Professor Steve Hanke and investor Nic Carter on the two sides of the bitcoin debate
By Mr.tutorialz
on April 7, 2021 10:04 am
Today’s episode of Decoder is about a very big idea: bitcoin. The Verge has been covering bitcoin since we launched in 2011. And since then I’ve heard many loud, powerful voices talking about how it’s going to be the future of… something. Everything. Maybe nothing at all.
To be honest, I’ve been a bitcoin skeptic: over the past 10 years we’ve seen the value of bitcoin skyrocket, but very few actual uses for what should be a revolutionary digital currency. But that value keeps going up, and it feels like we might be at an inflection point for the bitcoin story. And there doesn’t seem to be a lot of gray area between the people who think bitcoin is going to change everything and the people who think it’s nonsense.
For this episode, I had two conversations. First I spoke to a bitcoin investor. Then, a few days later, I spoke to a bitcoin skeptic. In each conversation, I tried to play the other role but without the usual yelling and chaos that seems to characterize bitcoin debates.
The investor is Nic Carter. He’s a general partner at Castle Island Ventures, which funds startups that are building on top of the bitcoin infrastructure to make payments more accessible. Basically, making sure bitcoin can function like a currency.
The skeptic is Steve Hanke. He is a professor of applied economics at the Johns Hopkins University and senior fellow and director of the Troubled Currencies Project at the Cato Institute. He has also advised other countries on how to deal with hyperinflation and how to stabilize currencies.
In the end, my biggest question about bitcoin is whether people are interested in it because it’s bitcoin or because it’s worth a lot of dollars.
Here we go.
https://megaphone.link/VMP4674440372This transcript has been lightly edited for clarity.
Nilay Patel: Nic Carter, you’re a general partner at Castle Island Ventures. Welcome to Decoder.
Nic Carter: Thanks for having me. I’m really excited for this.
NP: You have kind of an interesting history. You were the first crypto-analyst at Fidelity. Now you manage investments into the bitcoin ecosystem at Castle Island Ventures. I want to start at the very beginning. What drew you to bitcoin and crypto, generally?
NC: It wasn’t anything super dramatic. It wasn’t like my family had our wealth confiscated by some tyrannical government or anything. As much as I, weirdly enough, wish I had a great bitcoin origin story, I don’t, but I just was attracted to the playful community initially on Reddit, believe it or not. And I thought it was really cool to tip people through the internet and do P2P payments that weren’t being cleared through any traditional financial medium.
That was really interesting and exciting to me to have that instant, final settlement on internet payments. And then it was only with time — and it took me a long time — that I came to realize that there was actually a deeper, sort of philosophical underpinning behind the project, that it was a real monetary project, and it was tightly intertwined with some normative views on economics and the role of central banking in society.
NP: I want to pull back out of that. I’m really interested in your perspective on what the normative aspects of central banking are and how they might change with bitcoin. But just help me out from the very beginning. How would you define bitcoin at this moment in time?
NC: So the thing about bitcoin is that we have a bit of a definitional problem because the word bitcoin actually refers to a number of different things, and that causes confusion. So on the one hand, it’s a protocol.
It’s a set of rules that people opt into to send value through a communications medium in a final way so you get final settlement. And on the other hand, it’s also a financial asset, so bitcoin is the name of the monetary unit that circulates within the bitcoin protocol.
That doesn’t make a lot of sense to a lot of people, but the bitcoin network is such that, really, there’s only one native currency that is changing hands on the bitcoin network, and we call that bitcoin.