Yanis Varoufakis, Former Greek Finance Minister, has claimed that Bitcoin establishes “a type of feudalism run by the early adopters” and that its replacement of fiat currencies will be “catastrophic.” However, he believes that digital assets can still do a lot of welfare in the world.
Mexican billionaire Ricardo Salinas, who recently announced that his bank will be the first in the country to accept Bitcoin proudly stated earlier that the 21 million limits on Bitcoin is the key to everything and he doesn’t believe in other cryptocurrencies because they can issue more, while the asset depreciates, he won’t believe in them as long as there isn’t a fixed quantity of issuance.
On the other hand, Varoufakis believes that Bitcoin’s greatest strength is also its greatest weakness: its finite supply of 21 million coins, because of its fixed quantity and the lack of a democratic process to determine who gets and how many Bitcoins, it establishes an aristocracy ruled by Bitcoin’s early adopters.
Varoufakis stated that Bitcoin’s fixed supply renders it inappropriate for times of crisis. He used the coronavirus pandemic as an example, explaining that governments all over the world require the flexibility to expand currency supply to deal with calamities.
Imagine if Bitcoin could be replaced by a magic wand. Varoufakis told the Greek Reporters, “This will be terrible.” “We’d all be in serious trouble right now. What will happen if a pandemic strikes and you need to expand the money supply? Because Bitcoin has a finite supply, it is impossible to grow it.
Nonetheless, Varoufakis confesses that he has admired blockchain technology, which is the foundation for cryptos, since its inception.
He states, “When I first looked at the blockchain code, I thought: My God this is brilliant. A decentralized ledger that allows a complete record and full transparency while preserving anonymity in transactions. It is a piece of brilliance.”
He recalls writing an article and giving interviews in the early 2010s, stating that “blockchain is a brilliant solution to the problem we have not yet discovered. But it isn’t a solution to the money problem.”
On a positive note, Varoufakis is proposing a new way to democratize money and cut out the middle man, namely private banks. He suggests the use of cryptocurrencies issued by central banks.
We need to cut out the middleman: The Federal Reserve gives money to the banks they lend to corporations. Now, what if the Fed wants to stimulate the economy and gives every taxpayer in the US a digital account. The money goes directly to the Federal Reserve. The whole point is cutting the middleman.
He claims that Wall Street’s monopoly on the payment system in the United States is absurd. However, he was eager to remind that he is not seeking to outlaw Wall Street rather, he wants private banks to provide actual benefits to residents.
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