Q+A Panel Discussion 3 - In Response to Kirk Hope Interview

Sunday 5th  May, 2013
 
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Q+A
 
PANEL DISCUSSION 3 - in response to Kirk Hope interview
 
HOSTED BY SUSAN WOOD
 
SUSAN WOOD
Raymond, let me throw you a question on that one. Do you think it’s the way of the future, these bitcoins or something, a new generation of?
 
RAYMOND MILLER, Political Scientist, Auckland University
This may well be the case, but I think there’s something worrying about the use of bitcoins or any other sort of digital currency. One of the things that binds us together as a society is our commitment; there are certain obligations and rules of how our currency actually works. This bitcoin business, one of the things about it is it’s free of politics, it’s free of any sense of obligation to society, indeed, any connection with society. Indeed, it’s been described as being - we know about Facebook being a social networking system - as an anti- social networking system. It’s highly individualistic, and the concern is in part that it’s pretty sinister, drug-dealing or money-laundering or whatever, there’s also this inclination towards a highly individualistic society in which we can operate anonymously, nothing is traceable, we avoid paying taxes, we avoid exchange rates, we avoid a lot of the things that binds us together as a society. So I do think that’s quite a sinister thing.
 
JOSIE PAGANI, former Labour Party candidate
I think that’s right. There’s a real libertarian streak here of separating your currency from government, from big banks, you know, sitting in your log cabin with your gun and separating yourself from society. And the economists Paul Krugman made the point that you can’t actually separate money from society. Society makes money. And what you do with it is actually what makes money. So if you can’t pay your taxes in it, then it’s not gonna work. And I think, you know, the dollar, the euro and the yen are safe today, because any currency that loses up to 75% of its value in two days is probably not a very good holder of value.
 
PHIL O’REILLY
Yes, it’s part of that outlaw culture of the web, isn’t it - ‘I don’t wanna play by your rules.’ And, of course, it’s had a lot more take-up lately because of issues in Cyprus and so on where bank depositors are taking a haircut. So you can see its allure, but Kirk’s right in saying the answer will actually be to make doing what you normally do much easier. So when I travel offshore it’s a lot easier now to get New Zealand currency converted. You just pay with your credit card all over the place and so on.
 
SUSAN      
And cheaper, because it is those fees. If you use your credit card offshore, they whack you with those fees all the way along. And there’s a reasonable push-back against that, isn’t there.       
 
PHIL           
Precisely. The answer will, of course, be to make all of that more accessible, cheaper, and the banks will simply respond to that. And, of course, governments have got a big reason to assist them, because they need to get tax paid and they want to make sure that illegal transactions are minimised.
 
JOSIE         
Kirk made an interesting point, actually, that the supply of bitcoins is capped. That actually makes it a very inflexible currency. The reason we don’t have a gold standard any more is that we need to be able to control the supply of our money. So that means either we’re, you know, playing around with interest rates or we’re printing money or not, and if you can’t do that, it’s not going to work. It really is like the tulip mania in the 1600s in Holland where everybody traded futures in tulip bulbs, until a sailor came along and thought it was an onion and ate it, and then suddenly everybody stopped believing that this was a currency you could use. So, you know, money is a mutually shared illusion.
 
RAYMOND
They have to come up with another name. I’m struggling with the term ‘bitcoins’, particularly at 9 o’clock on a Sunday morning. One of the things that it does is that it does require buy-in. I mean, you need to have people who are prepared to trade in it. Buying a coffee, paying your lawyer for whatever reason, because very often they in some countries receive money in kind, but, you know, if you’ve got such a limited range of opportunities for actually trading with this currency, it’s going to be very difficult. That’s not to say it won’t be replaced by something which is much larger.
 
SUSAN      
Because this could be the early one in that. Interesting, though, Phil, isn’t it, people’s psychology, if you like - banks in Cyprus or you buy bitcoins.
 
PHIL           
Well, that’s right. Of course, in Europe there’s a real lack of confidence in banking. It’s not like here. I mean, we don’t like banks, I guess, because they make too much money and so on-
 
SUSAN      
We don’t like their fees.
 
PHIL           
But there’s a much different thing going on in Europe, which is an issue of confidence in banks themselves - will they survive? Is my money going to be safe? So there’s a very different cultural reason to drive bitcoins. But at the end of the day, I think that it’s just part of this outlaw thing of the web - ‘I don’t wanna play by anybody’s rules’. At the end of the day, rules will win out, because at the end of the day money is a social contract. Money’s part of what we need to do. And if we’re all gonna sort of move away from that social contract, all of a sudden you don’t have schools and hospitals and roads, and it gets a bit hard.
 
JOSIE         
It’s backed up by the rule of law, and if it’s not, it’s not really money. I mean, I’ve got a dishwasher that’s worth value, and I can trade it, but it’s not currency. So what you do with it makes it money, not what it looks like.
ENDS

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