Learn more about BPI Senior Fellow Gerald Dwyer in the latest installment of our Meet the Fellows series.
What do you do for work?
I am an economist. I have been an economist at universities for about 60 percent of my career and at Federal Reserve Banks about 40 percent of it. I am currently self-employed.
How did you wind up in your current role?
Why did I become an economist? My undergraduate principles class with Alchian and Allen's text convinced me that Economics is a useful way of thinking about the world. Reading Capitalism and Freedom by Freidman convinced me that Economics can be very useful for thinking about government.
How did you become interested in researching Bitcoin?
I have been interested in electronic money since the 1990s. I have been interested in private money since reading Hayek's Denationalization of Money before then. The blockchain was a tremendous innovation. How could I not be interested?
What are your most significant intellectual interests aside from Bitcoin?
Much of my published research has been on monetary economics and financial economics including banking.
How have your views on Bitcoin and cryptocurrency broadly changed over time?
Some of my previous research indicated that people have a strong preference for assets and liabilities denominated in the same units. Short of people moving to a Bitcoin monetary system, this suggests that stablecoins, whether in fiat money or other assets such as gold, are more likely to be used as a medium of exchange. This seems to be how things are working out so far. I was surprised by this but probably should not have been.
What misconception about Bitcoin do you hear most from your colleagues?
Bitcoin is not fiat money so it is going nowhere. Some people I have met actually believe in the state theory of money. (Yes I am almost incredulous at that belief.) Bitcoin is not of interest in the United States as a store of value so it is useless everywhere.
What misconception about Bitcoin or the subject of your research do you hear most from Bitcoin enthusiasts?
The most surprising proposition I hear is that Bitcoin will have extraordinary returns, say 25 percent per year, far out into the future. A basic lesson of financial economics is that predictable returns reflect the risk of an asset. If bitcoin has extraordinary expected returns, it also has extraordinary risk of losses.
What are your hopes for the future of BPI?
I hope that BPI's reputation as a source of useful information and innovative policy proposals about Bitcoin and monetary networks increases over time. Margot Paez's research on mining is an outstanding example.
Favorite novel?
Lord of the Rings.
Favorite U.S. President?
Ronald Reagan among recent ones; Thomas Jefferson longer term.
Who is your biggest intellectual influence?
Milton Friedman, although there are many others some with quite different views of the world.
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