Andreesen talked about this in his Rogan appearance. The banks and gov brought the hammer down on crypto because it was a legitimate threat to the banking cabal which runs the American Empire.
https://fortune.com/2025/01/22/donald-trump-net-worth-memeco...
Which leads me to believe that the only thing that could be honestly said is that a crypto is purely about winners and suckers and timing.
But I'm convinced most people that buy memecoins like that are thinking that there's other suckers that will buy it and make the price go up.
I don't really give this argument much credence any more. If the value of, say, gold or diamonds were to drop their practical-use-floor-value, they'd be valued at probably less than 1% (maybe much less) of current value. I mean, how much gold is actually consumed by industry? And we even have industrial diamonds now.
A friend argued to me that crypto is "A Terrible Thing" because its just used to fuel the (illegal) narcotics industry. At this point, I'm doubting that too - the market cap of all crpyto, and the value being transacted e.g. daily volume, has increased massively recently. Are we to believe that narcotics have caused that? I can't imagine so - more likely to me it's around 90-99% speculation which, you might well argue, is "Another Terrible Thing."
It’s like if you’re betting on a religion, Christianity is more likely to last than Scientology. They might both be equally made up, but one has demonstrated staying power.
The UK government has consistently honoured debt for longer then the US has existed, for example.
Gold, OTOH, is fungible. You can melt it, mold it into different shapes bars, resell it, etc.
If you buy sophisticated golden jewelry, you also pay ton for work that nobody else may appreciate. Sure you can get it smelted into something else, but you burn most of the original value, and some more on the change itself.
My general argument against this is that Ransomware _predates_ Crypto.
There's also the whole Regan airlifted Iran literal USD for helping him win a presidential election so you don't need crypto for scummy behavior.
That's a good thing, though.
Jokes aside, as a person who loves crypto technologically and agrees with the more cipherpunk roots of bitcoin, I have not seen anyone serious use crypto for anything other than drugs or small transactions, just for the sake of it. People usually just seems to hoard the stuff, which is incredibly stupid since the main value proposition of crypto is being able to transact it. I almost respect the people buying drugs with it more, since they at least use cryptocurrency, rather than just speculating in its value to fuel their gambling addiction.
Yep, that'd be me too. What gets my blood pressure rising is the sheer amount of coins & tokens available now all of which, bar perhaps a tiny fraction, seem to have no value proposition other than "number go up". To me, NFTs are the nadir of this concept. I struggle to imagine a legitimate use case for any crypto that doesn't involve rapid, frictionless transacting.
For example, there are a couple of fantastic services, like "Cauldron DEX" or "BCHBull" (no affiliation) - smart contracts which allow for trustless swapping of tokens. The concept is genius and the execution here seems very good (to me, non cryptographer) but, again, what can I do with these tokens or coins I've traded except trade them later for some other token or coin?
BCHBull seems to allow exposure to commodities and some fiat currencies - that makes it comparable I suppose to actual currency or commodity speculation which has been going on for centuries. One might still argue "what can I do with all this gold except trade it later for oil?" but, well, that seems to be a weaker criticism.
Let's go back to selling Bayer Heroin™ at pharmacies, with sensible regulations. That would better position us to minimize narcotic use over the long term, while also making it safer, and defunding the cartels while we're at it. In the meantime, if someone is going to do drugs, I'm all for them using cryptocurrency to make the process as safe as it can be given the circumstances.
[0] indicates there's a demand of about 5000 tonnes of gold per year, with about 560 tonnes going into technology and electronics (the vast majority still going to jewellery). The total amount of gold in the world is about 212.500 tonnes according to [1], which is a cube of only 22x22 meters. [2] says about 3600 tonnes are mined per year and about 1200 tonnes is recycled/reused.
[0] https://www.gold.org/goldhub/research/gold-demand-trends/gol...
[1] https://www.gold.org/goldhub/data/how-much-gold
[2] https://www.gold.org/goldhub/research/gold-demand-trends/gol...
The floor value of physical commodities with significant storage costs is negative.
The market is aware of these possibilities and these risks are generally recognized as being embedded in asset prices as premiums.
All money has always been about perception, whether we used paper, shiny rocks, or sea shells as money, it’s always been about perception. Is it real or counterfeit, do you trust the person you’re transacting with, are enough people you know using it, and will people with weapons show up to protect your money if someone else tries to steal it?
