Matthew C Klein, Columnist

Is Bitcoin Like High-Speed Trading?

Why are people pouring so much energy and technological investment into zero-sum games?

April 16, 2014 at 10:20 PM UTC

Matthew C. Klein writes for Bloomberg View about the economy and financial markets. He previously wrote for the Economist magazine and its economics blog, Free Exchange. Before that, Klein was a research associate at the Council on Foreign Relations, where he spent more than two years studying the history of the Federal Reserve and the intellectual history of monetary economics for an upcoming book by Sebastian Mallaby. He also worked at Bridgewater Associates, where he studied the economies of Central and Eastern Europe and advised institutional investors on asset-liability management. Klein has a bachelor's degree in history from Yale University. Originally from Chicago, he lives in New York.

Guess what's inside the balloon. Photographer: Jin Lee/Bloomberg — Guess what's inside the balloon. Photographer: Jin Lee/Bloomberg

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Bitcoins have something in common with high-frequency trading: both are seen as either a huge waste of resources or a useful new technology that will lower costs in the financial industry for the benefit of consumers.

The knock against HFT is that it's pointless for programmers to write software that executes profitable trades infinitesimally faster than software written by other programmers, instead of working on projects that may have broader applications. One of the arguments in favor of HFT, though, is that it discourages people from engaging in even more wasteful attempts to discover private information.