From where economy and psychology meet: Hugo Laflamme on the impact of cryptocurrency on our wallets and… brains!

Avatar
Article by
SHARE THIS POST:
[juiz_sps buttons="facebook, twitter, google, linkedin, pinterest, reddit"]

Research professor, lecturer of the Psychology of Economy at the University of Montreal and a fine interlocutor. Although he most evidently takes pleasure in answering to all questions and does it at length, Hugo could surely charge his interviewers, in Bitcoins!

Hugo, I see you are carrying your Ph.D. thesis on the psychology of expenditures [Psychologie de dépense] wherever you go. Tell me briefly, what made you choose this topic?

That’s true. I was drawn to psychology since a very early age and before the time I got to choose this university path I had already passed through stages of my life when I had had to struggle economically. I would always observe my own methods of wrestling with the occasional shortage of money, as well as sporadic prosperity, through the prism of psychology. But it was not until I came across Quesnay’s definition of economy, that I decided to merge it with my interest in human mind. He wrote that to do economy is to ‘obtain the greatest possible increase in enjoyment by the greatest possible diminution of expenditure’. Greatest possible diminution of expenditure! This phrase seduced me completely!

Smart and catchy, true. I wonder what would be Quesnay’s view of cryptocurrency. As one of the Physiocrats and an ardent partisan of the laissez-faire, free-market economy he would certainly approve of this invention.

It is indeed. I am sure Quesnay would support the idea of cryptocurrency. It is, after all, a most modern incarnation of a self-governing, interdependent yet politically unrestrained money system. The independence from government regulations makes it a controversial topic among economists. At the same time, and for the same reason, Bitcoins attract so much attention and, having acquired so much popularity since their

launch roughly 8 years ago, that they are also very influential in terms of psychology. In one chapter of my thesis, I analyze cryptocurrency as if it were on an equal basis with liquid money or credit cards. Although, obviously, people don’t use cryptocurrency so often yet.

Are you of an opinion they will, one day?

Sooner than we think if you ask me.

You’ve already mentioned that Bitcoins influence our psychology. So far, how would you describe the impact that using cryptocurrency has on human brains, on the « psychologie de dépense »?

Owning and paying in cryptocurrency changes people’s approach to money and their expenditure habits to a great extent. But before its effects will be visible on a greater scale, we need to change our approach to this brand new method of payment in the first place.

What do you mean?

I mean, that it won’t influence the general public’s notion of money – or means of payment, to be more precise – until people fully realize the potential and the benefits of using cryptocurrency. However, given that the number of bitcoin wallets is rising almost exponentially, I suspect it won’t take long to attain the « tipping point ». In the book of the same title, Malcolm Gladwell elegantly explains the dynamics of success and failure of ideas. Once there, beyond the tipping point of no return, the change will be irreversible. We will just replace our leather wallets with Bitcoin ones.

Why? I presume it is not ecology that will push us to this decision?

No, although with the current trends it may have its little role to play, too. It is a simple matter of security, factor number one when it comes to evaluating the methods of payment. An undeniable truth and a basic fact in the psychology of economics. We all know taking a credit card is much safer than traveling with your pockets stuffed with liquid money. Liquid, you can almost imagine it dripping out of your wallet! – Hugo laughs.

And, nevertheless, we often hear of robberies from stolen credit cards or even embezzlement of money from bank accounts, and this by the very bank employees!

Embezzlements, of course. It is not hard for the people who have access to your liquid money to divert its flow to their own pockets.

Then, as cryptocurrency is so intrinsically safe by being encrypted in a personalized payment system, it is a matter of time that people will massively turn, or embezzle themselves – chuckles Hugo – to this most secure method of payment ever invented.

What proofs or incentives do they need, then? What are we all waiting for?

You rightly pointed out in the introductory article that black market blemished the reputation of Bitcoin. But there are so many arguments in favor of cryptocurrencies, like less dependence on the exchange rates, that I believe our common sense will soon wipe off the stains. Let’s hope time heals all wounds, as the Bible says, and the good word of mouth spreads quickly.

Let’s pray to that! But, supposing masses of people indeed turn one day to bitcoin wallets, is the virtual system ready to admit such a great number of users? Will it not collapse?

I cannot tell you with certainty. I am no expert in programming or informatics. But, it seems, apart from higher energy consumption that this may entail, the system has an unlimited capacity and will even benefit from such a surge of users. In English you say ‘the more the merrier’, correct?

Bitcoin Montreal

Correct, but I don’t think banks and governments would adopt this policy when it comes to cryptocurrency? How do they look to this prospect? How does this future look from the perspective of the macroeconomy?

The governments, state and private banks will suffer greatly if – or when – it happens. Just because cryptocurrency is beyond their control. And I hope you know the profits they are earning from this control are massive on an international scale. Take international transfers. How much money do the banks charge for this effortless operation? Good forty dollars, speaking of transfers between Europe and Canada. With cryptocurrency, you don’t even need to envisage transferring it. Your money goes wherever you go and is practically nowhere to be found for possible thieves! Can you imagine that!?

This detail certainly convinces me.

The reasons are that you and I, we belong to the third economical generation as described by Adrian Furnham and Paul Webley describe in their book The New Economic Mind: The Social Psychology of Economic Behaviour.

The first modern money generation consists of people who used to stash away their savings at the back of a painting or on the bottom of a drawer, as your grandma certainly did.

The second generation relies on the bank systems, feels comfortable with virtual money and has no issues with using credit or debit cards, which they often prefer over paying in cash.

The third, our generation, shows certain reluctance to accept the external control of our assets, which marks its breakaway from the government-run institutions that the second generation broadly trusts. In contrast to the first generation, however, we would rather confide in the newest technology than physical hiding places our grandparents used.

We are becoming human cyborgs, aren’t we?

Good point! Although prosthetic limbs first come to mind when speaking about cyborgs, these are, in fact, our brains that become more and more dependent on technology. Think of Google. As you can access it whenever you need with just a mobile phone, it has become nothing else but your external memory. And how ergonomic it is as compared to our faulty brain! Now, in a very similar way, external Bitcoin wallet may replace the one you carry in your pocket.

What about my ID and metro card?

They will soon inject us all chips, nothing to worry about – smiles Hugo. As for the photo of your girlfriend, maybe an unobtrusive virtual reality headset will do?

It just must do, because I don’t have any.

You never know the day or the hour. It was only two months ago that I opened my Bitcoin wallet. Just as for educational as for private purposes. And now I am granting an interview on cryptocurrencies. You see?

 

The blockchain24.co site shall not be held responsible for any consequences resulting from the use of data contained in the pages of the site.

If you feel like sharing your thoughts and knowledge about cryptocurrencies, or write and publish a whole article just send us to [email protected]. We would love to publish your piece on our platform!

If you want to comment this article, visit our Blockchain24.co forum!

The blockchain24.co site shall not be held responsible for any consequences resulting from the use of data contained in the pages of the site.