Lord Keynes Would Be Proud

Facts, Not a Recommendation

I’m a libertarian. I don’t care what you do with your money. Ownership means that you can do what you want. If you want to spend it on coffee, go for it! If you want to hoard your money until you die, that’s fine, too.

  1. Paying with a credit card costs less for the consumer than Bitcoin, despite costing the merchant more. The merchant pays the fees in a credit card transaction (2–3%). The consumer pays the fees in a Bitcoin transaction. The merchant may, in addition, pay fees for conversion to fiat.
  2. Paying with a credit card has benefits for the consumer that Bitcoin does not. These include consumer protection (you can request a chargeback), points/cash back, signup rewards and 25–55 interest-free days of not having to pay the bill and benefiting from any price rise in that time period.
  3. Credit cards are accepted in way more places around the world than Bitcoin.

Social Coercion

So why are so many people up in arms about this? Why are they acting like I’m some sort of heretic that should be burned at the stake for revealing obvious economic facts?

Keynesian Dogma

These Crypto-Keynesians believe that the velocity of money is what matters. Keynesian dogma is that increasing method of payment usage or getting people to spend are how value is created. In other words, BCHers believe the value of a network comes from both the speed and quantity of transactions.

Spending is Selling

I suspect the real reason so many people were outraged by my tweet is because I questioned their core beliefs. Like Keynesians, BCHers believe that they’re doing something good when they spend.

Merchant Adoption

Merchant Adoption doesn’t necessarily increase network value.

Conclusion

Economics is the study of unseen effects instead of just the seen. Watching merchant adoption numbers go up is an easy metric for people to see and cheer on. Much like other Keynesian statistics, a lot of information gets lost when aggregated and this is true of method of payment.

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Jimmy Song

Jimmy Song

Bitcoin Educator, Developer and Entrepreneur. Book: https://amzn.to/2RSlnTb PGP Fingerprint: C1D7 97BE 7D10 5291 228C D70C FAA6 17E3 2679 E455