On Meet the Press, Chuck Todd posed a series of cryptocurrency-related questions to Sen. Elizabeth Warren (D–Mass.): “If I buy bitcoin, am I buying a share of stock or am I buying a pork belly or am I buying euros? What am I buying?”
“Or are you buying air?” responded Warren, calling bitcoin an “ephemeral token” where the value is only tied to other people’s perceptions of its worth.
Todd pressed her on that, asking whether the finite supply of bitcoin makes it more similar to platinum or silver.
“With bitcoin, there’s no thing that backs it up,” responded Warren, saying, “it’s just belief.”
“Instead of bitcoin, we could be talking about digital currency,” argued Warren, saying that central bank digital currencies (CBDCs) have “something that backs it up”—the government.
It makes sense that Warren, who wants people’s transactions to be maximally surveilled by the government, would favor the creation of a digital currency. But CBDCs don’t even come close to being useful substitutes for cryptocurrency, because they obviously fail to confer the benefit that makes cryptocurrency so attractive: anonymity, or privacy from government surveillance of transactions.
Toward the end of the segment, Warren said she thinks cryptocurrency “is going to end up getting regulated.”
Contrast both this mindset and this regulatory approach with Sen. Cynthia Lummis (R–Wyo.), who told Reason‘s Nick Gillespie last year, “There are different reasons to have a digital dollar, or a central bank digital currency, than to have bitcoin.”
“As long as the dollar is in use, it’s important that we make transactions clear faster and that people have more opportunity to use a digital format for the U.S. dollar,” said Lummis, deemed the “crypto queen” of the Senate, who noted concern about the ways these currencies, like the digital yuan being developed by the Chinese Communist Party, can be used by the state to surveil citizens.
“In combination with China’s ‘social credit’ system, the e-CNY [digital yuan] will also enable China to directly send money to, and take money from, favored and disfavored individuals,” writes Avik Roy at National Review. “People and businesses who speak out against the government can have their bank accounts instantly wiped out and find themselves de-platformed from economic life.”
As to how this might function in America, consider the fact that administrators of this hypothetical CBDC would have extraordinary amounts of data about where individuals spend their money. “If you were troubled by IRS leaks of private tax returns, wait until the Fed knows everything about your spending habits,” cautions Roy.
In that hypothetical universe, cryptocurrency’s promise of financial privacy makes it an even more appealing competitor.
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