Yanis Varoufakis, the former finance minister of Greece said that while the blockchain was a remarkable technology, replacing fiat with BTC would only make things worse. According to him, such a move would make capitalism uglier, nastier, and more dangerous for the world.
What the Minster had to Say
Yanis Varoufakis was the finance minister during the economic crisis that faced Greece. He was in charge of the country’s finance ministry when the country faced a financial crisis that left it unable to pay €1.6 billion to the IMF.
He published an open letter on Monday, July 27, 2020, on his blog in which he argued against the adoption of Bitcoin. The former minister believes that using Bitcoin would only make capitalism uglier, nastier, and more dangerous. However, he said he could see the benefits of the blockchain.
The former finance minister said that Bitcoin did not have mechanisms built into it that would allow it to react favorably to various economic issues. For instance, it could not react to the current COVID-19 crisis since its policy was hard-coded into the network and it was impossible to alter.
BTC does not Support Quantitative Easing
The former minister pointed to the current crisis facing the world. He pointed out that if central banks had been using Bitcoin, they would not have been able to print trillions of dollars in value. Instead, they would have had to wait for the majority of BTC users to agree to the increase in the supply of money. He said it would have led to a situation similar to the great depression of 1929, which led to the collapse of companies and banks.
The minister also noted that the ownership of BTC was unequally distributed globally. As a result, those who own a lot of it would not support an increase in supply. As a result, if BTC replaced fiat, it would only make the problem of wealth inequality worse.
While he does not believe in replacing fiat with BTC, he does believe that financial products using the blockchain will be an essential part of the future. Ironically, one reason why BTC was invented was the wanton printing of cash by central banks.