In a recent Los Angeles Times interview, Brookings Senior Fellow John Villasenor sat down with Patt Morrison of the LA Times to discuss cryptocurrencies like Bitcoin. The concept of cryptocurrencies is a bit difficult to grasp. Villasenor helps to demystify the concept and explained some of the advantages of Bitcoin and its competitors.
From the interview:
What is so hard for most people to grasp about it?
The hardest thing — not unreasonably — is that bitcoin is completely decentralized currency. There’s nobody in charge, no company, no government, no consortium — collectively everybody acts to run it. Most of us grew up in a world where government has oversight over currency like the dollar.
Is there an actual bitcoin coin?
Strictly speaking, no. People have made little things with a capital B on them. But you can send a half-bitcoin, or .003 bitcoin. I can’t send you less than a cent, but I can send you the equivalent of less than a cent in bitcoin.
I’ve read concerns about its potential for destabilizing “fiat” currencies like the dollar, not just complementing them.
Eight billion dollars [the current estimated value of all the bitcoin in existence] in the context of the global financial system is the tiniest drop in the bucket. I don’t see bitcoin shaking the fundamental foundations of the global system.
That’s not meant to be a criticism of bitcoin. If I’m going to the grocery store, I can pay cash, I can use a debit or credit card — there’s not really a pain point that bitcoin will help to resolve. Now, if I’m going to move $2,000 to London, there is actually a pain point where I might look at bitcoin.
The greatest threat from the U.S. perspective is direct military conflict between Turkish and American forces...Erdogan seems determined to force the Americans to fulfill past promises that YPG forces would return east of the Euphrates. The challenge for the US is whether that promise can be kept while also maintaining order on the ground.