I don't think that banks became too big to fail out of some sort of nefarious scheme. Instead technology rendered previous regulations and institutions powerless or irrelevant. Read how the bitcoin could do the same again (link is here).
a bit of the article:
Electronic payments aren't new. Bitcoin's only innovations are its status as an independent currency and its decentralized network design. But those differences might make Bitcoin -- or rather, crypto-currency in general -- an existential threat to the modern liberal state. If widely adopted, crypto-currencies would cripple government in three central functions: taxation, police and macroeconomic stabilization. That is exactly what Bitcoin's biggest fans are hoping.
I say out with the old in with the new.
ReplyDeleteIn our last class we talked about how innovations in technology would play a crucial part in stabilizing the economy so I found it interesting that this article seems to suggest that advances in Bitcoin could do the opposite. If this new means of exchange did become more popular it would have to be standardized anyway so that transactions could be fair. There are always periods of trial and error with any new form of technology so why wouldn't the same process be necessary for the use of Bitcoins? nothing starts off perfect and I believe that the potential that this new means of exchange could bring could have a positive impact on future economies as long as the some of the regulatory and privacy issues that the article brought up were addressed.
Personally I think the integrity of our government left with the acknowledgement of the financial crisis so the fact that Bitcoins threaten that even more doesn't bother me.
I agree, in the sense that I don't particularly see how technological advancement can take us back rather than forward. With that being said, I would like to bring up an example of a technological problem that occurred this past summer.
ReplyDeleteIn August, an electronic trading glitch caused serious problems with 150 stocks. The problems stemmed from firm Knight Capital Group, who may have lost $80 million from this glitch. This event was described as "another big knock to investor confidence." So I can see how some people would be wary of technology causing problems where humans would usually not.
The article I referenced can be found here:
http://online.wsj.com/article/SB10000872396390443687504577563001717194274.html