[In answer to an article that detailed how cryptocurrency is fundamentally broken and then veered back at the last minute.]
Wait. Wot. Did you not read your own article?
It's been over a decade, and still the only applications for cryptocurrency are crime and speculation, speculation with no known price evaluation model at all other than “purest sentiment”.
I am very un-fond of banks, and yet there hasn't been one financial services thing in my life that a bank hasn't been able to do much better for me, except buying illegal drugs off the internet or money laundering, neither of which crimes I actually commit or have commited, I hasten to add!
There are 5606 cryptocurrencies (as compared with 180 fiat currencies) and new ones appear almost continuously. At least hundreds of these cryptocurrencies seem to be actually traded for cash money.
What possible scarcity value do they have? Even the most enthusiastic advocate would have to agree that 99% of these coins will end up worthless.
Fiat currencies are inherently inflationary, which is a good thing in moderation, but while each cryptocurrency is deflationary, which is bad as it leads to hoarding of economic value, the cryptocurrency market as a whole is wildly inflationary in an incoherent way that seems immune to the idea of price discovery in classical economics until you realize that according to classical economics, all cryptocurrencies have a zero value (because they never yield any cash flows and have no breakup value).
Why does the world’s economy suck for most of its participants?
As we know from the Panama Papers and numerous other sources, trillions or even tens of trillions of dollars are stolen, money-laundered and tax-evaded right out of the system by a tiny number of very rich individuals every year.
This alone represents some trillion dollars every year of taxpayer money all over the world simply stolen — money that could be used to make our societies better, to create high quality public goods and services like healthcare, education, or climate mitigation, but instead is just taken from us by billionaire criminals.
And that's the tip of the iceberg.
The US spends most of a trillion dollars every year on its military, some large fraction of which is stolen. No even vaguely skeptical person would believe that an organization that has spent tens of trillions of taxpayer dollars over just a few decades, achieved universally terrible results, lost track of literally billions of dollars in bricks of cash, and resolutely refused to accept any form of audit during that time isn’t just a trough for war profiteers to gorge on.
In America, public works — bridges, tunnels, public transportation, infrastructure in general — cost an order of magnitude more than in other countries, that’s very roughly ten times more.
And yet construction workers in America aren’t particularly well compensated, and raw materials there are generally amongst the cheapest in the world. Where do you think all this money is going?
In many other countries such as Russia, 20% or more of the whole GDP is simply stolen by the leaders and put into their pockets.
The center cannot hold
This situation is inherently unstable and cannot go on forever.
One of two things will eventually happen.
Either the people will finally take back control of their government and their economic system including the right to create new money. We’ll root out the criminals — and there are a lot of them — and rewrite the laws to open up their filthy financial transactions to the light of day.
Or criminals will continue to loot the world economy until external forces — the climate emergency, resource exhaustion, deforestation and the death of the ocean — makes the whole house of cards that is Western Civ fold like a busted flush, leaving future generations standing in the ruins of their climate, their biosphere and our civilization, and cursing our names for a thousand years to come.
Crypto is corrupt, o!
On the global scale, there’s no difference between printing fake currency and individuals making a cryptocurrency to sell for your own profit. If I successfully create my own money and use it to gain goods and services, I am doing so by devaluing everyone else’s money a bit — more for me, less for everyone else.
Yes, on the level of goods and services produced and consumed, it is a zero-sum game when you are talking about goods and services. Past a certain point which we reached long, long, long ago, simply creating money randomly doesn’t actually create goods and services at all — you have to do something useful with it.
Government stimulus programs when they work, work by creating money and giving it to people who will immediately spend it — the poor, construction or infrastructure programs. Each dollar spent this way is immediately spent again and again, usually in the community, generating much more than a dollar’s worth of economic value. Infrastructure investments also have the benefit of paying off over generations.
Cryptocurrencies today create money in the hands of private anonymous individuals, almost to a man already affluent technologists, who immediately hoard, sorry, HODL that money. When they decide to spend it, they do ridiculous things like paying millions for an NFT (remember those?), money that goes to other affluent individuals.
Using cryptocurrency is an inherently antisocial act.
The vast majority of the people of the world are completely cut out from all of this value. A chance for them to, say, smuggle out money despite currency controls before their currency collapses is worthless to them because they don’t have any money to start with.
What the vast majority of people want is for their currency not to collapse in the first place. They want governments that aren’t kleptocracies, responsible, open and disinterested governments filled with dedicated, competent and honest people.
There’s Still Time To Change The Road You’re On
There are two paths we can go by.
In the rosy scenario, we the people take back the economic system, enforce the existing laws, enforce openness, expose the graft and corruption, destroy money laundering, confiscate ill-gotten gains, and use the money liberated to save ourselves at the last minute from the consequences of our obsessive consumption.
In this scenario, the only legitimate cryptocurrencies would be issued, owned and certified by the people, and all existing cryptocurrencies will be worth zero, as yet another tool for the ultra-rich to steal goods and services from the rest of us, with a small number of merely affluent white guys as technobeards for protective color.
Oh, should that happy, happy day ever come…
In the more likely scenario, ultra-rich people who have broken the law with impunity for their whole lives keep a more or less firm control on the world’s economic systems, as they have since time immemorial.
No problems are ever resolved.
In particular, reacting appropriately to the climate emergency would cost tens or hundreds of trillions of dollars and much of that would have to come out of the pockets of the ultra-rich, so this does not happen.
Humans go on to burn all the fossil fuels. Temperatures continue to increase.
In 30 to 150 years, the biosphere collapses, a few million species go extinct, the majority of humans die, and the Internet and even electricity ceases to function for most people, making cryptocurrencies, again, worthless.
We as a species would definitely deserve it. I would just feel bad for the millions of species that would get wiped out due to our malicious incompetence.
Humans would certainly survive anyway — just a lot less of us, and in a world that’s suddenly much more inhospitable to human life.
(At least a hard drive has some heft to it and would for make a good club or projectile weapon. Your thumb drive isn’t going to repel an invader unless you somehow stick it up his ass.)
You can probably guess which side I favor. Either way, we aren’t going to just stumble along in this increasingly inept and self-destructive fashion for centuries to come.
Look at this picture, where the green dots represent the remaining wild land mammals:
Now consider that two hundred years ago, the proportions would have been roughly reversed.
Consider also that in the seven years since that comic came out, we have lost a little over one green dot and gained almost two grey dots (mostly pigs and cows).
This cannot go on forever. This cannot go on for much longer.
So a dramatic, almost discontinuous change is certain to come, later or even sooner.
If we are very lucky, it will lead to us fixing things up; mostly likely it will lead to collapse; in either case, cryptocurrencies will be worthless, except perhaps amongst a small number of post-collapse billionaires still living in luxury off the corpse of the biosphere like grave worms, but I assure you that you or I won’t be invited to join that ultra-exclusive club.
What can you do?
Supporting private cryptocurrencies is supporting the wrong side in this war we have been thrown into, the people against a tiny number of ultra-rich people bent literally on destroying our living world simply so that they can win the game of “who has the most money”.
If you are reading this and own cryptocurrencies, please consider divesting yourself of them.
If you get out entirely now and forever, your moral responsibility would start to disappear even faster than a smoker’s lungs start to heal after quitting cigarettes.
Thanks for reading!
