I should be mentioned that the popularity of these pathological financial assets is not solely due to social manipulation, the loss of faith in markets and institutions came first, then came the manipulation. The result is further wealth transfer, inequality, addiction, chaos, poverty.
In the Middle Ages it was the Catholic church, today it's venture capital firms like a16z. There are plenty of greater fools, and new ones are created every day. A few people gets filthy rich while nothing of value is produced.
Very deep passage here, thank you: "I asked the other day on Twitter if anyone could come up with a comparable financial asset whose demand is completely artificially generated by narrative. Derivative contracts don’t qualify because I have yet to see a product where if we unwind the stack of underlying we don’t reach some real commodity, currency, equity, or benchmark which is economic in nature. The closest comparable people came up with is the historical practice where the Catholic church in the Middle Ages used to financialize penances for sins into products called indulgences as a means to fund the church’s endeavors. This is indeed an example of a purely-narrative-driven financial asset whose value is purely derived from the Christian faith, albeit a pathological and exploitative reading. If crypto assets have comparable financial products it is that of indulgences, both are purely narrative-driven fundamental-less financial assets that can be created out of thin air and whose market value is purely a function of sign value and fealty to an ideology. The only difference is that crypto assets have a digital secondary market where these neo-indulgences can float and be traded."
I've been reading (and 100% agreeing with!) these "here's why crypto is a giant Ponzi scheme doomed to collapse Real Soon Now" articles for ten years. When is it actually going to happen?
I'm not a crypto guy. I've never bought, sold, or mined a cent worth of it. I really can't stress that enough. But it's gone on an awful long time now. At this point these articles are starting to seem more like the "Here's why Facebook will die out like MySpace" articles I used to see circa 2010.
>After thirteen years, most rational people have either analytically or empirically derived that crypto assets can never actually be used as currency
Once I read this i concluded this article is BS. You may ask why, first of all the author doesn't know what most rational people think or have concluded and thus this sentence is false. Pretty sure the rest of the article is built on same foundations, personal conjectures of dubious worth. Just my 0.000025 BTC.
It is very obvious that cryptocurrencies are an asset class, and can't be used as currencies. Not for the lack of trying either. There is an ongoing desparate attempt of trying to find a purpose for crypto (Web 3.0, NFTs) to justify investment into it, since you can't even buy or sell a pizza with them.
Cryptocurrency is not purely narrative driven. Bitcoin is, now. It wasn't up until 2017, when its daily transaction count was more than doubling year over year for 8 years:
During that period, Bitcoin was amassing real network effects, which persist to some degree to today.
Some cryptocurrencies are amassing network effects these days, and may one day reach a critical mass of adoption that leads to one or more becoming a permanent fixture of the global economy.
>>As a result of crypto being a failure in its original purpose of payments
As touched upon, Bitcoin was succeeding in its original purpose up until 2017. Its failure since then was due to what amounts to politics, not any inherent limits in the technology.
Other cryptocurrencies have more than picked up the mantle since then with the development of technologies like zk-Rollups, zero-knowledge mixers and algorithmic stablecoins, and with these advances, hold the potential to create the ultimate payment system: one that is permissionless all over the world, not subject to volatile prices and cash-like in its resistance to mass-surveillance.
In the Middle Ages it was the Catholic church, today it's venture capital firms like a16z. There are plenty of greater fools, and new ones are created every day. A few people gets filthy rich while nothing of value is produced.