Macro investor Michael Green, often described as the Cassandra of Passive Investing, has turned his scrutiny towards Bitcoin. In a candid interview, he articulated concerns about the cryptocurrency’s inherent design flaws that could culminate in a winner-takes-all environment reminiscent of a Monopoly game.
Green emphasized the multifaceted marketing of Bitcoin, aimed at various investor demographics over time, but he contends this has led to a fundamental failure. According to him, Bitcoin’s genesis under the Satoshi white paper envisioned it as a peer-to-peer payment system, intended to liberate transactions from traditional banking networks. “By shifting to a distributed ledger and peer-to-peer framework, we aimed to eliminate banks from the equation,” he explained.
However, Green lambasted this vision as a total failure. “Currently, the actual transactions occurring on the Bitcoin network for real-world purchases are negligible. We witness activity primarily within speculative markets, with Bitcoin trading rather than facilitating peer-to-peer payments,” he stated.
Delving into broader economic principles, he differentiated between government-induced money printing and the regular credit issued by banks. He stated that government printing often aims to rectify errors in economic policies, while banks create money through lending, demonstrating a critical credit function that exists within traditional financial systems.
Green’s assertion that Bitcoin disrupts this very ability to generate credit is particularly striking. He remarked, “Bitcoin’s design intentionally bypasses the banking system, resulting in a purely monetary framework where all transactions act like payments to the auditing firms maintaining the blockchain.” He contended that Bitcoin tokens serve merely as payments to these firms rather than creating a broader financial ecosystem.
Why Bitcoin’s Limitations Mirror a Monopoly Game
The economist’s analogy extends to Bitcoin’s capped supply, highlighting its inability to create new monetary units akin to traditional banking practices. Green emphasizes that, as a result, a lack of forgiveness for economic missteps exists within this system. “This drastically limits its functionality. Interest rates and credit spreads become excessively high, inhibiting a viable economic environment,” he warned. Despite Bitcoin’s remarkable price surges, he noted its failure to establish itself as an effective payment system.
Green’s most scathing critique revolves around Bitcoin’s distributional inequality. He expressed concerns that as a finite resource, Bitcoin disadvantages newcomers, likening their prospects to those of a serf in the feudal system: “Each new individual born into a world where Bitcoin exists finds themselves at a deficit. There is no emerging wealth for them.” This perspective paints a dire picture of inequality, reinforcing his argument that Bitcoin contributes to an unjust society.
Once an enthusiastic supporter of Bitcoin’s potential as a groundbreaking form of private money, Green has since recalibrated his outlook. He explained that after assessing the implications of its finite nature, Bitcoin operates more like a Monopoly game. “In Monopoly, new players cannot join mid-game without suffering immediate losses due to the absence of resources. Eventually, one player must win—alluding to a singular winner among the Bitcoin holders,” he noted.
As he explained, this pattern of increasing concentration leads to a system that collapses upon itself, ultimately denying access to many. Far from democratizing finance, Bitcoin has perpetuated a cycle of exclusion. As of now, Bitcoin trades at around $87,589, a stark reminder of the speculative fervor surrounding it.
