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Season 6 - Episode 5
The benefits of cryptocurrency

Peter St. Onge is a Senior Fellow at the MEI, an independent think tank that stimulates public policy debate and reforms based on sound economics and entrepreneurship. He was assistant professor at Taiwan’s Feng Chia University, has served as a fellow at the Mises Institute, and was general partner of a private equity fund in Washington, D.C.


There are some 200 currencies in the world, with some fairly common problems, says Peter St. Onge in this informative interview. For one thing, inflation is more or less built in—slow in some places, like Britain or the US, and famously rapid in others, like Venezuela or Zimbabwe. The 2008 financial crisis, moreover, was partly caused by central banks encouraging reckless speculation by essentially covering bets.

In many ways, the characteristics of cryptocurrencies are superior to traditional paper currencies. There is no built-in inflation, and no central issuer to slide $2 billion to its buddies in a pinch. The financial sector, according to St. Onge, would like to use them, but governments have not really decided how to treat them. “A lot of the big players—banks, insurance companies—don’t want to get involved with blockchain or cryptocurrency in general because they’re concerned that down the line, the regulators might make up new laws, and then they’ll run afoul of those.”

Another of the positive features of cryptocurrencies is the security of the blockchain technology upon which they are based. While related businesses based on traditional databases, like cryptocurrency exchanges, can (and have) been hacked, blockchain itself is much harder to hack. This is because once a transaction has been recorded, it cannot be altered without the consensus of the network majority. Hackers cannot just break in, change numbers, and slip out—the entire community of miners has to ratify the change.

The same built-in consensus requirement means that the hard limit of 21 million bitcoins, once reached, will very likely be final. “It would be as if every time the central bank wanted to increase the amount of money out there—to pour water in the wine of all Canadians’ bank accounts—they had to take a vote.” When the people actually do have a say in the matter, they will very likely say “no thanks” to inflation.

Links of interest

Peter St. Onge