One article of interest lists 22 cryptocurrencies that blossomed and exploded but also showed the sales pitches worthy of the sleaziest used car salesman or Professor Harold Hill. Despite the claims (unfounded) of great wealth (without taxes) from trading in cryptocurrencies there appears to be a path of destruction trailing behind.
Cryptos confound everyone except the handful of slick salespeople who think them up for the rest of us to swallow. Any student of economics has heard (whether they paid attention or not) about the tulip trade in Holland way back when. Cryptocurrency is essentially no different. It might be possible to think of cryptocurrency as similar to a commodity or barter.
Apparently, somehow “mining” cryptocurrencies is expensive by causing the extraordinary use of electricity to run your computer. Each currency would have its own price and ante that only gets you in the game. And like any other commodity, precious or not like corn or gold or stock, what do I get in return? That a currency is tied with dollars to produce seems to anchor it to dollars for redemption suggests cryptocurrency is no different than any other stuff you buy or sell.
Cryptocurrencies in the short term are also sold as a way to avoid governments’ financial interference. For the most part, I kind of like the government interfering with the financial world. Anyone know anyone who went underwater back in ’08? Somebody has to keep these guys and girls honest. If government keeps the banks and the brokers more honest, I’ll take it. Better than losing my shirt.
It would appear that a person could accumulate all the banana peels they want, call them invaluable, and calculate their wealth (in U.S. dollars, of course, which seems ironic). I don’t know that the IRS cares. It is this trade-in thing, wanting to sell off your valuable peels for something the power company will accept that creates the enormous flaw in cryptocurrencies.
While it might seem silly to think that people would trade tulips or hay or banana chips, all currency has the same problem. It must be transferable, recognizable, and stable. At one level greenbacks are no different than potato chips. But, cash is “legal tender” for a reason. It is beyond my pay scale to know whether the government might accept payment in some form other than cash (one presumes the IRS has a practical reason for accepting checks) like paying your taxes by giving up your car. (If you had a refund would you get back one tire?) Our currency has an accepted value. We understand what $15 means and its use and expect the same accepted value in return. There is something very intrinsic about folding money and shiny quarters that the mere idea of “fake” currency cannot have.
Our greed defeats our common sense. We want to corner the good life so let’s send the boys off to war, for example, to have cheap oil. Are we equally prepared to do battle for supremacy of the crypto-world economy? We chide the European countries for fighting wars over religion or kingdoms yet we put up our dukes at the drop of a hat if we can convince ourselves that the hat is valuable. Goodness and light mean nothing compared to relative worth and wealth.
Good luck making your charitable donations with cryptocurrency. Or making a donation to the homeless center. Or paying the mowing crew. I am a throwback-greenback kind of guy obviously. I understand that the world invests in the U.S. because our money is sound and our guarantee pretty much better than the others. It would seem wise to keep it that way.
Heading into 2019 I will be interested in seeing if cryptos regain their mysticism and hype. Cryptocurrency seems to be that perfect sort of siren that we need when everything else is in doubt.
Charles Moore lives in Johnson City.