Bitcoin is Permanently Superior to Paper Money in Ways: German Business Magazine

While many mainstream media personalities and analysts remain skeptical about bitcoin (and often rehash misinformation), others are beginning to give cryptocurrency an honest appraisal.

The latest comes from leading German business magazine Wirtschafts Woche, which recently published an article praising bitcoin. “The Revolution of Cryptocurrency,” written by economist Thorsten Polleit, argues that the advent

of cryptocurrency set off a monetary revolution that could eventually supplant fiat national currencies.

Public fiat money, he explains, possesses four inherent flaws:

Inflation
Monetary distribution inequality
The tendency to produce boom-bust cycles
The temptation to increase national debt
Polleit states that cryptocurrencies avoid these and other flaws due to market competition. As long as no currency has a state-mandated economic monopoly, consumer demand should favor better coins.

However, it should be noted that not all cryptocurrencies resist the flaws Polleit finds in fiat money. Many cryptocurrencies are inflationary, although their rate of inflation is generally fixed rather than variable. Cryptocurrency distribution models can also exhibit inequality, and there is much debate about what constitutes a fair coin/token dissemination method. That said, by divorcing monetary policy from the national government, one will avoid the final two flaws of public money.

Polleit believes consumer demand for will likely increase as fiat money loses purchasing power and national governments reduce or even eliminate cash transactions. He foresees the potential for blockchain-based currencies to “make…Fiat money worthless.”