Bitcoin or Bit-con? Talking blockchain with Hazel Henderson
Hazel Henderson is a multi-award-winning futurist and evolutionary economist, and the founder-president of Ethical Markets Media, an independent media company promoting the emergence of a sustainable, green, more ethical and just economy worldwide.
After the publication of her recent article “Money is not wealth: cryptos vs. fiats” garnered significant attention worldwide, the GEC caught up with Hazel to get her take on blockchain, bitcoin, and the potential for cryptocurrency technology in the green economy.
GEC: Hazel, from what you’ve already written I think it’s fair to say you’re not convinced by all the hype around Bitcoin. Could you just outline why that is?
Hazel: As I’ve pointed out, money is not wealth. In other words, bitcoin, like most cryptos and many fiat currencies, has no intrinsic value. They are just information, a metric like inches or centimetres, that can be used to track real wealth: the productive activities of humans interacting with natural resources and ecosystems.
If such money units (cryptos or fiats) are backed by real world goods and services, not inflated or manipulated, then they can be an honest medium of exchange. But we are learning from the bitcoin fraud that money itself, of whatever kind – whether dollars, pounds, or bitcoin – is not a reliable store of value. Speculative frenzies can artificially drive up the price of a currency, but when such bubbles burst that inflated value disappears in an instant!
That’s why most of the scrip currencies issued in local communities after the Great Depression had to be spent into the community to restore local prosperity, to strengthen the link between the currency and real goods and services. Likewise, many of them had to be stamped every month to remain in circulation and would expire after a certain date – to prevent hoarding.
This horrifies Wall Streeters, since their game is to try and make money out of money by dreaming up derivatives or trading secondary instruments with each other. They forget that owning a share of stock does not give you ownership over a living corporation or its employees! A stock certificate is simply a tradable contract whose value changes daily in the market.
So maybe Bitcoin is a bust – but what about other cryptocurrencies? Haven’t some people argued that they could be the new “green money” that enables the transition to a new green economy?
Yes! As new blockchain platforms evolve beyond the inefficient bitcoin system, it’s becoming possible to design cryptos that can qualify as “green money”. But these must be backed 100% by real world valuable resources or services, rather than notional units, for example: cryptos based on carbon credits or offsets, which are often fraudulent and subject to gaming, as we know.