Nobel Laureate Stiglitz: “Why Do People Want Bitcoin?”

"We have a good medium of exchange called the dollar...we can trade in that."

Joseph Stiglitz believes that Bitcoin is simply unnecessary. He told Bloomberg TV that it is attempting to solve a problem that never existed, according to investing.com

“We have a good medium of exchange called the dollar…we can trade in that. Why do people want bitcoin? For secrecy. The banking system can and is already moving toward greater use of digital payments, but you don’t need bitcoin for that,” said Stiglitz.

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Talking in Davos, Switzerland, where the World Economic Forum is to be held, Stiglitz explained that in his opinion, the only advantage to the system is secrecy. Thus, as cryptocurrency becomes more mainstream, it will negate itself: “So by regulating the abuses you are going to regulate it out of existence,” he said.

Joseph Stiglitz is an American economist and a professor at Columbia University. A Nobel laureate and former chief economist of the World Bank, he was named one of the 100 most influential people in the world by Time magazine in 2011. His books include “Globalization and Its Discontents Revisited”, “The Euro and Its Threat to the Future of Europe”, “Rewriting the Rules of the American Economy”, and “The Great Divide”.

Opinions such as these have been far from uncommon amongst public figures, but generally scepticism has been either from members of the financial establishment that feel a threat to their monopoly, and government agents who fear a market crash and/or loss of tax revenue.

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Stiglitz is not of this school, however. He said in a New York Times article in 2014: “Widening and deepening inequality is not driven by immutable economic laws, but by laws we have written ourselves.”

The theme of his work over the years has been that laissez-faire economics does not lead to maximum efficiency, and breeds inequality. He said in 1986: “Individuals and firms, in the pursuit of their self-interest, are not necessarily, or in general, led as if by an invisible hand, to economic efficiency.”

He believes that a guiding hand is necessary to create efficiency and to negate inequality. So Bitcoin, to him, “doesn’t serve any socially useful function.”

He said in 2006: “The real debate today is about finding the right balance between the market and government. Both are needed. They can each complement each other. This balance will differ from time to time and place to place.”

It could be argued that the popularity of cryptocurrency is a symptom of dissatisfaction, as governments have thus far failed to provide an adequate guiding hand and stem inequality with the currencies that they create.

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