The “people with weapons” part turns out to be a key component. The novel thing about crypto is that you are less reliant on the “people with weapons” to protect you and tell you what you’re allowed to do with your money, and more reliant on the “people with encryption”.
Fiat is backed by tax base. US has more assets than debt. Additionally US is the largest economy in the world, how much would the right to tax it be worth? A lot.
It's not at all just perception and influence as you claim.
[1] https://ourworldindata.org/grapher/gdp-maddison-project-data...
https://data.worldbank.org/indicator/NY.GDP.MKTP.CD
Any other official sources would tell you that US is the largest economy in the world by GDP, which is the most commonly accepted metric.
The general form of this is, it's backed by something that will accept it as payment. But then the same is true of non-fiat currencies.
The value of a currency is simply, what can you get when you spend it?
Trump is the largest meme on this planet.
What should be the fair value of his fan coin?
A new fiat currency without a state sponsor is fragile by comparison. Always will be.
The same is true for crypto. It's fungible, private, and limited in supply. It's also independent of governments although they are doing their level best to correct that.
Bitcoin has no intrinsic value. It’s entirely belief.
That’s not a bad thing. MLMs can be very profitable, some turn into multi-generational institutions of faith.
I own bitcoin because it’s like buying a share of the Mormon church early on. Absolutely, do it! But comparing it with gold? Come on, be real.
The same is not generally true for crypto, perhaps in El Salvador they really take crypto to settle taxes but in any other country crypto only has value because of speculators.
Really? Can you point us, or perhaps just me, to something that explains that and which countries this applies to? I think that I'd have a hard time paying the Norwegian tax authorities with gold or silver. In fact even paying them in cash would be difficult.
Gladly https://www.efginternational.com/us/insights/2021/gold-and-b...
>I think that I'd have a hard time paying the Norwegian tax authorities with gold or silver.
This might be even true since Norway is not in EU but I would be surprised if Norwegian banking had been that different from Basel system.
To exploit this chance for quote Terry Pratchett, on a book that does happen to be about currency and banking:
> ‘The world is full of things worth more than gold. But we dig the damn stuff up and then bury it in a different hole. Where’s the sense in that? What are we, magpies? Is it all about the gleam? Good heavens, potatoes are worth more than gold!’
> ‘Surely not!’
> ‘If you were shipwrecked on a desert island, what would you prefer, a bag of potatoes or a bag of gold?’
> ‘Yes, but a desert island isn’t [the city of] Ankh-Morpork!’
> ‘And that proves gold is only valuable because we agree it is, right? It’s just a dream. But a potato is always worth a potato, anywhere. A knob of butter and a pinch of salt and you’ve got a meal, anywhere. Bury gold in the ground and you’ll be worrying about thieves for ever. Bury a potato and in due season you could be looking at a dividend of a thousand per cent.’
-- Making Money by Terry Pratchett
For a cryptocoin to have fundamental value, someone must be willing to accept it as payment. The only entities willing to do so currently are criminal enterprises and perhaps the El Salvadoran government (to pay taxes). All the other uses (like cross-border payments) rely on speculators on both ends providing liquidity for the exchange to fiat currency.
Suppose the price of gold is 80% perception of value and 20% utility for making electronics etc. Then if you buy it, 80% of what you buy is perception of value. You could get the same result by buying 80% Bitcoin and 20% commodity rock salt. Is someone who buys the latter any more of a sucker? What about somebody who then decides to divest the rock salt because it has a below-market rate of return when they have no direct use for it?
Even the scarcity is artificial, and based something between a contract and a gentleman's agreement, not any physical reality.
That is, the bitcoin software can be changed if enough people want to, to make more of it. And you can create infinite copies of bitcoin software and call it bitcoin or something else.
That's simply not true for the scarcity of gold.
Finally, insofar as there are uses for the blockchain, the ostensible finite volume of bitcoin has no bearing on anything, as you don't need 'one of 21 million bitcoin' for its blockchain functionality, you can use 0.1 or 0.0001 bitcoin. It's infinitely divisible, and a small unit of bitcoin can get you blockchain functionality.
And yet I've begun to put 5% of my monthly savings into it, as it seems to have become the long-term speculative asset. It doesn't seem to be going anywhere. But it really appears like an utterly ridiculous proposition, a self-fulling prophecy.
It's just that none of the blockchains have yet managed to situate themselves such that people are likely to value their effects. Instead they're focusing on scarcity, which is kind of silly because all of the competition is equally empowered to create artificial scarcities. I think they'll figure it out eventually.
