In a conversational interview, economist Tyler Cowen offers a balanced overview of cryptocurrency, describing Bitcoin as a novel record‑keeping system that also functions as a new form of money, investment asset, and computer. He outlines the skeptical side, citing concerns such as ransomware payments that are irreversible, the high energy consumption of proof‑of‑work mining, and the fact that many promised benefits—cheaper banking, lending, and finance—have yet to materialize. Cowen then presents a bullish scenario: as the internet evolves into a global economy (sometimes called the metaverse or expanded internet), it will need secure, blockchain‑based property rights and transaction infrastructure. In that future, individuals could seamlessly lend money across borders, own digital assets, and move resources globally with lower costs. He characterizes this vision as speculative but not wildly implausible, suggesting that crypto could become the institutional backbone of a new digital economy if these developments unfold.
All right, so now let's move on to cryptocurrency. You need a big water or anything before we switch topics?
Let's try crypto without water, but we'll see.
Crypto, crypto, crypto. As cryptocurrency becomes more popular, we're starting to see signs that it could become part of our financial future.
Cryptocurrency is a truly new idea, and it's rare that we have truly fundamentally new ideas. Think of Bitcoin as a kind of record-keeping system, and you pay people in Bitcoin to validate the records, and you move on to the next day, and every day, every moment, you have a new set of records. And this process is self-enforcing. It cannot easily be overruled by an outside authority or central authority. So it's like you have at the same time potentially a new kind of money, a new kind of investment asset, and also actually a new kind of computer. So when I talk to people who are deeply into crypto, I often feel quite skeptical. They have such bold, grand plans, and I'm not convinced they've thought through how to carry it all out. At the same time, I know many people who dismiss crypto altogether. They think it's a scam or a bubble or a fraud. And when I talk to them, I feel quite bullish about crypto. I see a lot of potential in the ideas, but I don't think we know yet how useful crypto will be. Here are some reasons why the crypto skeptics are skeptical. People use crypto to pay off ransoms. Let's say hackers will go into the medical records of a hospital, pull out or lock or freeze that information, and they won't give it back until they're paid off in crypto. You can't ever get your money back. It's an irreversible transaction done on the blockchain. That's the end of it. Crypto itself, in most of its current forms, it consumes a lot of energy. You have computers racing to make calculations to crack different kinds of cryptographic problems. And those computers use so much energy that it damages the environment through carbon emissions in a way that we, we understand pretty well now. But maybe the biggest reason to be crypto-skeptical is simply that a lot of the promised benefits haven't happened yet. Well, it's going to make banking cheaper, it's going to make finance cheaper, it's going to make lending cheaper. Maybe those dreams are just impossible or impossible anytime soon. And if people are skeptical about the promised benefits of crypto, they have some good reasons to be skeptical. Here's a way to think about the bullish case for crypto. Imagine that the internet becomes more and more its own economy with its own series of rules, and that economy is a global one. It will need its own systems of record keeping, its own systems of property rights, its own way of consummating transactions. We'll need a new institution to do all those things, and crypto is actually the best bet that we have. If that occurs, and many people think it will, it probably would be possible for me, say, to take part of my checking account and just by sending a single message, lend some of it out to, say, farmers in Kenya, the world would be more global, I would be better off, they would be better off. There'd be this new system, some call it the metaverse, others just call it the expanded internet, where we would own more things on the internet, have these secure property rights validated by the blockchain, have new investment assets, and moving Resources around the world would be much easier, cheaper. That is speculative, but it is not what I would call crazy speculative. It's a possibility, and we're gonna see if that's what's gonna happen.
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