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Cryptocurrencies Are a Dangerous and Retrograde Step
Enthusiasts for cryptocurrency say with revolutionary zeal that this is the future of money. We have seen private money or money tied to a rigid formula in the 19th century that was marked with frequent financial instability and pedestrian growth. The gold standard was adopted to bring stability but was abandoned 50 years later when it deepened and spread the Great Depression. Someone needs to speak up for the benefits of regulated fiat money, which, in the last 50 years, has been associated with more growth and stability than over the gold standard era.
Cryptocurrencies are a terrible thing. They are the essence of a Ponzi scheme whose value is based entirely on a greater fool prepared to buy it. The promise of alchemy-
turning lead into gold has bewitched humanity throughout the ages and cryptocurrencies are just the latest alchemy. Do not get me wrong, if rich people want to lose their money, in this or any other way, they should be allowed to do so. The rich should be the vanguards of new things in case something unforeseen and good falls out of them. But we need to protect those vulnerable consumers whose lives are such that almost any get-rich-quick schemes will be seductive, and seven out of 10 times, they will lose their life savings. Cryptocurrencies are today’s South Sea Bubble—one of the earliest recorded financial bubbles that took place in the 1720s’ Britain. Meme-based currencies like Dogecoin, Dogelon Mars and Doge Dash remind me of the infamous plan of one company during the South Sea Bubble to raise money “for carrying on an undertaking of great advantage; but nobody to know what it is.”
The cryptocurrency bubble is worse than tulip mania. Through the veil of technology, cryptocurrency enthusiasts are leaning on policymakers to permit them to be exempt from regulation, privatise money, and make money so disconnected from the economy that it would reap financial disaster. There are many reasons to avoid financial disasters, but one of them is that they ratchet up poverty and inequality. The current money–credit system is not perfect, but like democracy, it is the worst system barring all the others.
It has evolved from the ashes of the system cryptocurrency enthusiasts are trying to resurrect.
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