Some commenters were simply baffled by this. Marques Brownlee, a web video producer, tweeted, “Business school taught me to buy low, sell high. But with Bitcoin it just … it just keeps going up.”
Those words themselves seem to have coincided with the beginning of a sharp correction. In a wild few hours the price went to below $9,100 Thursday before stabilizing just a little above that.
These sudden swings stimulated new rounds in a debate almost as old as the crypto-currency itself. What is bitcoin? A private sector money supply, akin to gold but reinvented for the digital era? A speculative (but legitimate) asset? A Ponzi scheme?
Joseph Stiglitz, a Nobel Prize winning economist, is of the third of those opinions. He told Bloomberg Surveillance during the excitement on the 29th that bitcoin “ought to be outlawed.” He said it serves no socially useful function.
Left Wing View
The left is generally suspicious of bitcoin for precisely the reason many on the right admire it: no one is “in charge of Bitcoin.” No one serves the role for bitcoin that the Federal Reserve serves for the U.S. dollar, and other central banks serve for other official currencies.
Another Nobel Prize winner weighed in, agreeing with Stiglitz. This was Robert J. Shiller, a fellow at the Yale School of Management’s International Center for Finance. In a panel discussion Thursday Shiller said that bitcoin enthusiasts are selling a great story, like a “mystery movie” with an anti-government feel. “If it were only true,” he added.
Some leftists seem to be eager for the bitcoin “bubble” to burst, because they expect that the people who will be punished by that will have had it coming.
Bloomberg recently pointed out that differences among the various “developers of bitcoin” have led to “forks” in the currency, so that there are now different versions of it, as well as other knock-off currencies created on the same principles. This fragmentation is a feature that “could prove a bug,” Bloomberg warns, “just as it did for the U.S. financial system during the free banking era.”
Right Wing View
The defenders of bitcoin, generally on the right of center, reacted harshly to Stiglitz’ comments on social media. RenagadeinvestorUK tweeted that bitcoin has a variety of social functions: ending the monopoly of inflationary fiat money, undermining the way fiat money is used to finance warfare and this “destroys entire regions,” banking for the unbanked, and so forth. Renegade also says that he sees the pertinent spectrum as from “decentralization” to “centralization” rather than from right to left.
Another twitter denizen, Chris Pacia, puts the point even more simply. “Stiglitz is such a hardcore statist.”
Setting Stiglitz aside, reaction from bitcoin believers to the dramatic run up was … both a celebration and a sense of vindication. In the words of Charlie Lee, formerly the director of engineering at Coinbase, a major bitcoin exchange, all the holders deserve congratulations and now should “take some profit off the table. You deserve it for believing when no one else around you did.”
Such believers aren’t distressed that bitcoin pulled back sharply on Thursday. Their view, generally, is that some holders did follow Lee’s advice, selling in order to realize their profit, taking it “off the table.” That explains the price decline.