The entire idea was to have a truly decentralized monetary system outside the control of institutions. But it so happens that almost everyone deposit them in institutions, and when a problem/hack occurs, no one can help because well… it is outside the control of institutions.
All the disadvantages without the advantages.
The advantage to the vast majority of crypto investors / holders is a high speculative return.
If BTC was still worth a fraction of a cent, (almost) no one would be investing in it for th decentralized nature.
Bitcoin copies/forks like Litecoin and Bitcoin Cash, jokes like Dogecoin and Shiba Ina, memecoins like $TRUMP are in the top 50, while innovative protocols like Chia are at rank 250 or so.
That's the thing about money and value.
Value is a social construct.
Value is not created by the underlying technology.
Value comes from collective agreement among human beings.
That's why copying a coin doesn't automatically make the copy valuable.
Fiat tends to remain stable and valuable, because it is carefully managed to that end, and is the legally sanctioned method to extinguish debt and pay taxes.
Crypto is nothing but magic beans and a bad database. If its value falls, there's nothing to stop the fall but sentiment.
It can also come from fraud, market manipulation, etc
All the disadvantages
https://fred.stlouisfed.org/series/BOGMBASE
Bitcoin is capped at 21 million.
The Dollar is expected to lose almost all value over the lifetime of a person. Warren Buffett once noted that the Dollar already lost over 90% of it's value during his lifetime. With Bitcoin, there is no such expectation.
You’ve taken the wrong lesson from this, and the fact that Warren Buffett isn’t a pauper should be your biggest clue.
This is why it’s important to invest real dollars in productive assets.
The actual issue that needs solving is that real wages haven’t been rising to match inflation for the last nearly fifty years.
The idea that an economy has a fixed amount of currency makes no sense. You want it to be available to facilitate transactions.
If the treasury could credibly say “we will only ever print 2^64 dollars”, that wouldn’t make it inflation free, just a maximum possible denominator.
Any savings beyond a few months worth of cushion should not be held in cash anyway, but in equity and debt, which support productive investments. These have yielded positive results over these timeframes. (And BTW, both US equity and US corporate debt have outperformed gold over the last century or so.)
Even if you go for risk-free treasuries: long term real rates have mostly been positive [0], while short real rates have been hovering around, but in the last decade and a half below, zero [1], granted. But these rates are determined by economy wide equilibrium processes that can't be overcome by some magic beans and a bad database.
(Note that there are some 10,000 coins with strictly limited supply. They will not ipso facto outperform the dollar.)
For new real estate, there is also basically an infinite amount that can be added to the market. Planet earth is still mostly unused.
Bitcoin Cash has no USP that could lead to it becoming the digital Gold instead of Bitcoin.
Bitcoin is a protocol.
Like TCP:
Real estate is definitely not “infinite”. Especially if you consider arable land and weather patterns.
We're obviously still in the teething stages of the technology and need some serious improvements to underlying security; and to move beyond scams and ponzi structures.
What does this mean? It’s indistinguishable from marketing chaff.
It occurs to me that the biggest recent successes in “alternative” ecosystems have absolutely nothing to do with cryptocurrencies. Mastodon comes to mind.
So deFi can help users and communities because decentralized financial systems, allow users to lend, borrow, and trade without intermediaries, enhancing financial inclusivity and reducing costs.
Web3 technologies can facilitate community-driven initiatives, e.g. regenerative finance (ReFi), which supports climate action and equitable resource allocation. Also some interesting things happening around DAOs (decentralized autonomous organizations) e.g. Venture DAOs supporting new business creation.
In general the principles behind having reduced intermediaries, and having user control and ownership of user data, together with enlightened uses of smart contract and other Web3 technologies is empowering, especially if it's put to use to solve real world problems.
I do think that it's difficult to see past the sometimes murky shenanigans and greed often on display in Web3. But I think decentralization is a paradigm shift, it's going to take some visionary entrepreneurs and technologists to continue to build out the promise but I believe that it will happen.
Trading equity/FX on centralized platforms is extraordinarily cheap. You don't save much, if anything, by going decentralized there (not to mention the fact that to enter the crypto system, you need to exchange fiat (hard to get crypto by mining these days), and Coinbase charges consumers 1.55% on average for that, so 3% for a round-trip back to fiat.)
Having control of user data is orthogonal to the technology. It's a legal matter. We could retain ownership of a tweet with a different contract. The nature of the underlying distributed database hardly matters.
The vision of crypto has failed. Instead of reducing intermediaries, it gave rise to a whole new host of intermediaries, and enormous externalities (environments, scams, hacks, crime).
It's an interesting time: we're seeing mainstream adoption of blockchain and crypto technologies at the same time that shitcoin madness is trending.
The basic concepts behind smart contracts are sound and enable efficient transactions and alternative economic systems, this is why I believe we'll increasingly see major institutions adopting it.
As far as community and user empowerment and creating alternative economic ecosystems, it will inevitably take some time to realize effective systems and usage models. I think there is huge potential, still early days.
Thanks for the healthy scepticism though, I probably need more of it!
Similarly, within a decade of the invention of the WWW, there were heaps of successful and useful sites (amazon, Bloomberg, Wired, Friendster, ...).
[1] Note that Steve Jobs, when he introduced the iPhone, did have to explain it. He carefully explained that it was an iPod, a phone, and an internet communicator, demonstrated how to unlock it, how to scroll, how to open apps, etc. But then people got it. With crypto, after 15 years "you just don't get it".
It seems if you give humans anonymous non reversible financial transaction technology the results are not all good. I think the problems are with the humans as much as the tech.
This is the most strategic defensive play the US can do, so unfortunately the case for BTC to get to a million is a valid one. It's outrageous, but missing this move will leave a lot of people even poorer, and it will happen all of a sudden. They are accumulating right now, and one day they will just set the new high price.
Why do you think so? Of course, we all hear about people who lose it all in crypto exchanges. But how would we hear about the ones who don't?
I hear stories about them and whether the con-artist got access to their digital wallet, whether they made it to a safe room in the home invasion and, of course, whether they got rights to mine the dump.
Forgot your password? All your money is gone. Hard drive crashed and no backups? All your money is gone. Accidentally installed malware? All your money is gone. Spouse or parent with all the coins died? All the money is gone. Fat-finger a value in a transaction? Lots of your money is gone.
Yes there are “solutions” to all of these problems. All of them are Rube Goldberg contraptions themselves and have their own failure modes.
The truth is hard to know. I wonder how many people lost their coins to the ether by losing their keys or sending to the wrong wallets.
Is there an example of a crypto system that is actually used for legitimate monetary transactions? Excluding money laundering and moving money offshore?
As an angel investor, I use USDC to instantly send money to companies I am investing in.
I personally don’t have an interest in a money market account, but the money market account on crypto works exactly like a money market account outside of crypto except available 24 hours a day.
I might rent in Brooklyn in future, so I might wish to be able to access the parcl account for Brooklyn and be able to offset Brooklyn rent increases by buying tokenized Brooklyn Real Estate.
The biggest lie that is told about crypto is that writing off a few thousand years of experience with money will make problems go away.
It seems like this money is pretty censorable, it's just a different group doing the censoring.