I appreciate the analysis - I think you’re right about crypto philosophy, that the point is to create a viable alternative, operating outside the established financial gatekeeper system via blockchain trust. I do think it may have a strong future especially for developing nations who remain at the financial mercy of the world’s colonizing powers. But in this nascent stage it is wildly speculative - especially as the threatened existing banking power structure tries to kill it. Big wins and big losses elicit a simplistic comparison to a casino - but what is the stock market if not a casino. What concerns me most in this stage of the game is the small guy who loses significant money like my friend who lost 45k and significantly set back his retirement in an instant, while wealthy crypto marketers like Matt Damon easily survive the hit.
Thank you for your comment. Many regulatory policies are likely coming from many governments, and they should help to protect vulnerable people inclined to experiment with this type of speculation. I would argue that stock markets are very different. True, speculation does happen in these markets, but by and large investors are placing bets on actual companies that are producing things or providing services. These companies are investing in their businesses in turn. That, to my mind, is worlds apart from crypto speculation.
Wow this was a garbage article. Aaron - I subscribe because I expect some degree of analysis instead of a badly researched opinion piece. Find some better guest authors or I won't be renewing.
Two comments. One, the headline failures to date, FTX being the latest, are exchanges that are essentially unregulated banks. They control your tokens and promise to give them back. Except when they don't. This is the opposite of what the underlying distributed blockchain is intended to do. Even when an individual transacts directly on the blockchain they generally still need to convert it to a real currency eventually.
Second, as you point out, almost none of the raft of existing tokens are backed by anything real. An exception may be something like Nori (https://nori.com/), which is trying to create a carbon trading market. Disclosure, I am an early investor in them. At any rate, their token is backed by a ton of CO2 removal. The point of using tokens, as I understand it, is to create a market for carbon removal which supports the sort of financial instruments that most markets do. I believe that pretty much the rest crypto is pointless, though, and don't think this bodes well for their success, as they get tarred with the same brush.
I have not been interested in cryptocurrency viewing it as something like playing video games, ie not real! I am not surprised that it is turning out badly, but wonder why it was not better regulated. I recently read an article in The Atlantic that was saying that Sam Bankman-Fried looked down on reading books, and claimed that he and other people who made this claim publicly are victims of poor thinking. I do not understand trusting currency that is not tied to a government. It was not clear to me from this piece why that would be other than people do not trust governments to manage monies. I would have liked to know specific complaints. Also, I do not see why losing trust in cryptocurrencies will lead to people trusting government backed currencies less as well. I would think the opposite would happen.
I appreciate the analysis - I think you’re right about crypto philosophy, that the point is to create a viable alternative, operating outside the established financial gatekeeper system via blockchain trust. I do think it may have a strong future especially for developing nations who remain at the financial mercy of the world’s colonizing powers. But in this nascent stage it is wildly speculative - especially as the threatened existing banking power structure tries to kill it. Big wins and big losses elicit a simplistic comparison to a casino - but what is the stock market if not a casino. What concerns me most in this stage of the game is the small guy who loses significant money like my friend who lost 45k and significantly set back his retirement in an instant, while wealthy crypto marketers like Matt Damon easily survive the hit.
Thank you for your comment. Many regulatory policies are likely coming from many governments, and they should help to protect vulnerable people inclined to experiment with this type of speculation. I would argue that stock markets are very different. True, speculation does happen in these markets, but by and large investors are placing bets on actual companies that are producing things or providing services. These companies are investing in their businesses in turn. That, to my mind, is worlds apart from crypto speculation.
Wow this was a garbage article. Aaron - I subscribe because I expect some degree of analysis instead of a badly researched opinion piece. Find some better guest authors or I won't be renewing.
Readers - if you want to get more meat, less opinion here's a better place to start: https://www.bloomberg.com/features/2022-the-crypto-story/
Two comments. One, the headline failures to date, FTX being the latest, are exchanges that are essentially unregulated banks. They control your tokens and promise to give them back. Except when they don't. This is the opposite of what the underlying distributed blockchain is intended to do. Even when an individual transacts directly on the blockchain they generally still need to convert it to a real currency eventually.
Second, as you point out, almost none of the raft of existing tokens are backed by anything real. An exception may be something like Nori (https://nori.com/), which is trying to create a carbon trading market. Disclosure, I am an early investor in them. At any rate, their token is backed by a ton of CO2 removal. The point of using tokens, as I understand it, is to create a market for carbon removal which supports the sort of financial instruments that most markets do. I believe that pretty much the rest crypto is pointless, though, and don't think this bodes well for their success, as they get tarred with the same brush.
I have not been interested in cryptocurrency viewing it as something like playing video games, ie not real! I am not surprised that it is turning out badly, but wonder why it was not better regulated. I recently read an article in The Atlantic that was saying that Sam Bankman-Fried looked down on reading books, and claimed that he and other people who made this claim publicly are victims of poor thinking. I do not understand trusting currency that is not tied to a government. It was not clear to me from this piece why that would be other than people do not trust governments to manage monies. I would have liked to know specific complaints. Also, I do not see why losing trust in cryptocurrencies will lead to people trusting government backed currencies less as well. I would think the opposite would happen.