“Bitcoin as an Alternative Currency Project Failed” – Interview with CRIISEA Researcher Odile Laguerre-Lakomski

In 2009, Bitcoin (BTC) was launched as a digital currency that would compete with assets such as the U.S. dollar and the euro. But more than a decade later, the biggest cryptocurrencies are often seen as stores of value, or “digital gold,” rather than the digital equivalent of cash. Bad things turn into good things? We caught up with CRIISEA researcher Odile Laguerre-Lakomsi to discuss the thorny issue of cryptocurrency queen status.

Cryptoast: It is often said that Bitcoin was created on a deflationary model. Is this reality?

We must have gone back to the basics of Bitcoin. Classic bank money is considered to be tiered, which is already a fundamentally distorted view. This shows that the proponents of Bitcoin and those who designed the digital currency were and are computer scientists, more than an economist or monetary theorist. They adhere to the theories specifically proposed [l’économiste ndlr] Already in the 1930s Friedrich Hayek criticized the inflationary nature of bank money.

But it seems to me that they didn’t really delve into Hayek’s theory, but stayed on the surface. That said, to sum it up: it is enough to abolish the banking system and the central bank to eliminate inflation. In fact, it’s more complicated than that.

👉 Going a step further – Purchasing Power and Cryptocurrencies: Can They Help Prevent Inflation?

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So do you think the role of the central bank in the context of inflation is something to measure?

In the historical period we live in, the main mission of central banks, is inflation targeting. That is, their primary goal is to fight inflation, trying to control the money supply to keep it at a certain level. Whether it’s the U.S. central bank or the European Central Bank, inflation targeting could theoretically keep our inflation level below or equal to 2%. Therefore, it is not entirely true to say that classical money was inflationary, at least in contemporary times.I think there is a lot of confusion in the crypto community Between the concept of inflation and the concept of monetary value.

How to think about Bitcoin in this context?

It is a currency that retains its value, but [ses créateurs] Designing Bitcoin as a commodity, not a currency: so it can be effectively considered like value-added goods. This is what we observe very clearly. This supports this mechanism if demand increases compared to the available supply.

This is what happened when the first trading platform [de cryptomonnaies] Opened around 2011, you can already exchange USD for Bitcoin. But this increase in value is always related to the price of another currency, and therefore to the official currency. Also pay attention to the training effect. We saw it in ‘memes’ Once the public is interested, there is a lot of volatility.

👉 Read – According to a study, there will be 1 billion cryptocurrency users by 2030

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So you don’t think Bitcoin is an inflation-resistant asset?

The concept of inflation is related to the currency that is actually used for transactions. For example, if we are talking about inflation in currencies like the US dollar, it makes sense because the US dollar is a means of payment in the US economy. That is, everyone is paid in U.S. dollars, and all prices, debts, claims, services, and wages are expressed in U.S. dollars. The same goes for the euro.

Once you have a currency to transact with, it faces the goods and services you buy with that currency.That’s why when we try to measure inflation in an economy, we use it as a reference consumer price index.

For now, this is not the case with Bitcoin.

Exactly.Now, I say good now, it doesn’t make any sense because as long as these currencies don’t allow Create a payment area where we will pay all fees in cryptocurrency, for example, where all prices are expressed in Bitcoin, there is no concept of inflation. Bitcoin will only become a bulwark against inflation if it becomes a universal payment method that allows the purchase of a common set of goods and services.Bitcoin’s creators actually created a digital gold as they tried to build a currency have the same raritythan the golden tee. For other types of blockchains, it is equivalent to destroying the tokens in circulation.

👉 Find our guide – How to buy bitcoin in 2022?

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Bitcoin price is highly correlated with stocks: does this mean that cryptocurrency has not yet managed to break away from ‘classical’ finance?

Unfortunately, Bitcoin has mostly been institutionalized by finance. temporary, it failed as an alternative currency project, but on the other hand, it has been very successful in finance and as a financial asset, that is, since around 2017. Crypto assets are considered an asset class to invest in, and thanks to you can get attractive returns on investment in assets. Since the volatility is very high, there are also a lot of rewards.

Bitcoin and cryptocurrencies are thus absorbed by this financial logic that dominates our contemporary capitalism and has been in vogue since the 1980s.Therefore, we are dominated by investors People who are constantly looking for high performancesince the crisis [des subprimes] Year 2008.

Central banks have injected massive amounts of liquidity into the financial system as they try to restart the economic machine to avoid deflationary accommodative monetary policy, as well as the recession that followed the financial crisis. They also made multiple large-scale purchases of traditional assets, which caused their profitability to drop to zero at all.Investors are therefore forced to Shift to alternative asset classes, of which Bitcoin is a part. Especially since 2017, the Chicago Stock Exchange has sent a very positive signal to the market by opening a dedicated cryptocurrency trading service. Cryptocurrencies and Bitcoin then became financial assets and now follow the typical speculative logic of contemporary financial logic.

Why hasn’t Bitcoin fully found its place yet?

I would say intuitively Unfortunately, Bitcoin may have come a little too soon. I think financial capitalism should collapse completely and we should move to another model. Therefore, Bitcoin naturally positions itself.

Having said so much, I still feel There is a ground expansion formed. With the massive development of the internet and digital technology, we are turning to a different kind of capitalism. But we are at a stage where financial capitalism is not dead yet, and unfortunately, Bitcoin has come while it is still valid. Therefore, it is now absorbed as a classic asset.

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