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The Impracticality of Bitcoin

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Posted on Dec 23, 2013
YouTube/RT America

The presently unregulated digital currency known as Bitcoin has libertarians and currency speculators in a tizzy over the possibility of making a lot of money in short time. Greek political economist Yanis Varoufakis tells RT whether there is any ground to believe the currency, currently valued at $900, is practical for use by ordinary people and sustainable as a means of exchange overall.

To begin, Varoufakis says the percentage of Bitcoins currently used to purchase common goods and services is minuscule, which means that “as a means of exchange, Bitcoin has very little use.” The economist sees no evidence that Bitcoin will increase in supply or that large numbers of people will suddenly begin using it for mundane transactions.

Furthermore, the fact that there is a fixed supply of Bitcoins means that “if it succeeds in acquiring wide use across the world as a genuine means of exchange, by definition this currency is going to be deflationary,” which means the price of goods and services would fall as societies were forced to distribute a finite amount of currency over a growing population.

Varoufakis adds that as the currency is currently designed it creates a “social justice issue. Like we’ve seen in Bitcoin, if you entered the Bitcoin market or community a year or two years ago then you minted the Bitcoins very, very cheaply that now are worth an arm and a leg. So there is an aristocracy that is building and a fundamental division between the early adopters and the late entrants.”

Varoufakis begins talking shortly after the 1-minute mark.

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