Rebutting the NY Post’s Lazy Criticisms of Bitcoin

On Thursday, New York Post columnist John Crudele published a patronizing critique of the MIT Bitcoin project, we thought it would be best to rebut Crudele point by point.

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Rebutting the NY Post’s Lazy Criticisms of Bitcoin

On Thursday, New York Post columnist John Crudele published a patronizing critique of the MIT Bitcoin project, an initiative announced last spring that will see every undergraduate at MIT receive about US$100 worth of bitcoins this fall.

Crudele’s main problem with this project is that he feels MIT is being irresponsible in letting students mess around with money he feels has questionable value. Crudele’s argument is dripping with scorn and riddled with logical fallacies.

We thought it would be best to rebut Crudele point by point. Let’s take it from the top:

In the near future, the leaders of Massachusetts Institute of Technology will have to decide whether they want to take part in the worldwide scam known as bitcoin.

I hope the grown-ups at that esteemed Cambridge, Mass., school have more common sense than the students they are supposed to be guiding.

In Crudele’s second sentence, he launches into an ad-hominem attack, calling into question the students’ maturity by contrasting this with “the grown-ups.”

We see this all the time when discussing undergraduate college students, whose ages typically range from 18 to about 23. That means these people are legal adults in the US, fit to vote and die for their country … but they can conveniently be classified as “kids” when they start experimenting with private money or when NCAA athletes start asking for further compensation.

It’s also telling that Crudele would use the word “esteemed” to qualify MIT. When the conversation drifts toward the “esteemed” reputations of institutes of higher learning, talking in terms of dollars or bitcoins can be framed as something profane.

(If you want to dive down a deep rabbit hole, have a read through Venkat Rao’s “The Economics of Pricelessness” on his Ribbonfarm blog. It’s not necessary to this critique, but it does explain why Crudele adopts the moral guardian position, and why he plays that “esteemed” card so early.)

That $100 represents about a fifth of a bitcoin for each student. The “value” of a bitcoin — and I use the word “value” lightly — is now about $515 although the price has been varying wildly depending on how many gullible “investors” its backers can get to buy into the scam.

Just because Crudele appears ignorant of what “value” means — and where a currency’s value comes from — doesn’t mean that the “esteemed” undergrads at MIT need to be bound by this ignorance.

Also, calling something a “scam” repeatedly doesn’t make the assertion any more true.

Bitcoins are, essentially, a confidence game. These things only have value if someone is confident of their value.

I’ll go out on a limb and assume Crudele is contrasting this confidence-of-their-value argument with dollars, a fiat currency.

Here is how N. Gregory Mankiw defines fiat money in his textbook Brief Principles of Economics: “Money without intrinsic value that is used as money because of government decree."

What’s more stable, a consensus of the value of something or government decree? I am personally betting on the former.

Note also that values outside of currencies and money are almost always calculated by consensus: Whether to greet with a bow or a handshake, how much to revere our elders, whether it’s OK to burp at the dinner table etc.

Would society benefit from having those cultural values be defined by government decree? If not, why isn’t the same true for currency?

And anytime I write negatively about bitcoin, the loons come out to fight with me.

So, now you understand my position on this crap.

I’ll concede that there is a zealous faction of Bitcoin True Believers who don’t take kindly to criticism of their money. So it goes.

But those folks, plus ignorance of the concept of value, is enough to inform Crudele’s “position on this crap?” Try a little harder, man.

And once more: Calling something “crap” doesn’t make it crap.

The students, of course, think differently. And someone — probably one of the people who stand to gain by keeping this charade going — gave $500,000 to the MIT kids.

Has Crudele made any effort to argue that Bitcoin or the project in question is a “charade?”

Nope. He just identifies the faceless “people who stand to gain” (again, the profanity of commerce!) and once more calls a group of legal adults “kids.”

There doesn’t seem to be anything MIT — or anyone else — can do about people throwing away their “money.” But the university now has to decide whether it believes in bitcoin enough to accept that $100 as payment for anything school-related.

Will the students be able to put their $100 in bitcoin toward a schoolbook at the university-run bookstore? How about toward burgers and fries at the student center? Will MIT allow that $100 bitcoin to go toward one-tenth of 1 percent of room and board?

As far as I can tell, MIT seems no more compelled to adopt the position of a student Bitcoin club any more than it should adopt the position or values of the MIT College Republicans club. Whether MIT “believes in bitcoin” is irrelevant.

As is what the students do with their money. Sure, they could put it toward a “schoolbook.” Or, they could keep the money. Or, they could trade it for Litecoin. Or, they could go buy beer.

It’s free money. Would there be similar hand-wringing about MIT’s beliefs if I walked around campus handing out Benjamins?

Students are supposed to act in an irresponsible manner and stretch the limits of common sense. And responsible grown-ups are supposed to pull them back before they hurt themselves or the ideals of society.

Not surprisingly, MIT wouldn’t comment on whether it would accept bitcoins payment for anything.

We’ll soon see just how much MIT wants to cooperate with the bitloons.

I’m not sure Crudele’s patronization begs any further analysis. He’s operating on a double standard that allows college students to be adults or kids, depending on which is circumstantially convenient. In this case, it’s more convenient to think of them as kids.

As a final remark, however, I will offer Crudele and anyone else one important piece of advice: Don’t invent puns to describe the people with whom you are arguing if you ever want to be taken seriously.

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