CMRE Speakers Present Vastly Different Visions for the Future of Blockchain Technology
On October 3, the Committee for Monetary Research and Education held a dinner in New York City featuring four distinguished speakers on the topic of blockchain technology versus fiat currency. While excitement about what the technology means for our economy and society was unanimous, the speakers often differed strongly in their visions of the path ahead. If I had to boil the evening down to one idea, it’s that there’s even more disagreement about what the future looks like than I had already thought.
Political economist and author George Gilder focused on the many potential applications of blockchain technology and on the ICO market. Gilder is very bullish on blockchain technology bringing about significant decentralization in both the state and corporations, though he concedes there will be many ups and downs, giving naysayers the chance to write off the technology along the way.
Professor Saifedean Ammous’ views starkly contrasted with those put forward by Gilder. To paraphrase, the Bitcoin blockchain is the only blockchain that matters. He envisions a world where Bitcoin takes the place of gold in the historical system of a gold standard with private banking. He considers it inevitable that Bitcoin will eventually spell the end of fiat currencies and central banking. Since the Bitcoin blockchain cannot efficiently handle the number of transactions made in a global currency, everyday currency will instead be claims on bitcoins issued by private banks, with transactions taking place on systems more like PayPal. Only settlements between these private banks will be logged on the blockchain. Ammous sees no value in other cryptocurrencies or blockchain applications. His view is that the only advantage of a blockchain is the lack of reliance on a central intermediary, and that no other blockchain can fully prevent centralized control. I’m far from sold on either the inevitability of the future Ammous predicts, but the possibility is intriguing. He also raises important questions about the inherent inefficiency blockchains have in processing a large volume of transactions, which is too often the elephant in the room in these discussions.
Professor Larry White brought the discussion back to the present, talking about current startups and initiatives that pair blockchain technology with gold. He described several startups, each with its own potential advantages and limitations. We’ll be going into much more detail on some of these companies in this space soon. White sees a great deal of potential in pairing blockchain and gold, but views the overall landscape as a work in progress. I appreciated White’s willingness to accept a large degree of uncertainty when looking into the future of blockchain technology — uncertainty underscored by the disagreement of his fellow speakers and panelists.
Ralph Benko, senior economic advisor on the American Principals Project, discussed whether Bitcoin fulfills generally accepted conditions for a medium of exchange to be considered money. His talk set the table for a lively panel discussion. When people cite Bitcoin’s volatility as a drawback to its use as money, it strikes me that Bitcoin will likely be volatile until it is used as money. It will be interesting to see whether and how the cryptocurrency escapes from this catch-22.
Blockchain technology and cryptocurrencies are still new to the scene, and, I would argue, not yet fully understood. The number of startups and the increase in media attention in the last year alone have been staggering. I’m left wondering how different the discussion might be if CMRE held a sequel to this excellent event next year.
Max Gulker
Max Gulker is a former Senior Research Fellow at the American Institute for Economic Research. He is currently a Senior Fellow with the Reason Foundation. At AIER his research focused on two main areas: policy and technology. On the policy side, Gulker looked at how issues like poverty and access to education can be addressed with voluntary, decentralized approaches that don’t interfere with free markets. On technology, Gulker was interested in emerging fields like blockchain and cryptocurrencies, competitive issues raised by tech giants such as Facebook and Google, and the sharing economy.
Gulker frequently appears at conferences, on podcasts, and on television. Gulker holds a PhD in economics from Stanford University and a BA in economics from the University of Michigan. Prior to AIER, Max spent time in the private sector, consulting with large technology and financial firms on antitrust and other litigation. Follow @maxg_econ.
