4 Reasons Why Economists Should Love Bitcoin
Ask most economists what they think about Bitcoin and you’ll likely get an answer somewhere on the scale of ‘more like bit-con, amirite’ and ‘I want bitcoin to die in a fire.’
Not very friendly.
I studied economics and this doesn’t make sense to me. From an academic standpoint all I see is vast potential for this technology. Here are the top 4 reasons why economists should love Bitcoin:
4. Bitcoin Makes Trade Easier
Modern economics is rooted in the belief that competition in the global economy is a non-zero-sum game. What this means is that when nations interact through peaceful relations and trade all willing participants benefit. This belief is at the root of all arguments for free trade and globalization; the more opportunities there are for people on Earth to trade with each other, the better off we will all be.
This belief was born as a response to mercantilism, an economic theory that dominated Europe from the 16th to 18th centuries. Mercantilists viewed world trade as a zero-sum game meaning that nations were competing for a set amount of world wealth. This discouraged cooperation with anyone outside of national borders. International trade was seen as a tool to weaken other countries.
The classical arguments against mercantilism and for absolute wealth via cooperative international trade were first laid out by Adam Smith in his landmark book The Wealth of Nations and then refined by economist David Ricardo in his Theory of Comparative Advantage. They form the basis for the widespread belief among modern economists that tariffs, import and export licenses, and other forms of trade barriers are generally bad for the world economy.
This post was published at Coin Telegraph on 2014-10-28.