Though Bitcoin has become a popular term in the financial and technological world, a Rutgers professor discussed the ethical consequences of cryptocurrency as well as the impact it has on the real world.
Bitcoin is a cryptocurrency that is traded within the digital world. The currency itself is decentralized, which means that no government or bank can control its value or how it is being used.
Tobey Karen Scharding, a visiting assistant professor at the University and a fellow at the Rutgers Business School Institute of Ethical Leadership, said Bitcoin was a “token of value” that differs from other forms of currency due to how it is given value. She first became interested in the topic due to its ethical concerns, and was fascinated around it happening in real time.
The controversy surrounding Bitcoin’s value depends on whether it is a “fiat” currency, which means it only has value due to general consensus. Bitcoin, as well as other cryptocurrencies, can be considered a fiat currency because people agree that it has value. This label is a way to legitimize Bitcoin, even though it may not technically be real.
“Calling it a fiat currency makes it seem that the value or the specific exchange value is more up for grabs than it actually is,” Scharding said. “The U.S. dollar is a fiat currency as well, but that doesn’t mean that we can just change its value just because we changed our minds about what it’s worth. It involves a lot of different factors.”
Her focus on Bitcoin, though, is in its ethical implications around the world and within private sectors. “What characteristics does a currency need to be ethical, and does Bitcoin have these characteristics?” she said.
An interpretation of this question, then, is the role currency plays in advancing people’s lives while working in a civilized society. Scharding said Bitcoin advances lives in some ways, but not entirely.
“One of the ways it falls short is that it’s not regulated by a government or a bank like most national currencies,” she said. “It works to secure that everyone in the community using the currency has access to goods and services, and that the currency will have value ensured by those regulating it.”
Scharding remains skeptical about Bitcoin’s ambition to become a globally and nationally-recognized currency, because people are not willing to give up the safety and guarantees of a recognized currency.
Cryptocurrency, on the other hand, does not have any real national establishments to back up its worth. It can also undermine and devalue currencies that are recognized, she said.
“I’m personally confused by the idea of a country globally recognizing and adapting a cryptocurrency as opposed to their own,” Scharding said. “It’s just baffling to me that places like Venezuela would even entertain that idea.”
Overall, Scharding said Bitcoin is an “unethical investment” because it has no real reassurance to those who invest in it, and no one person can say whether a cryptocurrency will have value one way or another.
“It’s unethical because of how it undermines the value of national currencies, and to the extent in which national currencies undermine the safeguard of millions of people. That’s the real danger of Bitcoin,” she said.