Freedom of choice, bitcoins and legal tender

Today’s post is from Adrian Blundell-Wignall and builds on his OECD working paper The Bitcoin Question: Currency versus Trust-less Transfer Technology. The views expressed here are his own and do not necessarily reflect those of the OECD or of its member countries.
The working paper argues that some of the technologies associated with crypto-currencies are very interesting and may one day become a serious disruptive technology for financial intermediaries—but that these technologies should be thought about separately from the crypto-currencies like Bitcoin that have some very dubious uses. These coins, the paper argues, can never replace legal tender like dollars. However, some Bitcoin proponents seem to be very confused about the place crypto-currencies occupy versus legal tender. More...