A good rule of thumb is that, whenever Ron Paul speaks out about economics, whatever he has to say is 100% grade-A bullshit. In the case of Bitcoins, the Goldbug Geezer had this to say:
"There will be alternatives to the dollar, and this might be one of them," said former U.S. congressman Ron Paul. If people start using bitcoins en masse, "it'll go down in history as the destroyer of the dollar," Paul added.
Bitcoins seem to have replaced the gold standard in libertarian economic fantasies (I've been referring to unregulated free-market theories and the inevitable bubbles as "the moonbeam economy" since first reading about credit default swaps in the 'noughts). The more quixotic libertarians (or the most cynical scam artists- hard to tell with this lot) have dreams of leaving the tyrannical state and it's dependent moochers behind. Tellingly, the real "producers" involved in the project would rather take fiat currency than magic beans or jars of moonbeams:
"Our farm workers and suppliers still want to get paid in pesos,” Ken Johnson, the project’s founder and managing partner, explains.
Hilariously, about two months after Ron Paul's prediction about the demise of the dollar, hackers have stolen "millions of dollars" worth of bitcoins using malware (note scare quotes), and a major bitcoin exchange has collapsed. Double bing-bang hell, I just found out via Thom Hartmann that the MTGOX exchange was started to exchange game cards.
Unlike the "fiat currency" printed by the Fed, bitcoins are backed by the full faith and credit of a handful of grifters and the libertarian cranks they are taking to the cleaners. Tellingly, early adopters of bitcoins have had the opportunity to sell the fake currency at inflated prices in order to make a killing, which is a hallmark of a classic pump-and-dump scheme. Even the pro-bitcoin crowd would have to acknowledge that it was easier to "mine" bitcoins at the start, making the whole process seem like a Ponzi scheme:
Libertarians tend to overstate their intelligence, giving rise to the term Dunning-Krugerrand to describe Bitcoins. I imagine quite a few of the John Galt wannabes were taken to the cleaners by investing in these Freedumb Francs. Most of them will, no doubt, claim that the free-fall in the value of these magic cyberbeans was due to a conspiracy by governments or central banks.