Nobel Laureate Analyzes Blockchain from Historic Eye
A recipient of the 2013 Nobel prize in economics delved into bitcoin, the most popular digital currency worldwide, from the historical perspective.
“The cryptocurrencies are a statement of faith in a new community of entrepreneurial cosmopolitans who hold themselves above national governments, which are viewed as the drivers of a long train of inequality and war,” US economist Robert Shiller, an economics professor at Yale University, said in his article published on project-syndicate.org.
Citing the statement of virtual currency issuers, he said initial coin offerings, caused by bitcoin, ethereum, and other cryptocurrencies in the world, are exempted from securities regulation since it does not entail traditional money or confer ownership of profits.
His article, entitled “The Old Allure of New Money,” said that unless someone is working in the cryptocurrency industry, no one can explain how the market works.
Whether it is true or not the presumption that only computer scientists understand cryptocurrencies, it is definitely acceptable to say having a story won’t suffice. That is why those cashing in on bitcoin entrepreneurs continue working on many fascinating cases made possible by the technology.
Money, being the medium of exchange taking various forms and shapes, is full of mysteries.
“That mystery creates an aura of exclusivity, gives the new money glamour, and fills devotees with revolutionary zeal. None of this is new, and, as with past monetary innovations, a compelling story may not be enough,” Shiller noted.
“We tend to measure people’s value by it. It sums things up like nothing else. And yet it may consist of nothing more than pieces of paper that just go round and round in circles of spending. So its value depends on belief and trust in those pieces of paper,” he added.
Through the years, the economics professor explained the general public’s obsession with virtual currencies including bitcoin and ethereum has something is somewhat a mystery that he associated to the value of money itself.
“And, as in the past, the public’s fascination with cryptocurrencies is tied to a sort of mystery, like the mystery of the value of money itself, consisting in the new money’s connection to advanced science,” Shiller noted.
The best-selling author said every monetary innovation has a distinct underlying story, including the inception of bitcoin and the likes. “Each of these monetary innovations has been coupled with a unique technological story. But, more fundamentally, all are connected with a deep yearning for some kind of revolution in society.”
Shiller released an article this week to discuss the way the appeal of bitcoin fits earlier attempts to reinvent money by reviewing historical accounts. “One must bear in mind that attempts to reinvent money have a long history,” Shiller said in his article.
For the write-up, Shiller was attempting to answer the question of how virtual currency users manage to keep a high level of enthusiasm amidst repetitive warnings from governments, regulators, policymakers, and experts all over the globe.
The Nobel laureate opted to put the concept of bitcoin into time-based and electricity-backed experimental forms of alternative money, instead of comparing the virtual currency to previous technological solutions.
Placing bitcoin and political movements on the same level, he also compared bitcoin and attempts to overhaul governments and economies. He mentioned the Euro, the official currency of the European Union, remains where it is today while novel ideas by communist and technocratic thinkers have failed.
The emergence of digital currency, which started in 2009 following the inception of bitcoin, is said to be claiming to produce another type of money. Shiller said almost 2,000 virtual currencies are in circulation. Since then, it has stimulated the excitement of people on the virtual currency.
Shiller, who is the co-creator of the Case-Shiller Index of US house prices, is the author of Irrational Exuberance and Phishing for Phools: The Economics of Manipulation and Deception, co-authored with George Akerlof.