American economist and cryptocurrency expert Jeffrey Tucker joins Merion West to discuss how cryptocurrencies may shape the economy of the future, some drawbacks to how they are currently used, and how they intersect with individualism and collectivism. Here he chats with Hans Riess.
Mr. Tucker, you have held a strong presence in the cryptocurrency space. You have written about Bitcoin and other cryptocurrencies. You are also a managing partner at Vellum Capital, an investment firm specializing in cryptocurrency assets. What do you think we will see next for cryptocurrency?
I should mention my primary affiliation is as Editorial Director to the American Institute of Economic Research, and I consult for a lot of crypto companies and blockchain companies but mostly as an informal advisor.
What’s next in the cryptocurrency space? I think we are going to see gradual adoption but probably not in dollar-based economic regions. We have got a lot of companies that are building products right now and working out the infostructure. We are in a discovery period to find out what this new technology can do, and we are setting the stage for something eventually that nobody can foresee.
Let me just give you an example. Cryptocurrency essentially came out during the last big financial crisis of 2008 and 2009. However, it was not ready for prime time at that point. I think during the next currency crisis we’re going to see a lot more adoption and regular use. We have started to see this pattern take place in countries with exchange controls and failing currencies. Crypto has been something of a safety valve or safe haven to people in the digital space. I think the cryptocurrency of the future is going to perform and function similarly to the role precious metals played in the past.
To paraphrase a statement from John McAfee: Bitcoin or other cryptocurrencies will only become a legitimate form of exchanges to society when your grandmother can use it. Can you tell us about something that might be happening to make cryptocurrency more accessible and user-friendly?
People have been working on this problem now for about five years. Part of the problem is that a lot of the development resources from the companies that are involved in blockchain development has been diverted by regulatory compliance and security considerations. As a result, it tended to neglect user experience. We are starting to see some user experience get better on wallets and exchanges. However, we are still not at the point that even I would be able to explain to my mother how to use it. The use of cryptocurrency involves a different set of skills than people currently have—in the same way that there, for some people, it used to be a foreign skill to send a letter.
You had to know how to write a letter, how to address it adequately, and how to place the message. Over time people developed those skills. Then when email came along, it all seemed a little bizarre. The first email addresses were a string of numbers and a “@” sign. People could not even find that stuff on a keyboard, and they could not understand why none of us could do it. There was not a network to send it to. I mean emails took 20 years to become familiar to people and friendly enough that it was completely mainstream. 20 years. So it is a little bit like that with cryptocurrency; it is like the early stages of email.
Crypto requires a certain set of skill, and I understand that. We are not at the point where people have really figured out how to construct wallets that avoid problems. One of the biggest problems but also advantages of crypto is that when you send and receive money there are no chargebacks. That actually makes sending and receiving particularly fraught with potential problems.
Would you say that a large part of dealing with cryptocurrency is being able to trust the people you are dealing with?
The opposite is true actually. Crypto allows you to exchange with anyone on the planet—in the same way you might with someone random on the street. Say you go to a hot dog stand to eat and you give the person $5. You do not need to know the person, do a credit check, or find out the person’s name. All you need to know is that they have a hotdog to sell me, and I have a $5 bill. So that exact type of transaction is made possible by crypto—by any two people on Earth regardless of geographic proximity. It’s amazing, and in that sense, it’s why these transactions are considered trustless. The point you make is interesting, though, about having to trust a person to get the money back. You really can’t make any mistakes. That is the bottom line.
Nobody minds if you send an email to the wrong address, but when dealing with high-end assets, it can be pretty scary. I can tell you as a user. Anytime I am moving digital assets across accounts, you have to focus very hard and triple check your transactions before you complete them. Maybe that is the future, and what we should be doing all the time, but our current systems are tolerant of mistakes. Crypto is not.
I don’t know if this means we need to change the software before it goes mainstream. The other thing I have noticed is that crypto can be difficult to use because of how hard it is to comprehend. Paypal works, your rewards points work, but even some “crypto groupies” struggle to understand the software.
You recently published a book entitled Right-Wing Collectivism: The Other Threat To Liberty. Can you elaborate on how you describe collectivism?
Collectivism is best contrasted with individualism. Individualism is where an individual has his own rites belonging to him by virtue of membership in the human family. Collectivism, however, grasps you into some group based on some characteristic you have. It could be race, gender identity, geography, citizenship or income group—anything that diminishes your individuality in favor of your group identity.
The purpose of the book was to say that there are many forms of collectivism. It is not just the Left, which tends to divide through rich and poor, or men and women. There is a form of collectivism that belongs to the political Right that wants to divide people based on membership to the “Nation” or racial and religious identity. The point is this is just as dangerous, but it takes a different form from the Left’s version.
That is the thesis of the book, and I trace this back to the Hegelians of the early 19th century, with crushing absolutism and how it developed into fascism during the World War periods. I am saying that this is also a great threat to liberty.
Would you say the rise of the New Right, including President Trump, is a certain flavor of this form of collectivism?
I would say absolutely so. Trump is kind of a Rightest populist, and he definitely played on those factors. One thing you will find this with collectivism is the strong insistence on nationalism, economic nationalism, protectionism, and nativist immigration policy. The emphasis on managerial expertise as the key to fixing national life is also present. That is how I would summarize the current President’s platform. He is far from the worst form of Right Collectivism, but he definitely taps into that as a source of his support and outlook.
I also think everyone underestimated this with Trump. I think this particular form of right-wing collectivism is a little foreign to us, and we have not had much experience with it. People are still learners. When Trump came along, people assumed he was just a normal Republican with an emphasis on middle-class workers. That is completely wrong. Trump’s form of politics is missing a major element that has been found within the Republican Party since Reagan.
I identify this in the book as being liberalism: the view that government should leave you alone to trade with and hire whom you want. It is the confidence that freedom is the best way to organize society. You would never hear our current President talk like that, and that is for a specific reason I argue in the book.
He has picked up a strand of reactionary style politics that has been floating out there but not been mainstream, which causes the confusion.
To end on a lighter note, what is your scooter fascination? I’ve seen that you have been tweeting a lot, what is going on?
Yes. I really like scooters. They really reflect the individualism of the American personality. For a century, urban planners have been trying to come up with a collective style solution for our transportation problem. Whether through mass transit or carpooling, there is always an attempt to bring us together that Americans have resisted. We always enjoyed our cars because we control them, and they belong to us, which enables us to do as we please.
What I love about the scooter is that it samples that individual ethos but is also environmentally-friendly. They take up very little space, rely on the anarchy of supply and demand which I admire, and no planner has ever thought of the idea. As I am talking to you, I am looking out my front window onto the streets of Atlanta; there are scooters passing by all over the place. I am absolutely delighted by the sort of problem-solving chaos that comes from business enterprises. That is what thrills me most, seeing that problem solving happening across the world.