The Top Ten Best and Worst Things About Crypto in No Particular Order
Here is a top ten list of the best and worst things about cryptocurrency. The idea of this list is to express what I consider to be some amazing benefits and glaring sticking points.
The list has a dash of humor because life is too short not to crack jokes, but the underlying message is none-the-less honest (from my perspective at least).
|1||Trustless algorithm-based blockchains and smart contracts have the potential to change the world in a number of interesting ways (elections, financial contracts, insurance contracts, medical records, social benefit distribution, tax systems, and more could be improved with the technology)||The technologies behind crypto are rarely used in place of existing technologies in practice, perhaps in part due to the fact that trust and oversight are important aspects of human relations, so far the technology has facilitated very little world changing and a lot of speculative gambling; the reality is while some of these technologies are revolutionary, many of the value tokens native to the systems have no actual use-cases beyond transacting (meaning they could be replaced, but the underlying open source technology kept)|
|2||Crypto is taxed as capital gains in the United States (this is better than it being taxed as ordinary income if you like keeping your money)||The impossibly confusing tax reporting makes life difficult for crypto traders and users, as one owes taxes when they use crypto or trade it for other coins; it is likely many will end up owing fees and back taxes|
|3||Instant trading on exchanges is unique to cryptocurrency||Exchanges are hot targets for hackers and lack features like assistance with tax reporting|
|4||There is no central third party, you can be your own bank||You have no fraud protection of any sort, nor any of the useful features of banks, not everyone wants to be their own bank to say the least|
|5||States can’t control the value of decentralized cryptocurrencies via monetary or fiscal policy||Value comes from low volume online global exchanges leading to wildly unstable assets, few countries have currencies as unstable as the average crypto|
|6||Anyone can create a cryptocurrency||While some altruistic smart people sometimes create cryptocurrencies (like Vitalik and Ethereum or Satoshi and Bitcoin), many cryptos and crypto products are created by scammers (like Bitconnect) and there is little stopping manipulators (like pump and dump groups) from participating on exchanges|
|7||The concept of decentralized currency is potentially revolutionary and can lift up the 99%; it is a democratic system at its core||In practice money and mining power gets funneled to the 1%, as they have the assets and tech to facilitate the transfer of wealth (just like in any other market, if not more-so); if you look at the lists of richest wallets, you can see the minority (likely and logically exchanges, miners, developers, hedge fund traders, a few whales, etc) increasingly own the majority of crypto wealth… if Bitcoin goes to $50k, the above group will potentially be some of the richest people on earth (that is fine on one level, but a little absurd on another)|
|8||You can send money across the world quickly and for little cost||Crypto prices can change wildly in a short amount of time, the end result is it is at times cheaper to send a fiat currency (and while you could send a stable coin, you have to switch it back to a crypto and then back to dollars, which takes time and costs fees)|
|9||A volatile 24/7 global markets mean there is never a dull moment and always money to be made||People need to do things like sleep, cryptos can experience corrections while you are sleeping, this forces one to automate trading or simply deal with the ramifications; further, most people are bad traders and do not benefit from the constant volatility|
|10||Crypto is exciting and there is a high demand; that demand creates value, we potentially haven’t seen anything yet in terms of value (meaning those who buy and HODL now could potentially do rather well in the future)||The crypto market tends to produce a sort of irrational exuberance that leads to constant bubble and bust cycles, it is highly speculative due to the lack of agreed on ways to value cryptos; some cryptos get absurd valuations in respect to their underlying technologies, use values, transaction data, and supply (AKA fundamentals)… this hints at future instability and more bubbling and busting, which points toward more gambling and wealth consolidation and less revolution; there is a good chance the biggest fractal is yet to come, which means that while a lucky minority will time their exits, many are likely to buy high or HODL up to the top and back down again (as this is what happened at $20k, so why not next time?)|
Bottomline: Cryptocurrencies are virtual value tokens that sit on-top of theoretically revolutionary technologies that have the potential to change the world. Smart contracts, peer-to-peer democratic and decentralized one-world global payment systems, and tamper-proof records are clearly good things.
Yet, somehow, all of that seems to have developed into a 24/7 global casino that is pulling a reverse robin hood. It has created a space which makes life easier for some of the worst among us and harder for many of those who needed the most help. To be fair, some get lucky and some manage their wealth well and benefit from crypto; it is both good and bad, not just bad.
It is impressive how something so amazing on one level immediately opened up so many negative doors on another level, except it isn’t. Pure democracy and pure free markets lead to the human condition unrestrained, and thus we get excesses of human emotions like Greed, Irrational Exuberance, and Fear steering the ship.
I will say though, the technologies that were created are technologies that the best among us can build on, and the unchecked madness of humans is something that can and has in practice been checked and balanced (if not by a central force, then at least by the democracy as it matures).
In other words, of my best and worst list, the best is here to stay and arose from human logic, and the worst can likely be curbed and restrained, as it arose from human emotion. There is no real need to restrain human logic, but next time someone builds a revolutionary system they may want to consider using their super-egos to program in some checks on everyone’s egos and ids.
I’m not sure exactly what Satoshi’s vision was, but if it was peer-to-peer payment system that would protect the masses if ever the 2007 financial collapse happened again… there is still room to go back to the drawing board. I mean, crypto has bubbled and busted more in a decade than the stock market did in a century, and I’d argue there is far more mucking with the price than there is mucking with the dollar. Granted, Bitcoin doesn’t suffer from inflation in general, but the rapid inflation and deflation presents its own set of problems (even more true for other cryptos, but also true for Bitcoin).