Crypto Dreams (and Nightmares)
Bitcoin For (and Against) Dummies
In case you haven't noticed, your government is insane. A bunch of thieving parasites living high off the body politic. They tax your income, they tax your property, they tax your purchases, and they inflate away the value of whatever money you have left with their idiotic lending and spending.
All the while telling you its for your own good, for your 'freedom.' What a load of bullshit. But what can be done about it? We are in effect held captive by the government monopoly on money. Whether it be dollars or euros or baht.
But what if it didn't need to be that way? That was the crypto dream. The promise of Bitcoin was a currency that would be free from government dilution and thievery, traded freely between free individuals, with both security and privacy.
For awhile that's exactly what it was. Around 2011 Bitcoin became the de-facto money of the Dark Web, where it was often used for drug dealing and other illegal commerce. It wasn't the nefarious use that got my attention, but the idea that a private digital money could actually work was astonishing.
Bitcoin I thought, was going to be a very big deal. It was revolutionary. It had the potential to usher in a new era of human freedom and prosperity. Potential yes, but it hasn't quite worked out that way. Not yet.
As more people noticed this new sort of money, its usefulness for making private transactions took a backseat to its insulation from inflation and government control.
Although Bitcoin had worked well enough as money for a few hundred drug dealers on the dark web, it wasn't up to the task of replacing "money-money" for the everyday transactions of millions or billions of people. The thing that made Bitcoin so secure, the shared ledger, was just too slow.
And so instead of being used as 'money' Bitcoin turned into an asset. Digital gold. And then came the gold rush. Both into Bitcoin and into the numerous alt-coins that seem to multiply at an ever increasing rate around it.
Some of these new coins sought to fix Bitcoins problems or add some functionality, but most were just scams of varying degree. Some quite elaborate. A good number of my friends lost a good amount of money on something called DasCoin. I tried to warn them but they were entranced by get-rich fever.
For the past ten years crypto has pretty much been a casino, with the players making their bets and hoping for a big payout. The new casinos are the exchanges, taking a cut of every transaction. Although these exchanges enabled the widespread trading of crypto, they also destroyed its main purpose.
On an exchange crypto is no longer "encrypted." It is not private, it is not anonymous, it is not used for purchase of physical goods in any great number, and gains are taxed by your friendly government just like any other gain.
What the hell is "crypto" about that?
Not much.
As far as I'm aware there is only one crypto-coin of any significance that remains private, anonymous, and secure from government intervention: Monero. But because it maintains purity of purpose, Monero has many of the problems that pre-exchange Bitcoin had. Difficulty of purchase, self-custody issues, and limited adoption. Maybe one day Monero will overcome those challenges but I don't expect that day anytime soon.
It is still possible to use Bitcoin (or any of the thousands of alt-coins) for private transactions, but the plain fact of the matter is that most people don't. People are consumed by the idea of fast riches, and so crypto has become something in between investment and gambling.
Maybe it will be different in the future. I hope that it is. But that’s where we’re at now.
And now for some bullshit.
It comes in two main flavors: scammers and know-nothing naysayers.
The standard crypto scam goes like this: someone launches a coin that is a clone of something else, grants themselves a large number of coins, generates some hype to build interest and market-cap in their coin. Then liquidate their position leaving everyone else holding the bag
Another sort of scam are closed system or ‘non-tradable’ assets which are really just well-disguised ponzi-schemes. There’s a bunch of them on FB and they’re not too difficult to spot. Anyone posting messages like, “Get your XQR wallet now before the dollar collapses. Contact me now” is probably selling a scam, whether they know it or not.
The other sort of crypto bullshit comes from naysayer know-nothings. These are the opposite of the scammers, who instead believe that crypto itself is a scam in its entirety. Here's one that I saw on FB today:
"Once the dollar is gone, your Crypto is worth absolutely NOTHING. You will own NOTHING & you will be Happy."
And he continues in the comments:
"Crypto is currently based on a dollar amount. Show me a Crypto that isn't worth something in dollars. Didn't Bitcoin go up to $80,000 plus dollars today? That's it's worth in real money. Surely you can see this. If the dollar isn't around, neither is the Crypto that has dollar amount attached to it."
Dear sir, I like your enthusiasm and your logic is flawless, unfortunately your starting premises are mistaken and so logic has led you astray. Yes Crypto is priced in dollars, but so too are eggs, gold, gasoline, and Netflix subscriptions.
If the dollar were to disappear tomorrow, eggs, gold, and gasolines value would NOT go to zero. Their value would simply be expressed in some other unit, as they are now in euro, yen, rubles, rupees, or... bitcoin.
Crypto-currencies are just that, "currencies." What you call a price is actually an exchange rate. There is an exchange rate into dollars, and into a hundred other currencies, most of which Crypto can be bought and sold into today, right now.
Crypto is NOT dependent on the dollar for its existence, and you have their relationship exactly backwards. If the dollar went to zero, Bitcoin would soar. It would simply be priced in some other unit.
Crypto can exist with or without dollars (or euros, yen, etc). And just as eggs or gasoline, or gold have a price in euros, yen, and baht, they could also have a price in Bitcoin, Ethereum, or Monero. In a better world they would be.
And though we do not currently live in that better world, one of the things preventing that happy transition is the sort of misunderstanding that you hold and spread. Crypto is not dependent on dollars, only your mental framework is.
So what is actually going to happen with crypto?
How the hell would I know?
The dream scenario is that government fiat currencies are replaced by inflation proof tax free money. The nightmare scenario is that central bank digital currencies will be imposed from above by tyrannical control freaks.
And the realistic scenario is that some coins retain and increase in value while most fizzle out into irrelevance. Some people make money, some lose, some sit on the sidelines, and some rant and rave about absolute nonsense.
For the record I am currently long Bitcoin, Microstrategy, Ethereum, Cardano, Solana, and Algorand. That is not advice. I’m just saying that my money is where my mouth is. And although I am still holding, the currently soaring prices do not make a good entry point in my opinion.
I could be wrong, but I’m not about to tell people what to do, or not do, with their money. What I will advise is to be wary of storytellers selling either crypto dreams, or crypto nightmares. Keep your wits about you and maybe just maybe make a few bucks or bits or doge.
YMMV