American Consequences - August 2020


Steven Longenecker comment: We’ll set aside gold for a moment, Henry, and note that “arbitrary construct” isn’t too far off from describing a dollar. What do you think is backing those many pieces of cotton-rag paper, printed with special inks and engraved on a press, that we carry in our wallets and exchange for goods and services? The simple answer is nothing . Nothing at all... other than the belief of billions of people in its worth. That’s why you can easily trade a single dollar for anything from a soda to an iTunes song to a lottery ticket. Today, one bitcoin is backed by the belief of millions of people regarding its worth. That is exactly both its risk and its opportunity... There are, of course, billions of people in the world who aren’t ready to trade $11,000 in paper bills for one bitcoin. And yet, what do you think will happen if tens of millions or even hundreds of millions more start to believe that bitcoin is worth something? We are not die-hard believers here. Instead, we have been both interested and somewhat skeptical of the burgeoning promise of both cryptocurrency and blockchain technology since we launched American Consequences . In fact, we made it the focus of our second-ever issue, three years ago. A single bitcoin was about $2,500 when we published that issue... versus more than $11,000 as we write today. Re: Another Type of Pandemic Is Just Beginning

to be a somewhat hellish fire hazard). But thank you for your kind words, Lyle. Re: How Crypto Will Quietly Go Mainstream I have a son-in-law studying for his accountancy exams. He has been staying with us and said cryptocurrencies are part of his homework on the syllabus. In order to give him background info, I forwarded your e-mail to give him a wide sense of the possible future of cryptos... I think Porter’s own conversion has convinced me to wake up and smell the crypto coffee. – Michael Y. Steven Longenecker comment: Michael, we frankly hadn’t considered the idea that cryptocurrency was in accounting coursework, but it makes perfect sense. We’ve heard that about 10% of Americans currently hold some type of cryptocurrency – so it makes sense that those gains are going to be increasingly relevant on their taxes. Thank you for writing in and sharing... and we wish your son-in-law the best on his exams. Bitcoin is not a coin, not gold, like the one- ounce coin we normally see an image of when bitcoin is depicted. Those images, along with the two vertical lines through the "B" are meant to give the illusion that bitcoin is real, like a dollar bill or a gold coin, that it has real value when it is just an arbitrary construct, a digit created from nothing, is, well, it's nothing but an abstraction. – Henry P.

This opinion piece closely mirrors my own


August 2020

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