Authored by Omid Malekan,

Bitcoin Has Plenty Of Utility

My co-author Ulrich Bindseil and his ECB colleague Jürgen Schaaf have written an intriguing paper on the distributional consequences of Bitcoin should it continue to appreciate in value. I disagree with their argument and want to hash out why.

In that paper, they make a creative argument that if Bitcoin was nothing more than a speculative asset with no other economic or social utility, then continued price appreciation will have negative consequences for the rest of society. I have no issue with their conclusion — it's a thought out and robust argument. But their premise on the utility of Bitcoin is flawed, for two reasons.

First, they have an unnecessary focus on whether Bitcoin has lived up to the goals of its creator and early adopters. I think this observation is unimportant, even if true. The focus should be on whether Bitcoin has utility for society today. Second, they fall into the common trap of treating Bitcoin as just an asset, one that is independent of the novel infrastructure that powers it.