Crypto currencies always seemed to me to be either pure speculation or a facilitator of criminal activity. I’m prepared to be wrong about that; but, even enthusiasts haven’t given me another reason for it’s existence. Their argument always devolves to some version of “U.S. dollars are just ‘FIAT CURRENCY!’ and aren’t backed by anything”.
They argue that all fiat currency is equal because neither is based on gold. Which is wholly stupid, of course, but they convince themselves, and more importantly others, that the “good faith and credit” of Joe Schmoe in his mother’s basement is just as reliable as that of the United States Treasury.
I roll my eyes so hard at the “fiat” vs “hard” currency thing. At base, a medium of exchange either has intrinsic value—you can eat it, make tools with it, etc.—or it doesn’t. Once you’re out of the barter system basically every medium of exchange (i.e. currency) lacks intrinsic value. The value is extrinsic, and in short, it has whatever value people collectively agree that it has. In that sense, bitcoin is no different from gold or silver or seashells or the USD. The fact that a particular centralized entity can consciously increase or decrease the supply of one of these makes no damn difference.
You know what does make a difference? The fact that one of these is accepted as valuable across the world, is the acknowledged and accepted medium of exchange for the largest economic juggernaut the world has ever seen, and carries the full political and economic and military might of that juggernaut to back it up. That’s where the value comes from.
But what if that juggernaut collapses? What’s all that fiat worth then? Nothing, same as gold or silver or seashells or bitcoin. Better be ready to trade in grain and hides, buddy. Nobody will care what’s in your digital wallet.
I should also note that if you want to invest in crypto as a purely speculative play, that’s great. Buy some with USD and sell it to get more USD, that’s where the value is. I guess you just have to hope you’re not the one holding the bag when it tanks. It would be a shame if you lost valuable USD in the transaction.
Just a minor quibble on the “facilitator of crime” issue. Do you know what criminals used to use before crypto? Cash. I don’t recall there being a crying out for cash to be banned because criminals use it.
This reminds me that I’ve actually seen arguments in favor of eliminating the $50 and $100 bills, on the basis that they’re not used very much in commerce, and that if the $20 were the highest denomination it would make the illicit physical transfer of large sums more difficult.
Criminals STILL use cash. Overwhelmingly so, and far more frequently than with crypto. A record of every crypto transaction is preserved in the blockchain. There’s permanent digital receipts… it’s like leaving behind notes of a criminal fucking conspiracy… Stringer Bell would not approve.
Not a crypto true believer or anything but I can’t argue with the nice sum I made years back during the Kimchi Premium arbitrage. Of course that was before regulations and the general public turned crypto into what it is today.