's no point trying to argue with them and showing them valid points. Life has proven that you can't convince an economist that you are right with rational arguments and logic(despite the fact that economists are supposed to be logical and rational). There are left wing economists and right wing economists. I've never seen a left wing economist being convinced by the right wing economists about the importance of fiscal responsibility and maintaining a free market. At the end of day, they all have their opinions and they will defend their opinions until the end.

It's true that you can't convince them, but that was never the goal. You might not be able to change their minds, but laying down counterarguments against their claims could bring a positive perception of Bitcoin to other people. Growth and learning comes from engaging with criticism, not avoiding it.

Yes, it's because it's goes against the very basic of economics, 1. how can someone produce money out of thin air? 2. how it is traded in the first place? 3. how can it be money in the first place? So on and so forth. So they're didn't know what Bitcoin is, or blatantly refuse to look at it as again, what they have learn is textbook. But what Bitcoin is offers something very different that it really shook the foundations of finance world.