Monday, December 9, 2019

Nobel Prize Economist Says, Bitcoin is a Self-defeating Form of Progress

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Grace Joseph
Freelance Writer, Blogger, and Crypto Enthusiast. Studied Computer Science in University and Undergoing a Masters Degree Programme in Computer Engineering [email protected] [email protected]

In a debate between the former Federal Prosecutor, Kathryn Haun and a Nobel Prize-winning Economist, Paul Krugman, the validation of Bitcoin and the US dollar were compared. The Economist is of the opinion that it is easy to validate a genuine dollar bill over a fake one, but it is hard to validate a cryptocurrency.

From the economist’s viewpoint, it was easier to validate government fiat currencies such as the dollar because the process itself did not require a lot of resources. He already knows that fake currencies are constantly being tracked and as such, he can be confident that his dollar bills are real by merely looking at them. Since authorities that have been put in place, a person will be less likely to generate counterfeit dollar bills.

On the other hand, cryptocurrencies like Bitcoin will require a central authority to validate them and someone to verify that the coin they’ve received is a genuine one. This just takes away the decentralized nature of the coin. According to him, the validation of Bitcoin is a “self-defeating form” of progress because it will require a lot of resources to work.

Paul Krugman stated that;

Someone has to be investing the resources in effect to say that this token I’ve received is a real one. I mostly know that the dollar bill in my wallet is the real one because it’s a bit hard to reproduce.”

The Former prosecutor had a very different opinion on the matter. According to her, there were still ways to generate fake bills if one uses modern technology. Also, during her time in office, a lot of fake dollar bills went unchecked by the Treasury Department’s Secret Service. This was because the Secret Service couldn’t spend its limited resources trying to track someone who was only generating a couple of fake dollar bills.

In her own words,

But the fact of the matter is the resources are so strapped, the Secret Service in particular is an agency so strapped that I can’t tell you how many counterfeiters we could never prosecure…if someone counterfeits a hundred thousand dollars that the Secret Service is going to investigate them.”

The Federal Prosecutor also made comparisons between Bitcoin’s and Ethereum’s mining methods, where the former which used Proof-of-Work (PoW) was known to consume more energy, and the latter which took advantage of Proof-of-Stake (PoS) used less energy during its mining process.

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