It’s a bad idea. A cryptocurrency makes a lot of sense to some libertarians. Here’s a universal currency, not controlled by any government, that allows individuals to conduct financial transactions privately, anonymously without any intermediary — banker or government — taking a cut. (At least in theory. The IRS has been public about getting its cut of Bitcoin trades.)
But back up a minute. Who needs such a currency? Criminals, yes. Terrorists, yes. Anyone else who wants to keep their affairs invisible to prying outside eyes — whether law enforcement, intelligence agencies, or a spouse in a contested divorce. That’s a very limited universe, and it’s not inhabited by the most honest of us. Big investors seeking to build a big position in a security have plenty of other tools.
It’s much too volatile. A currency is supposed to be a medium of exchange, not, primarily, an investment. Yes, currencies change in value, but nothing like Bitcoin, which rose from virtually nothing several years ago to above $19,000, then plunged to just under $7,600 before recently rebounding a bit. Why would anyone use an instrument that volatile to buy or sell anything?
They have no real value. The truth is that cryptocurrency advocates are misleading when they call these digital items a currency. Yes, technically they are currencies in that they can be used to buy some goods and services. But cryptocurrencies are fundamentally a speculation — people are buying hoping to sell later at a much higher price.
They’re a commodity. Anyone with the right computer skills — and enough cheap electrical power to produce the code and complex puzzles needed to launch a cryptocurrency — can do it.
The fact that there are more than 1,500 cryptocurrencies is more than sufficient proof that these are not a scarce item. A commodity that’s easy to re-invent is worth little, if anything.
It’s a bubble. Let’s suspend disbelief for minute and imagine cryptocurrencies are going to be a huge technological game changer like the Internet or airplanes or automobiles. Luddites, like me, can never see the next big thing until it’s too late to cash in on.
They are unregulated, and regulators are clamping down. Governments haven’t known what to do about cryptocurrencies. The currencies span the globe, making it difficult for any country to stop them. The lack of regulation has led to increased fraud in the crypto-markets.
Eulogy made by Steve Goldberg
