Kyle Roche and I published an essay on Bitcoin in the Wall Street Journal on Monday, explaining why it is rising in price and becoming less volatile. It gains as national currencies become more risky stores of value. Given the state of the world, that means bitcoin has a bright future! As we say “The instability caused by problems with the euro, Brexit and the many Western democracies’ growing ratio of debt to gross domestic product threatens the value of even established currencies. Bitcoin is likely to succeed so long as the value of other moneys rests on politics.” We could have added that by serving as a hedge against bad politics Bitcoin is also an instrument of liberty.
Some commentators responded by impugning Bitcoin, but they did so on the basis of false notions and confusions. Here are the most common claims and brief rebuttals.
1. Bitcoin is simply an instrument of crime. The argument is that Bitcoin is used because it helps criminals make payments that avoid discovery. This assertion would not explain why Bitcoin continues to rise in price. Moreover, investigators find Bitcoin helpful in tracking down criminals, because it helps them follow money changing hands and connect it to criminal activity. Central banks themselves have concluded that cash better facilitates crime than does Bitcoin.
2. Bitcoin can be hacked. In fact, the record of Bitcoin transactions are kept on thousands of independent computers, making it almost impossible to disrupt its ecosystem.