Crypto-currencies including bitcoin are a “giant scam”, according to the ABC’s financial commentator and Australian Business Review editor Alan Kohler.
“There are apparently more than 700 of these blockchain seedlings now, sprouting at the rate of about 30 per month through what are called ‘initial coin offerings’, he said in an opinion piece published in the Weekend Australian.
“The modern miners of crypto-currencies use stupid amounts of electricity and are hoping their ‘coins’ become money one day. For the moment they are just tokens for speculating with …
“They are hoping that the world’s governments and central banks take leave of their senses and make crypto-currencies legal tender. In fact one government – Japan – has already lost its mind and started to do it …
“Money is, in essence, a piece of information that relies on trust. I wave my credit card for a $4 cup of coffee and the barista trusts that she will be able to get $4 worth of something else in return for that piece of data that has appeared in her bank account.
“The trust comes from the system of legal tender, in which the community, through the government and the central bank, effectively guarantees payment in full – $4 for $4.
“Can the trust bestowed by a blockchain record of a bitcoin’s transaction history replace that guarantee? Maybe it can sometime in the future, but I doubt it.
“And what about the weird mining process, in which algorithms churn through trillions of calculations, burning gigawatts of power. That’s no way to run a monetary system, you would think.”
Kohler concludes: “Global governments will soon need to declare that cryptocurrencies will never become legal tender, and legislate to that effect. You can play with them, and have fun trading and gambling, but actual money? Nah.”
And that’s finance …
