Robert Shiller, a Nobel laureate, said cryptocurrencies could turn out to be just another failed currency experiment.
“As in the past, the public’s fascination with cryptocurrencies is tied to a sort of mystery, like the mystery of the value of money itself, consisting in the new money’s connection to advanced science,” Shiller wrote in a blog on the Project Syndicate website.
The Yale Professor said that practically, only those in the computer science departments, can explain how cryptocurrencies work.
“That mystery creates an aura of exclusivity, gives the new money glamour, and fills devotees with revolutionary zeal,” Shiller wrote.
“None of this is new, and, as with past monetary innovations, a compelling story may not be enough.”
The leading economist pointed out that new ideas of money apparently is within the territory of revolution, which is accompanied by compelling, easily understood narrative.
Shiller cited the example of the “Cincinnati Time Store”, which opened in 1827, and sold merchandise in units of work, highlighting the importance of working people. The store closed in 1830.
Shortly afterwards, the socialist Robert Owen attempted a similar approach to money and failed. Similarly, communists also attached money to the importance of labor and issued paper notes with vivid symbols of working class on it, the economist pointed out.
And during the Great Depression of the 1930s, the Technocracy movement with links to the Columbia University, proposed to replace the gold-backed dollar with erg, a measure of energy, as a solution to the unemployment problem. There was also a proposal by the economist John Pease Norton to have a dollar backed by electricity.
All these failed monetary experiments were coupled with a unique technological story and more fundamentally, they were connected with a deep yearning for some kind of revolution in society, Shiller noted.
“The cryptocurrencies are a statement of faith in a new community of entrepreneurial cosmopolitans who hold themselves above national governments, which are viewed as the drivers of a long train of inequality and war,” the economist added.
by Jyotsna V