Macro Musings with David Beckworth George Selgin on Bitcoin and the Future of CBDCs
Oct 25, 2021
George Selgin, Director Emeritus at the Cato Institute, returns to discuss pressing topics in cryptocurrency and monetary policy. He elaborates on Bitcoin as a form of synthetic commodity money and its implications for economic stability. The conversation dives into El Salvador’s bold move to adopt Bitcoin as legal tender, highlighting the associated risks and government strategies. Selgin also explores the future of stablecoins and fintech, pointing out regulatory challenges and innovations needed for central bank digital currencies.
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Bitcoin as Synthetic Commodity Money
- Bitcoin doesn't fit traditional money categories of fiat or commodity money.
- It's a new category called synthetic commodity money, combining scarcity like a commodity but no non-monetary use like fiat.
Bitcoin and Hayek’s Money Vision
- Bitcoin resembles Hayek’s idea of private fiat money but is more stable due to capped supply.
- Cryptocurrency is viable private synthetic commodity money, avoiding overissuance problems of fiat.
El Salvador's Bitcoin Legal Mandate
- El Salvador made Bitcoin compulsory legal tender to overcome network effect obstacles.
- The government supports merchants by bearing conversion risk, trying to encourage Bitcoin adoption.
