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**JUNE 9, 2021**

Kuttner on TAP

Time to Ban Private Cryptocurrencies

****

When the Bitcoin craze first began, my reaction as an unreconstructed
progressive was that this whole idea was a scam and an invitation to
abuse. Bitcoin serves mainly speculators in Bitcoin itself, fraudsters,
criminals, and now extortionists. Its benefit to the general public is
minuscule.

Bitcoin is a vivid example of how libertarians get so much wrong. Crypto
is the high-tech successor to the chaos of "free banking" in the 19th
century, when any crook could open a bank.

Recent events have only confirmed these misgivings.

Libertarians love crypto because it is the ultimate free market and ends
the "government monopoly" in creation of money. That's precisely
what's wrong with it.

Supposedly, cryptocurrencies save users money by ending the "transaction
costs" of paying by check, credit card, Venmo, etc. But unless you are
stupid and like paying extra fees, those costs are trivial compared to
the criminal uses of Bitcoin and the larger costs in the destabilization
of the financial system.

Now, the libertarian crypto fantasy has backfired, as government
agencies, in response to the recent epidemic of ransom hacks, have had
to take on new powers to track down the ransom gangsters and hack into
their crypto accounts to get some of the money back. If you like
increased police powers and massive disruption of critical systems, you
can thank Bitcoin.

Sorry, but it's good and necessary policy for governments to have a
monopoly on creation of money. Yes, private banks do "create" money when
they extend credit, but that money creation is regulated and monitored.
Even cash transactions in excess of $10,000 are tracked and monitored
for fraud and criminal activity.

If we want the benefits of digital currency transactions without the
risks, one idea discussed at today's hearing of the Senate Banking
Subcommittee on Economic Policy, called by Elizabeth Warren, is to
create a Central Bank Digital Currency that would be operated and
governed by central banks such as the Fed, and available for use by the
general public. See more detail here
.

Privately created and unregulated cryptocurrencies should not be
regulated, as some have suggested. They should be banned.

~ ROBERT KUTTNER

Follow Robert Kuttner on Twitter

Robert Kuttner's latest book is
The Stakes: 2020 and the Survival of American Democracy
.

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