4 min läsningThere’s hardly a week without a new argument claiming the failure of crypto as a daily use case. It usually comes from economists, such as one of the most famous among them, Paul Krugman, who reiterated almost a year ago that “almost nobody uses cryptocurrency as a means of payment,” before explaining that “when Bitcoin, the original crypto asset, was introduced, enthusiasts predicted that it would displace conventional fiat money, that is, currency issued by governments. The blockchain, they claimed, would make transactions using cryptocurrency easier and cheaper than transactions using dollars. And cryptocurrencies would be safe from the ravages of the printing press: governments couldn’t debase your money through inflation. That was more than 15 years ago, and crypto has completely failed to deliver on those promises.”
He is far from alone: John Quiggin, Peter Schiff, Yanis Varoufakis, Thomas Piketty, there is not one of them who would save Bitcoin. Even within the ranks of the French mint, La Monnaie de Paris, which is very open-minded when it comes to discussing money after collecting currencies from all ages and all over the world, its economists are strongly opposed to the idea of Bitcoin. “Bitcoin, despite its initial ambition, does not meet these criteria: unit of account, medium of exchange, store of value. Its extreme volatility prevents it from serving as a reliable store of value. It is barely used as a medium of exchange, since very few goods or services are priced or paid in Bitcoin. And as a unit of account, it is virtually never used—no one sets salaries or rents in Bitcoin,” economist Clémentine Cazalets told CoinShares’ The Node Magazine last year.
Do the test: try to find an economist who is relatively open to the idea of Bitcoin’s success. I guarantee you’ll have a hard time.
Old software is still running
I have a simple explanation for this: most of them, and this is also true for politicians, by the way, are still running old software. Conceptually, they struggle to reconcile the idea of a currency with its technology, which is the most interesting feature of what a cryptocurrency actually is. They do not factor into their analysis the fact that Bitcoin is not only “digital coins,” but an actual network, a platform on top of which it is possible to issue other assets, to build, and to transact. They fail to take into account that the Bitcoin network actually helps traditional fiat currencies move globally in a cheaper way than traditional rails—a world where “Bitcoin is coming into everyday mainstream payments at first as invisible infrastructure,” to paraphrase David Marcus, CEO of a company that uses Bitcoin to move “real money.”
My assumption was actually confirmed by Nobel laureate Eugene Fama, who openly admitted that he was “hoping [Bitcoin] will bust because if it doesn’t, you have to start all over with monetary theory.” He is exactly right. Unfortunately for this profession, that is precisely what Bitcoin’s early adopters and supporters have said since its inception: you will have to start all over with monetary theory. That is what Bitcoin forces you to do.
You may wonder why I’m writing this now, given that this anti-Bitcoin bias or misunderstanding has been known for ten years. The reason is simple: the annual J.D. Power study on merchants and payments has just been released, and it confirms that non-traditional payment methods are increasing at a rapid pace among U.S. small businesses—and that includes crypto. Crypto adoption now stands at 19%, meaning almost one-fifth of merchants accept crypto payments. That figure is up 4 percentage points in just one year. On top of that, 33% of merchants still on the sidelines say they would be willing to accept crypto if their payment processor enabled it.
Is this enough to claim victory over the economists’ old guard? Not quite yet, but the signs are there. Three of the top ten payment processors in the world—Stripe, PayPal, and Block (formerly Square)—have a significant portion of their business tied to crypto, with the latter introducing Bitcoin payment capabilities for four million merchants through its Square Bitcoin feature. Visa and Mastercard are both working extensively on stablecoin rails. The latest review of Bitcoin ownership by our Bitcoin research lead, Christopher Bendiksen, provides strong indications of Bitcoin’s growing adoption not only in emerging markets but also in developed ones, most notably the U.S.
I’ll admit that this intuition remains largely empirical, but all signs point toward global adoption—both as a reserve asset and as a medium of exchange—and it is likely to happen at a faster pace than the updating of economic theory.
