Does Paul Krugman think
Bernankoin is evil?

Some people have talked about the idea of a government creating its own cryptocurrency, and Bernankoin gives us a peak into how that could work. Individuals who are worried about the horrors of deflation can rest easy because Bernankoin is here to provide rising prices to all markets. Instead of trusting the free market to properly allocate resources throughout the entire economy, Bernankoin allows everyone to print bernankoins whenever they are needed. In the future, you will be able to print bernankoins on your computer instead of asking the bank to finance your new business loan. Say goodbye to that liquidity trap for good!

Replacing Mining with Printing

Although Bitcoin has proven to be rather innovative as a payment network, there are a large number of issues with the bitcoin currency. The first issue is a matter of semantics, but it’s important to remove an archaic term such as “mining” from the lexicon of future cryptocurrencies. Mining has nothing to do with money because we no longer need to put our trust in a chunk of metal. Bernankoin replaces Bitcoin’s mining with a printing process that allows users to use the same methods that Ben Bernanke and Alan Greenspan have used to keep our economy at a perfect growth rate for decades. Anyone can become a Bernankcoin printer, so there is no reason to worry about a collapse in consumer spending. Everyone has access to bernankoins whenever they need them, so we don’t need to worry about the 1% preventing the flow of money throughout the entire economy.

The Futility of a Government Issued Cryptocurrency

All joking aside, Bernankoin shows us why a centralized version of Bitcoin created by a government would be completely missing the point. The reason people like Bitcoin is the fact that there is no centralized party controlling the increase in the money supply. Even if a government were able to create its own inflationary cryptocurrency, that form of money would face a huge issue when it came to competing with the bitcoin. After all, who is going to hold the government’s cryptocurrency when it loses value on a yearly basis? Bitcoin has been able to bring competition back to the world of money, and it’s been a long time since fiat currency has had any real competition. They’ve been able to rig the system against gold and silver in the past, but Bitcoin offers a new option that could be difficult for government officials to tax, regulate, and control.

The US Dollar as a Cryptocurrency

Imagine if someone said they were going to create a new cryptocurrency, named the US Dollar, to compete against Bitcoin. The creator would claim that a central authority, the Federal Reserve, would control the supply of dollars over time. They would hand out the dollars in secret, and no one would be allowed to complete a full audit of the source code. The mining process would be a guy adding extra zeros to certain US Dollar addresses, and the central authority behind the system would also have the power to change the amount of dollars attached to those addresses when they deemed it to be necessary. If the US Dollar were created today as a new cryptocurrency, it would look a lot like a premined scamcoin.

4 Responses

  1. Gubatron

    Guys, in case you missed it, the article is a satire on the US dollar and the former president of the Federal Reserve, Mr. Bernanke.

    Awesome piece.

  2. Avatar of

    Someone in Russia is actually trying to make centralized cryptocurrency (allegedly in partnership with some banks)
    Wishcoin, “better alternative to Bitcoin”, that “solves main problems of Bitcoin” as they say: decentralization and limited emission. They say that they already have approval from some bank and some “partner”, but they didn’t reveal any names yet.
    There will be only one “emission center” that is going to emit coins based on requests from big investors and the Government. They announced that they already emitted ~5 million coins (Their website shows the number 5,808,263). It’ll have fixed exchange rate of 5 RUR per 100 Wishcoins.

    There’s not much information yet, and their website is providing no useful information. The only information right now is from news outlets and blogs. This thing looks very suspicious, but may very well be real. For me it looks like some people want to get paid twice for worthless bytes of information: once from “investors”, who pay for emission, and then from regular users. Obviously, price for investors will be much lower so they can get profit.
    Right now they are clearly on a “marketing stage”, they give away coins for social actions (Likes, retweets, and so on). However it is not displayed anywhere except on their website, since there’s no wallet yet, we can’t be sure those coins are real at all.

    As a bottom line:
    Controlled emission with no volume cap (continuously pre-mined)
    Fixed exchange rate
    Probably, Proof-of-Stake.

    Question is, is it another MMMCoin, or is it really a step forward made by some enterprising bankers? I bet it will not work at all.

    • Johnfoolery

      Honestly, I think it could it work and be beneficial to both government and users all over the world. A couple things would have to take place in order for it become a positive.

      A.) Bitcoin would have to go unaffected by the integration of this new government cryptocurrensy. Take the other smaller cryptocurrensys for example. They are all a worth a whole lot less than BTC but seem to fluctuate in the same directions as the BTC market.

      B.) Maybe instead of Paypal and other companies accepting BTC they only collect the new government issued crypto. Transferring our BTC to a government controlled crypto would allow for slight taxation and a sense of control for not only the government but also investors wary of BTCs un reliability.

      So this is looking at it in a good light. But it could also, and probably has a higher chance of, making things worse for cryptocurrensys.

      A.) One of the main things and something that most would worry about is if this new gov crypto was introduced and suddenly BTC was no longer top dog of the crypto market then we’d be in trouble.

      I believe that treating the government crypto just as another crypto but allowing for more mainstream use with it would not only add to all crypto markets but legitimize this Wild West that we are dealing with now.


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Avatar of Kyle Torpey

Kyle is a freelance Bitcoin writer and the Marketing Director for Bitcloud. His work has been featured on Business Insider, VICE Motherboard, Let's Talk Bitcoin, and RT's Keiser Report . You can follow him on Twitter (@kyletorpey) or send him an email.