Wall Street Journal presents myopic view on cryptocurrencies, cash

Brett Arends at the Wall Street Journal had an op-ed on Friday called “Why Cash Is King Again” that makes one nice small point but misses a larger one.

His premise is this: “Following the data breaches of credit- and debit-card information at major retailers, some shoppers say they are putting aside their cards and going back to spending cash—like in olden times.”

That trend more or less corroborates the popularity of cryptocurrencies such as Bitcoin, which function in theory much like the paper and metal cash Arends posits is making something of a comeback.

The Bitcoin Analogue

Just read his first point in favor of cash: “And why not? Dollar bills can be stolen, of course. But they can’t be stolen online. Their use doesn’t leave an open door to your bank account for a hacker to walk through. They are hack-proof, anonymous, and lighter and more durable than a smartphone.”

Doesn’t this same point work for Bitcoins. As long as you maintain a paper wallet and only keep spending cash in your digital wallet, your money is safe. No “open door to your bank account.” And it’s infinitely lighter than your smartphone.

Then, there is this statement: “I’m a cheerleader for old-fashioned paper currency. Not only is it secure and anonymous—it may also help some people control their spending and save more.”

The word choice of “secure and anonymous” is intentional — Arends is baiting the Bitcoin argument.

The Myopic Perspective

Here’s the thing: Arends can pull greenbacks from his mattress all day long for spending around New York or Washington. That’s all well and good for him.

But what about the rest of the world? What about Russia, whose citizens are bearing financial sanctions as a result of their government’s behavior? When the fiat monopolists start playing such games, the real “secure and anonymous” currency is the cryptographic one.

Maybe crises in the US haven’t prompted enough people to turn to digital money as a safe harbor for wealth, and perhaps that day may never come. But for the other 96% of the world, Arends’ arguments resonate a little stronger once they are applied to cryptocurrencies.