Yes.
Gold conducts electricity.
Bitcoin has no physically useful properties. However, I will admit a public ledger is actually probably very good for the USA so we can see all the grifting easily.
Just as not all crypto is equal, the Zimbabwean dollar isn't remotely like the Swiss frank, just as bitcoin isn't remotely like hawktua.
Of course not. I don't know the laws of the country you live in, but in the US, the dollar is always acceptable as the payment of a court judgement and for the payment of taxes. That's not perception of value, that's value.
All money is just IOUs, but getting an IOU from your landlord is different than getting an IOU from a stranger. You will have to pay your landlord in the future, or the landlord will send someone to physically throw you into the streets, and might be given license from the government to just take arbitrary possessions from you. An IOU from the landlord will automatically offset that.
When you get IOUs from entities you don't have a ongoing financial relationship with, you need buyers who either 1) have an ongoing relationship with or are willing and able to transact with that entity, or 2) trust that they can find someone who has a relationship with that entity who will buy the IOU.
1) is value, 2) is the perception of value. Crypto has 3), in which there is no entity issuing or accepting the currency against a real debt (such as taxes or legal liabilities, which if not paid result in men in uniform hitting you with sticks, chaining you up, and locking you in a room), and no place to dump the currency other than other speculators.
You can find people who believe in bitcoin, so bitcoin is liquid. But bitcoin support relies on a constant and enormous amount of marketing and lobbying, in the exact same way as "hawktwa." Crypto (thus far) only has value in that it can aid in criminal transactions (semi-privacy), and that enough wealthy people own it that they're now convincing weak governments to subsidize it. Dodging law enforcement and government handouts to the wealthy on one hand; maintaining preexisting legal obligations and paying taxes already owed on the other. Both fiat and crypto rely on government, but crypto is government subverting itself. Crypto only has value to the degree that governments allow or encourage lawbreaking and corruption. Crypto (as it is, not a hypothetically) is parasitic.
> Zimbabwean dollar isn't remotely like the Swiss frank
The Zim dollar is exactly like the Swiss franc, except it's harder to find people who pay Zim taxes and court judgements than people who pay Swiss taxes and court judgements. Just as hawktwa is exactly like bitcoin, except they lack the lobbyists, and the marketing is focused around a viral youtube clip. The big difference between the two classes is that you don't have to be convinced that government fiat is worth something, you know it is. The reach of crypto, outside of fraud and government graft (which is real value) is simply the reach of crypto marketing.
Except when your government is not trustable and you have to find a way to store and transfer value in an independent and anonymous way.
If you trust an untrustable government, you lose when they betray you. If you don't trust a trustable government, you lose when you spend years and decades hedging against their betrayal and it never comes.
It's not though. It became about that, in general, but there are crypto projects out there which don't focus on hype or valuation.
It is functional and useful to be able to move value worldwide for 10% of the energy of a credit card transaction, decentralized, at sub-second speed, with no fees, even when just moving tiny fractions of a cent.
There are a lot of maxis and bag holders trying to prevent people from figuring that out, but sooner or later a crisis will hit and everyone will remember what crypto was about in the first place.
By the way, if you thought that Trump was doing something illegal, which certainly sounds suspicious, well it isn't. This guy gives a good overview of the why https://x.com/wassielawyer/status/1881995797245600248
Anti-bribery/corruption is the concern with the coins (just as it was with his hotels in the first administration). Not the legality of the coin.
But it’s moot, this admin has decided that norms don’t constrain it and it will not allow investigations into itself. So it’s de facto legal.
What the banks have (now, due to long history) is a regularly regime where we expect the government to fix that credit when the bank gets those credit decisions wrong. In trade for that extraordinary treatment governments demand banks comply with a variety of regulations.
I’ve worked for a long time in the banking and credit space, no one I know in that industry thinks Andreeson did a credible job explaining modern banking. To knowledgeable people he came off as either fundamentally ignorant or extremely deceptive depending on your cynicism levels.
The fact we have a mechanism to create trust in trading debut is about assigning and managing risk in the payment of that debt, and transferring/holding that risk over time, which is a separate aspect to the raw creation of money concern (managing total debt loads).
As another commenter noted, anyone can create "money out of thin air". Come to my corner store and buy an apple on credit. Poof!
Credit was the original money, made out of thin air, and can be by anyone.
