As the FT notes today, this is the [plot of the value of 500 cryptocurrencies over the last couple of years:
When is a store of value not a store of value?
When it has no inherent value and is just like a Ponzi scheme is, of course, the answer.
That's exactly what cryptocurrencies look like right now, as I admit I have always said.
And let's be quite clear about something else: these are not currencies, or anything remotely like them. At best they are a mug's game. And there appear to have been many mugs out there.
The downturn is proving that just because excess cash balances can be directed towards a so-called investment medium, does not prove it is of worth.
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I agree with you and BTW – the word ‘plot’ in relation to crypto is exactly that – a plot.
Possibly I read the wrong publications and have not seen it, but one of the least under-discussed aspects of western society is the way our lives have been transformed by the constant need for the ill-gotten wealth of the super rich to find new rent seeking opportunities.
Years ago I used to think it was very quaint when you were visiting a picturesque area and you would come across some natural wonder that ever since the 18th Century had been cordoned-off and a charge made to view it.
Thank god our modern, enlightened, democratic society had put an end to such gross cupidity I used to think.
Now I think it is only a matter of time before we are once again forced to pay to walk in own country.
It’s quite scary how many people I know who rave about cryptocurrency, or NFTs, their physical equivalent.
As far as I can see, it’s just a modern version of what the Dutch were doing with Tulip bulbs 400 years ago.
You are right
i would agree until you see how central bankers try to debase currencies through printing and inflation. Of course there is no true store of value. Not crypto, not gold, not precious metals, not property, not a particular currency as they all exhibit volatility and no one asset can keep up with inflation once it’s embedded. Index linked gilts technically should but look at their performance over the recent inflationary period, they have been a disaster. Inflation is the killer and it’s control should be our economic priority.
I am suggesting ways to achieve that goal
Pffft.
Me suspects the presence of a “Positive Money” type.
So “inflation is the killer” is it? In that case we are all dead. The alternative is deflation. Do you know what that does?
https://www.investopedia.com/terms/d/deflationary-spiral.asp
Richard, did I read that right? There are 500 (more in fact as these are the top 500) cryptocurrencies in use in the world?
That is crazy. It’s more than the number of established non cryptocurrencies is it not?
Apparently so
None in my world
The Emperor’s New Clothes, though amusing, wasn’t quite right. In the real world when the child shouted “the emperor has no clothes!” the crowd would have replied: “shush, you don’t know what you’re talking about.” And so it is with crypto. It doesn’t matter what logic is brought to bear on the subject, investors simply cannot bring themselves to accept they’re the victim of a Ponzi scheme. I accept there are winners in every Ponzi scheme, but the losers generally vastly outnumber them. Perhaps a future post-crypto academic paper will muse on the human psychology that will no doubt lead a majority of crypto investors to claim that THEY really knew what it was all about and THEY got out without a loss, unlike those other suckers.
This piece provides a good overview:
“Column: Bitcoin, NFTs, SPACs, meme stocks — all those pandemic investment darlings are crashing”
https://www.latimes.com/business/story/2022-05-12/bitcoin-nfts-crypto-spacs-meme-stocks-struggling.
And this one nails it:
“Cryptocurrencies, blockchains, NFTs and the constellation of hyped-up technologies known as web3 have been celebrated as a way to liberate the internet from the tech giants who control it now. Instead what’s happening with Bored Ape suggests they’re doing the opposite: polluting the digital world in a thick haze of errors, swindles and expensive, largely unregulated financial speculation that ruins whatever scrap of trust still remains online.”
https://www.nytimes.com/2022/05/05/opinion/crypto-nfts-web3.html
The most unforgivable aspect of that whole show is the obscene amount of electricity that is wasted on it:
“Bitcoin consumes ‘more electricity than Argentina'”
https://www.bbc.com/news/technology-56012952
Agreed