I have a pretty good grasp of how the underlying technology, known as blockchain, works.1 I’ve also followed the concept since Bitcoin first popped up on the tech radar in the early 2010’s, so I also have a pretty good understanding of how the tech is applied.
But the rest of it just plain baffles me.
Why does anyone buy into what is essentially an illusion? A promise (of sorts) with absolutely nothing behind it. A pyramid scheme in which the vast majority of coin owners will lose most everything they put into it.
If you are also confused by crypto and would like a good read about just how much of a con the whole business is, I highly recommend the book “Easy Money: Cryptocurrency, Casino Capitalism, and the Golden Age of Fraud”.
It begins with this clear-eyed assessment of the concept.
You may have noticed something about cryptocurrencies: They don’t do anything. Sure, you can trade them, betting that one will rise or fall, but they aren’t used for anything productive. Cryptos aren’t tied to anything of real value, unlike shares in a company or a commodities future. They’re computer code uncorrelated with any actual asset. Even the most arcane financial products have some relation to something of use in the material world.
The authors, Ben McKenzie, an actor who started looking into crypto as something to do during the pandemic, and Jacob Silverman, a financial journalist, go on to offer a very entertaining but sobering look at the recent history of the industry and just how flimsy a platform it’s all built on.
At the moment there are lots of celebrities, politicians, and other high profile people pushing cryptocurrencies. Starting with the Conman in Chief. And, for me, the past statements and actions of those advocates is a huge red flag.
They proclaim crypto to be “the future” of money. A technology vital to the national interest. Worth the incredible amount of energy required to power the system. Something that everyone should be investing in.
What none of them will admit, however, is that putting actual money into crypto is not an investment. It’s not an “asset”. You are gambling. Placing bets on a game few people understand, with totally opaque odds, and that you can’t even watch.
But if that’s your idea of fun, go right ahead.
I, however, will continue not to get crypto.
The book link goes to the publisher’s website. I’d rather not send any business to Amazon so, if you decide to buy the book, please go somewhere else, preferably an independent bookshop.
1. If you’d like a blockchain primer using minimal techie language, with an education focus, check out this 2016 post from Audrey Watters. It’s a little dated but still a very good read.