But, at least in the US, before the national bank acts in the 1800's, various taxing entities specified which bank notes (or other assets) they'd accept and not accept. It was basically whichever bank notes circulated the most with no/little discount, some gold/silver coins, some government bonds. Ie acceptance by a taxing entity isn't really a clear line on "is/is not" money.
Trading receivables has been going on forever, happens today, is totally legal. The corner store could sell the receivable, and many businesses to sell their receivables.
Offering someone credit in USD isn't making your own currency. The closest widespread version of that are community currencies[0], which the US doesn't seem to particularly care about -- I'm guessing because they're generally pegged to the dollar and promote local economies.
[0] https://en.wikipedia.org/wiki/List_of_community_currencies_i...
Consider how much business can be done on credit, and what constrains it. Infinite, and nothing. My corner store is not required to hold reserves against it's receivable. Apple (or a telco) is not required to hold reserves against it's receivable for a phone on credit. Their suppliers aren't required to hold reserves against credit on them. And so on all the way back to the folks digging stuff out of the ground.
If I need financing of 100 pesos for buying a house, and I go to a commercial bank which has a 10% fractional reserve requirement, they'll give me 100 pesos, 90 of which will be newly created broad money. As I buy the house, and pay the 100 pesos to the seller, the 90 newly created pesos just entered the economy.
If I go to your corner store and buy an Iphone on credit, you're not getting any new pesos right away, and neither am I. I could turn around, and sell the Iphone to someone, but again, that person will pay me with pesos that already exist in the system.
You could argue that implicitly me wanting to buy an Iphone means that someone somewhere down the line would've used a commercial bank to take a loan and hence my activity indirectly participates in broad money creation. But that doesn't mean that buying an iPhone in a corner store on credit is exactly equivalent to taking out a loan at a commercial bank when it comes to broad money creation.
The point of "money creation" is to enable economic activity. Credit does the same thing. In fact, your "money" at the bank is just a receivable from the bank. Ray Dalio has a quarter decent explanation of it here: https://youtu.be/PHe0bXAIuk0
You're right when you say that it's all debt all the way down, but you're very much wrong if you really believe that new fiat units appear in the system just because you took a loan at a non-bank entity.
EDIT: To illustrate my point a bit.
Let's assume that there are no fractional reserve banks, and only cash exists as a form of money. Only government issues cash, in total 10k USD have been issued, and the next issuance will be in 2 years.
Let's say you need 10 USD, and I have a 10 USD banknote. The banknote is debt money in the sense that it's a direct liability on the central bank balance sheet. For me it's a 10 USD worth asset.
Now we sign an agreement that you're going to pay back 11 USD in a year. I give you my banknote. Now I have exchanged one asset (a 10 USD bank note) for another asset (your promise to pay back 11 USD in a year). Depending on your character, history, and point in time between now and in a year my new asset is worth between 0 - 11 USD.
Let's assume you have stellar character, and are a well respected member of the community who always pays their bills. It's likely my new asset is now worth 10.5 USD, and someone would be willing to buy your debt from me.
By issuing a loan to you, we haven't created additional 50 cents in the system. The system only has 10k in it, and the next issuance is in 2 years. Anyone who would be willing to buy your debt from me would need to already have 10.5 USD.
Now the government decides that fractional reserve banking is pretty nifty, and is made legal. The fractional reserve requirement is set at 10%.
A neobank that has 3 USD cash (central bank liability) in their vaults approaches me and buys your debt from me by opening a 10.5 USD deposit in my name. Now the bank has a liability of 10.5 USD (my deposit), a 3 USD asset (cash), and an asset worth approximately 10.5 USD (your debt).
Congratulations, we have now all together created 7.5 USD of additional money in the system. The theoretical M2 money maximum in our system is now 100k USD. How much is actually in circulation depends on how much debt people are taking on. At the moment we're the only ones having done this, so amount of M2 money in the system is 10 007.5 USD.
I never said "fiat" - you seem to be conflating things. In my example you call out "no new fiat" (which is true) and in your example you say "more M2!"(which is true). Make a valid comparison. The best way is by comparing the total assets and liabilities in the system and the total amount of economic activity driven by those.
In the end, a receivable is a receivable. The only difference is that we've created a very neat system to trade bank receivables, and tend to call them "money". When you hear someone say "money was created" mentally translate it to "receivables were created". "M1", "M2", "fractional" etc make it all sound so sophisticated when it's just ideas from 100,000 years ago, and you and I can create receivables too.
