Fear and Loathing in Crypto
“There was a fantastic universal sense that whatever we were doing was right, that we were winning. And that, I think, was the handle - that sense of inevitable victory over the forces of Old and Evil."
-Hunter S. Thompson, Fear and Loathing in Las Vegas
As Bitcoin reaches new all time highs weekly, it's hard not to be bullish. In fact, I am. From purely an investing and trading standpoint, that is not a trend you want to short. From a technological standpoint, it has all the hype and network effects of a burgeoning social app that is now starting to move beyond its earlier adopters. Yet it all gives me pause.
Three years ago, I was wide-eyed and optimistic about the technology, and while I was somewhat skeptical - I could see a crypto future that was appealing to me. Now, I am concerned. When I look at crypto, I see many of the same issues and actors causing political instability in our country and the world today - tribalism bordering on cult-like behavior, memes reinforcing the narrative, gaslighting, sockpuppets, and a movement that largely appears only to be in service of itself.
The US dollar regime is probably the most valuable strategic asset to the United State and its citizens, as well as the largest driver of world peace and prosperity. Even if you aren't the most ardent supporter of MMT, the fact that we have been able to essentially print our way through the Covid crisis without massive financial market instability and runaway inflation should be seen as a major achievement - a technological breakthrough it its own right. Getting to a vaccine in 8-9 months was amazing, but so was our ability to get money into the places in the economy that needed it most and avoiding economic catastrophe.
A response to this achievement from the crypto community was the now legendary meme, "Money printer go brrrrrrrrr" - as if increasing the money supply and getting money to those who need it, against the backdrop of a global pandemic is something to laugh at. Not to mention saving the economy from second order effects that surely would have crippled most of those who didn't need it, and are sharing the memes. Worse yet, crypto doesn't have and answer for how it would have dealt with such a catastrophe.
I find it incredibly troublesome that here we are entering the golden age of fiat currencies, and we can't even appreciate it. We have some of our best and brightest now looking for ways to undermine it. Each day I see more and more people I know who a few years ago wouldn't even be able to explain what money is (and likely still wouldn't) talking about the need for "sound money" and "censorship free" money as if they are some Russian oligarch with large holdings of paper currency needing access to markets that have cut them off. But I digress.
We don't even take time to really ponder the virtues of fiat. In many ways it is likely the only currency regime that supports democracy in the long run. A currency and economy pegged to gold, or even bitcoin, must eventually go through those that hold the commodity for its orders. Fiat currencies ultimately go to the electorate for theirs. And the US as the reserve currency requires all countries to go to us, in essence.
Many crypto bulls, like the goldbugs before them want to share charts of the value of the dollar or increase in money supply as if it's a bad thing. What's curious about crypto bulls is presumably they believe that the increase in bytes and processing speed, etc that underpinned the information age is a good thing. When you think of money as information, perhaps this expansion makes sense. Most would agree that our digital economy is much more high definition and higher resolution than it was 20 years ago. Our real economy is the same way. Financial innovation is the ability for our economy to absorb and put to productive use more and more currency. Sound money is merely not producing too much currency or injecting too much money in the wrong places.
I assure you, I am no Luddite. I find the technology behind blockchain and crypto to be quite interesting and quite applicable at solving trust problems across a wide range of industries. I am also very interested in the concept of programmable money and the Ethereum blockchain is quite interesting to me - perhaps because it is fiat in nature.
I do think we as a society need to take a hard look at Bitcoin and ask what problems it is actually solving for most users in the real economy, because it hasn't solved too many yet, 12 years in.
Until then, I remain somewhat concerned. While I don't believe most people involved in crypto have any intention of subverting our power in the world and our ability to manage our economy (even if we've been doing so poorly), there are many who know what even the slightest bit of damage to the US Dollar Regime could do to our country, and I see the fingerprints of such actors everywhere I look when it comes to crypto.