Imagine you're the kind of person who wants to create jobs, but you don't have any wealth of your own from which to make payroll.
So you systematically go from house to house in your neighborhood, demanding that all your neighbors cut you a check, or else. Most of them do, because you're a big, scary guy like that.
You then use the money you took to hire a handful of people to distribute fruit baskets back to the whole neighborhood.
Some would say that – though your method was sinister – you still created jobs.
But did you?
Bitcoin's No Broken Window
If you think the thief of our story did, in fact, create jobs, you've fallen prey to one of the most persistent economic fallacies in history: the Broken Window Fallacy.
The fallacy is that the spoils from destruction or theft are the equivalent of new wealth having been created. This, of course, isn't true.
What's really happened is that the pilfered neighbors now have less disposable income. They'll now be unable to support jobs in the fields where they would rather have spent their money – on a new car, computer, education, surgery, etc. The thief's fruit baskets come at the expense of all the other industries that would have been patronized otherwise.
(Because if the neighbors really wanted fruit baskets more than they wanted computers, education, or surgeries – well then, they would have just bought one themselves.
Such is the nature of any “job” a government – including the U.S. State – claims to create. But Bitcoin? Bitcoin has created new wealth. Lots of it.
Jobs & Industries That Never Existed Before
Bitcoin and other cryptocurrencies created an estimated 250,000 jobs during 2014. None of these positions existed before 2009, and this list is only partial:
- Script and Multisig developers
- Java cryptocurrency developers
- Microtransaction engineers
- UX/UI crypto designers of user-only security protocols
- Bitcoin and cryptocurrency crowdfunding planners and consultants
- Cryptocurrency journalists
- Cryptocurrency traders
- Cryptocurrency technical analysts
- ASIC chip designers
- Bitcoin gambling website operators
- Mining pool administrators
- Cryptocurrency escrow agents
- Cryptocurrency Exchange-Traded Fund (ETF) operators
- Bitcoin fraud detection consultants
- Cryptocurrency ATM designers
- Virtual currency exchange arbitrators
- Federated open transactions’ server operators
No one's wealth was forcibly transferred away from them to create these jobs. They've all been funded as consumers' top choices in resource allocation. In other words, Bitcoin never broke a window.
The Final Score
And so the ultimate tally for 2014 job creation is this: Bitcoin - 250,000; U.S. State - 0.
But we'd better stop the crazy growth of this cryptocurrency thing, and fast. Why? Because without staggering unemployment rates and stagnant economies, what will the poor politicians have to stump about?
Did you enjoy this article? You may also be interested in reading these ones:
So you systematically go from house to house in your neighborhood, demanding that all your neighbors cut you a check, or else. Most of them do, because you’re a big, scary guy like that.
You then use the money you took to hire a handful of people to distribute fruit […]