Crypto asset
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Silly ones like Bitcoin, onecoin, and sensible ones like the unitary settlement coin — crypto assets are digital “assets” — it is a loaded term — having no physical extension, and creating all kinds of metaphysical issues which dusty old lawyers are having to get their arms around.
I mean, are they a chose in possession or a chose in action? Or just another delusion of the mad crowd, evidence that we are properly untethered from the flat plate of the world, and deep in the turtles.
More here soon.
Crypto as a technocratic solution to a human problem
It’s hard not to enjoy the hubris in the FTX/Alameda memeplex collapse. Wider implications as we see them.
Crypto maximalists are staying strong: see this discussion between the babbling, gibbering wreck that we now know as Chance the Gardener and the more articulate crypto libertarian Erik Vorhees.
The crypto-libertarian take: crypto promises to fix the technocratic problem of regulation by substituting it with code. Code is law. But the problem of regulation is not technocratic but human. Libertarians, of all people, should understand regulations not as abstract technical artefacts that create bad incentives — though, sure, they do this — but as a by-product of hard-wired human, self-interested behaviour. Regulations make and get made by inevitable, self-interested human behaviour: acquiring social influence (and therefore political power); establishing market dominance and then extracting rent. The behaviour is reflexive, and there are feedback loops here. The regulatory ecosystem is as organic a market and complex a system as the market itself. It is part of the market.
Crypto does not — cannot — stop or fix hard-wired human behaviour. This is the the JC’s main objection to crypto maximalism: it is so glib. God knows the current state of trad-fi isn’t optimal, but it got that way because these are hard, deep, ancient, shape-shifting problems of human social organisation. They cannot just magically solved by code.
Crypto as an asset class
So we are agreed no-one trusts the governments — seen and unseen — any more and the shadowy systems which beam coronavirus from 5G towers and infect us with communism from chemtrails will kill us if we don’t somehow get off the grid.
But if if the unshackled masses suddenly can’t be sure of the bona fides of the central institutions they have until now relied on, what sort of consensus will they reach on the value of intangible tokens on a dematerialised ledger which are not backed by anyone? This is like a cosmic joke, folks.
In our present times of self-isolated peace and relative tranquility, the now “mature” bitcoin — designed to prevent the capricious ministrations of central banks, creating volatility mayhem through self-serving fiscal policy — swings 700% in value over a year, where the mercurial dollar moves a couple of percent. [1]
Crypto as a settlement system
This is distributed ledger technology, which is a handsome idea; sound; and certainly helps ameliorate a problem — namely how to transact safely when you don’t trust the motives or solvency of intermediaries — but this is rather like solving the problem of weeds in your garden by concreting it over.
Trust is a feature, not a bug, of the financial system — not just the financial system, but society at all levels, from family to the UN: if you don’t have it, you are better investing in shotguns and tins of corned beef than crypto-assets on a blockchain.
Better solution: refine your system to value and reinforce trust.
See also
References
- ↑ And no, that doesn’t mean cryptos are the stable one: if they were dollar prices would be subject to hyperinflation, then hyperdeflation, yearly. Haven’t noticed that. Cryptos are not currencies, and since you can’t eat them or make things out of them, they are a lousy commodity too.