The Bitcoin Era Was Predicted 17 Years Ago



The digital currency era was predicted 17 years ago by Milton Friedman, an American economist who received the 1976 Nobel Memorial Prize in Economic Sciences for his research on consumption analysis, monetary history and theory, and the complexity of stabilisation policy.

During an interview conducted by the National Taxpayers Union in 1999, Friedman said:

“I think the internet will be one of the major forces for reducing the role of government. The one thing that’s missing, but that will soon be developed, it’s a reliable e-cash. A method where by on the Internet you can transfer funds from A to B, without A knowing B or B knowing A. The way in which I can take a 20 dollar bill and hand it over to you and there’s no record of where it came from, and you may get that without knowing who I am. That kind of thing will develop on the Internet.”

This is an almost exact description of how crypto-currencies like Bitcoin work, all you need is the receiver’s public address and you send them Bitcoins without even knowing each other’s identity.

For example if I wanted to send Bitcoins to a friend on an online forum they can simply post their bitcoin address, which I would copy and deposit Bitcoins into using my Bitcoin wallet. Bitcoin addresses can be left anonymous or you can associate your name with your address like Wikipedia co-founder Jimmy Wales did.

Friedman also had concerns about criminal uses for digital currency

“Of course it has its negative side, it means that the gangsters, the people who are engaged in illegal transactions will have an easier way to carry on their business”



The Silk Road Scandal

Silk Road was an underground marketplace used for online drug sales and other illicit materials and services including hiring hitmen and the purchase of firearms. This was made possible through the use of the Tor web browser to access the Dark Web and Bitcoins to facilitate the transactions.

This ties back in to Friedman's concerns about criminals being able to profit from the use of discreet digital cash.



The Future Of Global Currencies

Will decntralized crypto-currencies ever replace good old centralized fiat currency? I will save that for another post.

"If you put the federal government in charge of the Sahara Desert, in 5 years there'd be a shortage of sand." - Milton Friedman

Full Interview