Wednesday, April 14, 2021

Difficult Crypto Considerations

Crypto is now worth $2.26 trillion. That's up 10x over the past year. The entire U.S. stock market is worth $50 trillion. The annual budget of the USA is $4 trillion. These are big, big numbers. Global numbers. Numbers that can crash huge economies.

I know the take of crypto optimists: Crypto will replace currency, and soon we'll skip to the market and pay in our favored crypto and the dollar will just magically disappear...taxes, the gov, who cares when inflation is out of control. Blah. Blah. Blah. But I don't buy this reality. It's too clean. What is a more realistic take? Or even a pessimistic take? Because I see some problems ahead.

  1. If crypto continues to grow at the same rate as it did in these past 12 months, then it will reach a value of $20+ trillion. Where does all that investment come from if not the stock market? If $10 trillion is diverted into crypto, would that cause the stock market to crash?
  2. The Department of National Intelligence (aka US spy agencies) recently released a report stating that digital currencies are a threat to fiat. What will the U.S. Gov do to protect the Dollar? And when?
  3. What would society look like if fiat failed? Massive inflation...and then what, people who didn't buy the right crypto are destitute? How would fiat failing actually play out?
  4. Post-Covid 19, it's a return to the climate crisis. There will be more wildfires. More extreme weather events. And crypto mining requires a large amount of energy. Do we really need any proof-of-work coins? In other words, how does Bitcoin fail...is it like Myspace, Netscape, or the horse-drawn carriage? What does Bitcoin failing look like? Does it drag alts down, too?
  5. What if China bans crypto mining or crypto entirely now that it has its own digital Yuan?
  6. What are some other Bitcoin bubble poppers?
  7. Is there a way to justify Dogecoin's value right now other than as a bubble indicator?
  8. What if Tesla/Elon Musk fall out of favor? How does that impact crypto? What might make crypto toxic to the masses?

No comments:

Post a Comment