In 2018, I experienced slight FOMO (“fear of missing out”, not a crypto) when some of my friends made considerable amounts of money almost overnight with Bitcoin and Ethereum.
It didn’t bother me much that I had forgone free money. No, it was more about me not recognizing this seemingly awesome development in tech. My whole life, I have been tech-savvy and always on the forefront of cool new technology. I was the first one at my elementary school to have a Tamagotchi. I was always the one with the newest gaming consoles. Not only that, but I owned an electric scooter (like the Bird and Lime ones, but bulkier and with a 2 km range) back in 2005. Pretty fucking cool, I know.
So, in 2018, I asked myself how I could have missed the rise of blockchain and cryptocurrencies?
The answer started dawning on me about 2 years ago: I didn’t miss it. I just didn’t think it was interesting back then. And I still think it’s not interesting today.
Don’t get me wrong, I do think that the concepts behind the blockchain are interesting. But only as an intellectual exercise, with no practical use in the real world. As for cryptos, they are not at all interesting, not even as an intellectual exercise. As my new favorite crypto hater blogger Stephen Diehl puts it, they are a pure greater-fool seeking asset that’s used for gambling, crime and all kinds of other shenanigans that don’t create any value (on the contrary, they destroy value).
I still can’t believe how so many (otherwise) smart people that I talk to try to justify that the blockchain or cryptos will make the world a better place. Clearly, they just want to convince themselves that it’s in fact ok to buy crypto, while they exactly know the real reason behind it is to make a quick buck.
This cognitive dissonance leads to all kinds of wild explanations why cryptos are the best thing since sliced bread.
One explanation that comes up often is that cryptos will help stabilize poor developing nations. One example here is that the people of a nation with a strongly inflating currency can put their money into a stable crypto “currency”.
Let’s see why this is bull crap.
First, cryptos are one of the most volatile assets in the history of finance. Trading Venezuelan bolívar for crypto is like jumping from a sinking ship that still has some lifeboats left to a canoe with a big hole in its floor.
Second, cryptos are not cash. Even if there were stable cryptos (please, don’t get me started with stablecoins), to buy and sell crypto, you either need access to a crypto exchange or own a crypto wallet. The set of people who have access to an ordinary bank account (e.g., to buy USD) and the set of people who have access to crypto exchanges or wallets is overlapping pretty strongly. Therefore, no person in their right mind would prefer crypto to gold, USD or EUR if they are looking for a safe place to put their money.
In summary, cryptos don’t do jack shit to help a poor farmer in El Salvador. Cryptos can’t fix societal, political or economocial problems. In fact, most technology can’t.