Price instability, confiscatory and variable transaction fees, several high profile frauds -- including in a so-called "stable coin".
Crypto is its own worst enemy. Not the government.
You get none of those protections with cryptocurrency, which is exactly what scammers, criminal organizations, and financial libertarians want.
I can create money out of thin air with you, if you are willing to accept my credit worthiness.
Most of the cryptocurrency companies prove that this statement isn't entirely true though, unless I don't get it. That is, they generate cryptocurrencies out of thin air (credit) and say it has a certain value, then people pay them fiat money for those. They just generated value out of thin air and some compute cycles.
Amazing that more people don't know this. Most people will insist until their face is red that bank credit is a "loan" with equal debits and credits on both sides of the balance sheet. Wrong. The borrower's bank account goes up. And the bank's balance sheet goes up (the loan is an asset). Viola, new money.
What's amazing is that more people don't think this through. They just take the "thin air" story and that's it.
Both Alice and Bob's salaries are just credit at banks in the same system. If they sell their cars they get money from the same system. There's no way out.
The banking system's accounting trick to create money was proven by prof Richard Werner.
The limits on cash transactions are growing. To pay for something like a car you'd need a bag of papers as higher denominations to match inflation would never be printed. Cops can seize cash without much of an excuse. Customs can seize cash over 10k without much of an excuse.
A small bank can only go down if other banks don't trust them. Like SBV a couple of years ago. But their assets are taken by a bigger bank. Lehman Brothers was a rare exception and it looks like Goldman wanted them to go down for some petty reason. But the AIGs will always be bailed out.
More small banks going belly up and more bailouts are coming. The world is reducing exposure to dollar. Central banks are selling US treasuries and buying gold. The US dollar's empire is crashing down and the Western banking cartel is getting desperate. They'll try to drag the world into war or some other old trick.
Money is moved; this is the problem with your analysis, see page 19 of the infamous Bank of England's "How Money is Created" paper [1].
[1]: https://www.bankofengland.co.uk/-/media/boe/files/quarterly-...
There is no magic in banking. If you describe something and it sounds magical, a piece is missing. If you were running bank B, you'd never agree to what you described. You'd want the assets, or you'd want some kind of collateral even if you were willing to do an interbank credit, you'd limit it, you'd do all kinds of credit analysis on your bank counterparties... And what I just described is how trading of securities tends to work between banks. But even then, it's not how payments are solved...
In the end both are net zero.
So yes, as a whole the bank gives money from thin air.
Now obviously the liability will get zeroed out in the end, but in the meantime you get to keep all that accumulated sweet interest for ... uh... "managing risk"... it's a very beautiful thing!
So you have in fact created money out thin air, it's in the interest payments! You pay interest for basically "nothing!" (cough, cough, "managing risk"). And that interest does not get zeroed out! It's "pure" profit from an accounting trick.
Every bank does that. The US has more than 4,000 of them.
They've had a full, unrestricted bank licence since 2017 and have over 9.3m customers[1].
That right there is more unlikely than crypto becoming a credible threat to the banking establishment.
If you want to see a lot of dead bodies of rich people in the street, tell the rest of the world they can't have their smartphone and laptop and Xbox and Playstation.
That's a great way to get yourself killed.
Follow the money: Wall Street loves and lobbies for crypto.
The idea of 'disrupting banks' is gaslighting because it pretends that they operate within a 'free market'.
Best not to pay much attention to Andreesen though.
Of course, it was all supposedly being deposited into Deltec Bank, whose website was a Wordpress site, whose "Deputy CEO" couldn't remember the name of the country's two banking licenses, and which one Deltec held, or whether they held both.
I guess it's hard to track all of those things when you go from getting your Masters in Science at HEC Lausanne at 15, and immediately being appointed a Professor of Finance at a Lebanese university, all while running your own hedge fund, "Indepedance (sic) Weath (sic) Management" from Jacksonville FL...
Do you want interest and the conviniance and security of a real bank? Give it to a bank to look after. There are maybe some risks, but there's also risks with a bitcoin wallet or physical bullion (theft, losing it).
Do you want money now, and can pay it back later? The bank will loan it.
Are the banks in trouble? The government can regulate, and even rescue them. A run can happen, but as long as the government and banks say the money is there, who cares about conversion to a bitcoin or bullion?