Not that I can read this paywalled article, but the ideas that the economy is Doing Great and crypto is Dead are both wishful thinking
> The density of connections between these players is nicely illustrated with a sprawling diagram in an October report by the Financial Stability Oversight Council ( https://home.treasury.gov/system/files/261/FSOC-Digital-Asse... ) , which brings together federal financial regulators.
> To historians, this litany of contagion and collapse is reminiscent of the free banking era from 1837 to 1863 when banks issued their own bank notes, fraud proliferated, and runs, suspensions of withdrawals, and panics occurred regularly. Yet while those crises routinely walloped business activity, crypto’s has largely passed the economy by.
I'd also suggest looking at https://www.fdic.gov/about/history/timeline/1850-1899.html
The "free banking period" ( https://link.springer.com/chapter/10.1057/9781137361219_2 ) ended with the passage of the National Bank Act - https://www.occ.treas.gov/about/who-we-are/history/founding-...
Crypto is trying to reestablish the banking system of the 1800s with all the fraud, bank runs, banks creating their own currency, and the like... and then realizing why all the regulations that are in place are in place.
What it's really doing is proving that those regulations aren't necessary, because it's possible to have a crypto crash without affecting the general economy.
Because the benefit of those regulations is so that ordinary people can have a safe place to keep their money. But that works even if it applies only to savings banks and not to crypto, because that gives risk-averse people the safe place to hold their deposits even while a fast-moving unregulated system exists alongside it.
Which gives the best of both worlds.
This is only true because the only people (to within a rounding error) using cryptocurrencies are speculators, scam artists, and their victims.
If cryptocurrency ever became what its proponents suggest—a mainstream currency in general use—then these crashes would affect regular people and the general economy just as the ones mentioned in the 1800s did.
Meanwhile it could enable technologies like P2P social media where distributed hosts get paid in crypto for providing network services without needing a centralized payments intermediary and various other things.
You appear to be stating that cryptocurrencies could hypothetically exist and Do Things beyond fraud and speculation without many mainstream people using or caring about them.
While this is (again, hypothetically) true, I don't think it refutes my claim that the only reason cryptocurrency crashes don't affect the general economy is because most people don't use them (and the few uses they do have are almost entirely negatives). Indeed; I think what it does is posit a world where most people don't use cryptocurrencies...and crashes could still affect the general economy, through the medium of the (hypothetical) non-scammy, non-speculative uses of cryptocurrencies. Because unless you're proposing a system where people just keep trading around the same tokens, which have absolutely no ability to pay rent, buy food, or otherwise improve their lives outside of these very niche "P2P social media" areas, you're not talking about a currency. You're talking about some kind of a "social media score".
There are a lot of people who have put a few thousand dollars that they couldn't really afford to lose on the promise that this was the future of money and that they needed to get in on the ground level.
https://www.theguardian.com/technology/2022/nov/19/the-money...
> ‘A lot of us feel cheated’ William, a construction site manager from California, was woken by a text from friends about potential trouble at FTX in the early hours of 8 November. At the time, the 40-year-old had about $85,000 of fiat currencies on the exchange, plus three bitcoins worth about $55,000 and about $10k in other altcoins - a significant chunk of his assets.
Bitcoin and other crypto currencies are not the domain of the millionaires and billionaires. Yes, these people are speculators - but they're ordinary people with incomes much closer to the median than likely you or I.
That doesn't make them not speculators. Speculation comes with risk.
If schools are teaching ordinary people to put a significant fraction of their net worth into speculative investments, the solution is better schools, not banning things.
If there were a real government demanding payment of taxes in bitcoin, then it would have value. Until then, it does not. El Salvador does not count because El Salvador is inconsequential, and either way they have no army. Also, it's obviously a political stunt by their young and hip president.