VoxTalks Economics S8 Ep6: Do cryptocurrencies matter?
Jan 24, 2025
Bruno Biais, a Professor at HEC Paris, delves into the intriguing world of cryptocurrencies as a safeguard against economic turmoil. He discusses how these digital currencies can counteract government-driven inflation, echoing Friedrich Hayek's ideas on money. Biais highlights their emerging role in countries with unstable financial systems and shares examples from Nigeria where citizens turn to crypto amidst bans. The conversation also touches on the reevaluation of cryptocurrencies' volatility and their potential as a stable alternative in times of financial crisis.
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Cryptocurrency's Value
- Cryptocurrencies, like traditional currencies, are not backed by real assets.
- People accept both because they believe others will accept them in the future.
Crypto's Utility in Stable Economies
- Bitcoin emerged after the 2008 financial crisis, reflecting distrust in the system.
- In stable economies with reliable monetary policies, traditional currencies are more practical than volatile cryptocurrencies.
Bitcoin's Volatility
- Bitcoin's volatility makes it unsuitable as a stable store of value or means of payment.
- El Salvador's attempt to use Bitcoin as legal tender faced challenges due to this volatility.
