DIRECTOR: All right. Let’s now turn to cryptocurrency. You need to drink water either something before changing the subject?
TYLER COWEN: Let’s try waterless cryptocurrencies – we will see.
JOURNALISTS: “Cryptography”. “Cryptography”. “Cryptography”. “Cryptocurrency is becoming more popular, we are starting to see the signs of which it could be a part of our financial future. ‘
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COWEN: Cryptocurrency is a really new idea, and it is rare that we have tfundamentally new ideas. Think of Bitcoin as a species from record keeping system, and pay people in Bitcoin validate records, and go to the next day and every day, every moment, you have a new recordset – and this process applies. It cannot be easily undone from an outside authority or central authority. It is as if you have, at the same time, potentially a new type of currency, a new type of investment asset, and also, in fact, a new type of computer.
So when I talk to people that are deep in cryptocurrencies, I often feel quite skeptical. They have such bold and grand plans, and I’m not convinced they reflected how to do it all. At the same time, I know a lot of people who completely reject cryptocurrencies. They think it’s a scam or bubble or cheat. And when I talk to them, I feel quite optimistic about cryptocurrencies. I see a lot of potential in ideas, but I don’t think we know yet how useful the cryptocurrency will be.
Here are some reasons why the crypto-skeptics are skeptics: People use cryptocurrencies to pay ransoms. Let’s say the pirates will leave in hospital medical records, pull or lock or freeze this information, and they will not return it until they are paid in cryptocurrency. You will never be able to get your money back. It is an irreversible transaction built on the blockchain. It’s the end.
The same encryption, in most cases of its current forms, consumes a lot of energy. You have computers running To make calculations break different types cryptographic problems. And these computers consume so much energy which harms the environment thanks to carbon emissions in a way that we do understand pretty well now.
But perhaps the main reason be crypto-skeptical it’s just so much the promised benefits hasn’t happened yet. “Well, that will make banking cheaper.” “It will make finance cheaper”. “It will make the cheapest loans.” Maybe these dreams are just impossible, or impossible soon. And if people are skeptical on the promised benefits of cryptocurrencies, have good reasons to be skeptical.
Here is one way of thinking ‘the bullish case’ for cryptocurrencies: Imagine the Internet becoming more and more its own economy with its own rules, and that the economy is global. He’ll need his filing systems, their own systems of property rights, iyour way of consuming transactions. We will need a new institution do all these things, and encryption actually is the best bet we have. If this happens, and many people think it will be, it would probably be possible for me, let’s say, to take part of my checking account and just by sending a single message, lend part of it let’s say, farmers in Kenya. The world would be more global. I’d be better off. They would be better off. There would be this new system, some call it the “metaverse”, others simply call it the “Extended Internet”, where we would have more things on the internet, they have these secure property rights validated by the blockchain, have new investment assets, and move resources around the world it would be much easier, cheaper.
It is speculative but that’s not what I would do call it “speculative crazy”. it’s a possibility, and we’ll see if here’s what will happen.