Let currency competition flourish
As governments like India move toward banning private crypto currencies, believing they pose a threat to state control, there is a strong case to allow cryptocurrencies to flourish alongside fiat money.
Jim Dorn writes that letting the two co-exist will spur competition – and that will lead to a more robust financial service sector for everyone:
…there is no reason to fear the spontaneous development of alternatives to discretionary government fiat money. Allowing free competition within a genuine rule of law that safeguards property rights – including the right to a sound currency – is the best way to encourage innovation and progress. A monetary system based on trust is an important foundation for economic and social harmony. Allowing a free market in ideas and experimentation, whether it be for money or other institutions, generates new information that is lost when the state bans competition, which is best understood as a Hayekian discovery process.
The new frontier of cybercurrency and blockchain should not be restricted by overreaching government bureaucrats who want to protect their turf and maintain the status quo, or by bankers who don’t want competition in the delivery of financial services. If we are to gain the benefits of fintech and the information revolution, doors to an innovative and more adaptive monetary system must remain open while maintaining sufficient regulation to ensure a transparent and orderly payments system.
All of which is true, and all of which helps explain why states, bureaucrats, and their courtiers, dislike the idea of a flourishing private currency. It doesn’t need them to operate, and can substitute for them when states become irrational (like Turkey) or fail (like Venezuela).