It’s Very Expensive to be Poor: Stanford Professor Susan Athey Talks Bitcoin with Forbes
Forbes technology writer Laura Shin recently conducted a three-part interview with Bitcoin enthusiast and Stanford business professor Susan Athey about her involvement with Bitcoin, including an experiment being conducted with MIT students. The purpose of the experiment is to determine whether permeation of Bitcoin is a determinant factor in its spread, which is to say, how much of Bitcoin’s uphill battle is to do with the hurdles to acquiring it.
By seeding an entire community with Bitcoin, we can test the hypothesis that it’s lack of community adoption that’s keeping people from using Bitcoin.
In this experiment, each participating student is getting $100 in Bitcoin. Area businesses, keen to the project, have begun accepting Bitcoin, a positive side-effect of the research. The wide-ranging interview could be seen as a good introduction to Cryptocurrency for career businessmen and veteran capitalists. In the first part , the basics of Bitcoin are covered and the life-changing potential of digital currency in general.
Also read: Duke University Professor Offers Bitcoin Blockchain Themed Class
Bitcoin At the Register and Around the World
The third and most interesting part of the interview goes over the MIT experiment and which parts of the economy are most positively impacted by the wider spread of cryptocurrency. Interestingly, one of those beneficiaries is the merchant:
…credit cards are a consumer-friendly solution, because the credit cards allow you to call up later and say, no, that wasn’t me, and the merchant’s out the money.
But another and much better example of how the economy will benefit from wider use of Bitcoin, is those without bank accounts. Imagine being an honest citizen in a place like Somalia. How difficult it must be just to order computer parts or a new cell phone. Many businesses and likely all banks will have nothing to do with you, whether you pay with a legitimate credit card or not.
Thanks to the advent of the Blockchain, businesses have a far greater degree of assurance and no existent risk of of a charge-back. So while the cost of shipping and finding a shipping solution in sub-Saharan Africa or somewhere like it might still be an issue, but the payment problem becomes a non-issue with Bitcoin.
…getting the world’s unbanked to be able to more efficiently access financial markets is a very important public policy goal. It’s very expensive to be poor. […] So if we can find ways to get those costs down and promote financial inclusion, that will help inequality and growth and help people get themselves out of poverty.
Something for Everyone
It is important for all involved, from the aspiring miner to the interested venture capitalist, to keep in mind that the expansion, digitization, and interconnection of the global economy is beneficial to everyone from the wealthiest banker to the toiling coder at Microsoft.
Goods and services are the true defining matrix of value and their availability is paramount. No one can predict the future and it is impossible to say who the next massive market will be. Having a versatile vehicle of exchange like Bitcoin or any of the alternatives is as essential as exporting in local languages is.
…in the early days of the internet, most of the traffic was pornography, and the first people to make money on the internet were pornographers. That didn’t mean we shouldn’t do the internet.[…]Digital currency has the possibility to connect the world’s unbanked poor much more quickly to international financial markets, and that promise is worth a lot.
It is no secret that cryptocurrencies are the way of the future, but what is not said enough is that literally anyone can get in on the game. All walks of life have the ability to offer their goods, services, and labor in the new economy, and many of the problems of past economic modes like racial discrimination and distribution of wealth are mitigated, to say the least, by the blindness of the Blockchain.
Instant transfer of funds is unheard-of in regular banking situations, but Bitcoin, as we all know, makes this, too, a non-issue. When you think of it this way, it almost makes less sense to accept fiat currency, doesn’t it?
…if you’re a small entrepreneur without a lot of capital, it’s hard to make money available immediately and have enough capital to hold in reserve so allow to cash out immediately before the money arrives. […] So this technological innovation of moving the money instantly lowers the cost of entry to remittance markets and allows you to basically connect any retail chain that has the ability to accept cash and give out cash can so it can become part of a low-cost, low barrier-to-entry remittance corridor.
The interview ends with a mention of Ripple, in which Athey plays a key role. It notes that one of the key differences between Bitcoin and Ripple is that you are free to only deal with those you can trust. Ripple made huge waves when it was launched but as of this writing it is only valued at 0.00005085 BTC.
How do you feel about the permeability of Bitcoin? Do projects like the MIT experiment help or hinder its rise? How important is transactability in your estimation of the currency? Comment below!
Images from Shutterstock.
