Plus: Biden gets off-message on inflation.
As someone who was in school for a computer science degree before crypto took off, it's been weird watching normal people get so enthusiastic about an obscure academic exercise. Bitcoin was interesting because it presented a clever, incentive-compatible solution to the double-spending problem in distributed transactions.
Now, when you do research in distributed computing, the first assumption you make is that you can't trust anyone. That's because assuming trust makes most problems disappear. That same reason, however, it why it's so fucking stupid that people think crypto has any applicability to a real, modern economy.
Like, in this imaginary future where there is no source of fiat authority, how are you going to get a mortgage for a house? If you buy a house, how will you have title to it? When a burglar comes in through the window, are you going to point to where it says on the blockchain that he's not supposed to do that? It's all so stupid in that techno-libertarian way that takes for granted everything you like about modernity and whines about everything you don't like. Move to <war-torn country> if you want the freedom to live in a post-trust economy.
Whenever someone asks, I explain to people that crypto is like Zelle except it's 1,000x slower, takes 100,000x as much electricity, and instead of being run on a bank's computers it's being run on a Chinese server farm. It's great for illegal activity and speculators.
The thing about cryptocurrencies that makes me think they will be with us forever in some form is that they're a lot like gold, only stripped to its essence. Gold is really not an investment the way a stock or commodity is. Gold is not completely useless, but it's quite close. Yes, it's used for jewelry, and for (mostly cosmetic) plating of fancy electrical connectors, and.... that's pretty much it. There's far more of it already pulled out of the ground to satisfy the actual uses for the next hundred years or more.
So gold is already kind of a pure "greater fool" kind of investment. More charitably, you could see it as a way of betting on overall investor sentiment. The problem is, gold is an actual physical thing that is actually pulled out of the ground and stored in vaults and so forth, and that affects its price in a way that isn't super useful if you're really trying to bet on (or hedge) changes in investor sentiment. Cryptocurrency is a way of distilling that "investor psychology" component of gold into a non-physical realm.
To my way of thinking, this is a great reason not to invest in crypto, for the same reason not to invest in gold. You're betting folks won't suddenly realize the emperor has no clothes. It's entirely possible that if people see crypto as "digital gold," instead of making crypto more valuable, it will reduce confidence in gold. Which it should! Gold is wildly overvalued! But realistically, gold has a psychological hold on a lot of people around the world and it will take a lot to shake it. Crypto doesn't have the same legacy, so my guess is it still has plenty of room to fall and spend time in the weeds before returning again. It's just too useful as a pump-and-dump to abandon completely.
I share your exasperation on crypto, but there are deeper levels to its uselessness for the problem it's trying to solve. According to its boosters, crypto is "trustless." They often say "more trust means more truth." Fundamentally, though, what problem is this solving? I suppose a person could wake up some day and see that their bank account suddenly has a balance of $0 and the bank won't do anything about it. But does this regularly happen to people? I don't really think so. It's hard to see a use case for crypto beyond money laundering.
A few years ago, it was fashionable to say "Cryptocurrency may not be the future but the blockchain itself is an important technology. Smart contracts!" And, to my knowledge, the only product that is remotely viable from blockchain-enabled tech is NFTs, which are an obvious scam. If the law started to recognize NFTs, then it would be different, but it doesn't, so you're left with the world's best certificate of ownership.
As Josh notes, if you actually apply logic to crypto, it doesn't make any sense. But, after years of being wrong, do you really want to bet against it?
I’m with you on crypto, but I’m curious how you would explain the difference between that and any fiat currency. It seems to me that the government backing of real currencies is what makes all the difference, but I’m not certain.
Isn't this somewhat in tension with the old adage in economics that "if something can't go on forever, it won't"? A related claim is that if something seems pretty impossible, it probably is. (e.g., How can my Volkswagen diesel legitimately get better MPGs than anyone else's diesels? How can many lower-income buyers in 2005 afford half-million dollar homes? How did only 4,400 Chinese die of COVID?). Every claim coming out of the cryptoverse seems equally (or more) impossible or unlikely. Have we really found the deepest well of credulity in financial history?
Can't you make exactly the same argument about the dollar?
Takes a special and rare politician to show empathy.
Even to just feign it consistently.
I would suggest the most their handlers can hope for is to stay on message.
If the message includes feigned empathy, so much the better.
Please do another one on why NFT's are dumb and a scam :)