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The Fed Wakes Up to Bitcoin; What about the Rest of Us?

Theodore Iacobuzio |

I love posting on Bitcoin, because it brings the POUM out of the woodwork; they’re always ready to comment on Bitcoin. Still George Orwell isn’t the 1930s figure that the Bitcoin phenomenon brings to mind.

And now the Federal Reserve Bank, a bête noire of monetary fundamentalists if ever there was one, has taken notice (never mind the couple who tried to live on nothing but Bitcoin).

Back to the Fed, it’s an interesting paper, and the author, François Velde goes out of his way to compliment Bitcoin’s designers for the system’s elegance. He’s also learned enough to bring another ’30s, (and ’40s) figure, F.A. Hayek (he of “The Road to Serfdom”), who argued (in the ’70s) for the denationalization of money. I doubt that Bitcoin is what he had in mind, and so does Velde. At any rate, the paper’s worth reading.

One point. The average Bitcoin transaction, Velde says, is $2,000, which certainly tops the U.S. credit card average transaction value (ATV)—derived from The Nilson Report—of nearly $93—substantially larger than the $80 Velde instances. Yet the disparity is great. It seems that Bitcoin is for the very few buying really expensive stuff who want to get out of the world financial system. But there’s a whole population that is desperately trying to get in.

Topics: Payments Strategy

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