Greenspan Says Bitcoin a Bubble Without Intrinsic Currency Value

Bloomberg has an article about Alan Greenspan’s struggle to understand Bitcoin. Here are some gems from the article:

“You have to really stretch your imagination to infer what the intrinsic value of Bitcoin is. I haven’t been able to do it.”
“I do not understand where the backing of Bitcoin is coming from.”

Dude, your inability to research the many sources of information on the inherent scarcity and computation-based value of cryptocurrency is not an indictment of it’s worth. Central bankers are like cavemen at a computer. They are completely bewildered.

Furthermore, intrinsic value is a myth. Every individual values every thing differently. There may be commonalities and social consensus but the value derives from this consensus. There is, perhaps, an inherent usefulness of a thing for a given purpose, but that is not value. It is only the precursor to value. The value you place on the thing is your appraisal of said usefulness.

The best bit of the article is a quote from also former Fed Chair Ben Bernanke:

“Although the Federal Reserve generally monitors developments in virtual currencies and other payments system innovations, it does not necessarily have authority to directly supervise or regulate these innovations or the entities that provide them to the market,” Bernanke wrote to lawmakers.

That’s right. Get back to your game of Global Monopoly, central bankers. We’re designing the future here.

Kelvin Doe, Aid, Digital Currencies, and the Developing World

Today I was exposed to the remarkable story of Kelvin Doe from Sierra Leone. He is a teenager who creates electronic devices out of refuse he finds around. He has built and operates his own FM radio station (under the name DJ Focus) complete with audience interaction via text message. Watch his inspiring story here:

What struck me most about this video were a few comments by Doe’s MIT mentor David Sengeh:

“For quite many years,[…] many African countries received aid but it does not necessarily get us anywhere. We’re not looking into the future. We’re not designing our own future.”

“I want there to be many more Kelvins. I do not want it to be a one-off thing. It’s a movement. It’s how do we create thousands of young people who are inspired by making stuff and solving the problems that are in their neighborhood?”

These comments highlight the shortcomings of foreign aid programs and the need to for communities to be empowered to chart their own course to prosperity. Nobody will work as hard to improve conditions in a community as its members, provided adequate financial and informational resources. Much aid money is lost to local corruption and political maneuvering, never finding its way to the Kelvin Does of the world who are left rummaging through trash heaps. Further exacerbating the problem, personal remittance companies like Western Union can charge around ten percent of the remittance value for their service. So how can we on Earth do a better job of helping out the people who need it most? We may now have the answer: cryptocurrencies.

Yes, Bitcoin, Litecoin, and the like may be the new way to funnel funding to the developing world and the brilliant young minds who are working out their most pressing social problems. With cryptocurrency, transfers of wealth minute or massive can be made instantly and without intermediary bank and remittance company fees or political bribes. There is no longer a need to involve the government behemoth to spend your tax dollars on foreign aid however it deems appropriate, with disappointing results. In this way, cryptocurrencies allow the ultimate in personal “financial democracy”: you as an individual get to choose which projects to fund just like making a cash donation. As long as there is a Kelvin Doe or an NGO with a feature phone and a digital wallet on it, they can accept your donations.

The costly, inefficient, and cumbersome processes made necessary by the contemporary financial system are quickly becoming obsolete, provided Bitcoin and other currencies take root. There are already projects to create remittance systems with coin. Cryptocurrency technology is rendering centralized forms of aid and payment (and pretty much everything else) obsolete- and the true benefactors will be places like Sierra Leone. It’s time for those of us in the West to embrace the opportunity to foster this development.