One Marshmallow Now, or Two Bitcoins in 15 Minutes?

The most expensive dunce cap in the world is a hat I bought with bitcoin about five years ago.

I’m not going to bother looking up exactly how much bitcoin I paid for it, and what that would be worth if I had just HODL’d. It’s too mortifying to contemplate.

But you know what’s even more embarrassing than my failure then to grasp one of the fundamental advantages of bitcoin? Joseph Stiglitz’s failure to grasp it now.

Bitcoin “doesn’t serve any socially useful function,” the Nobel Prize-winning economist blithely declared on Bloomberg television last week. Wrong, Joe.

Off the top of my head, I can name three socially useful functions of bitcoin: its censorship-resistance; its judgment-resistance; and the topic of this post, its deflationary characteristics, which reward saving for tomorrow rather than splurging today.


Stepping back, a longstanding knock on bitcoin’s suitability as a currency was that it’s fixed, predictable supply and zigzagging but generally increasing value against the dollar encouraged hoarding. But “hoarding” in this context seems little more than a morally loaded term for what our grandparents called “saving.”

Used in this way, the word “hoarding” pathologizes thrift, something once considered virtuous. It equates the kind of person who will wait 15 minutes for two marshmallows instead of eating one now with the kind of person who keeps 40 cats in a New York City apartment.

In his forthcoming book “The Bitcoin Standard: The Decentralized Alternative to Central Banking,” economist Saifedean Ammous argues that wider adoption of bitcoin would have a salutary influence on people’s behavior.

“When the value of money appreciates, people are likely to be far more discerning with their consumption, and to save far more of their income for the future,” writes Ammous, who is an assistant professor of economics at Adnan Kassar School of Business at Lebanese American University in Beirut. “The culture of conspicuous consumption, of shopping as therapy … will not have a place in a society with a money which appreciates in value over time.” […]

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