Crypto will always be a transactional adjunct to both reserve and non-reserve fiat
- FTX boss Sam Bankman-Fried believes bitcoin has no future as a payments network, because its 'proof of work' system means it can't scale up
By Zahra Tayeb - BusinessInsider -
THIS YOUNG FELLOW IS PRECISELY RIGHT FOR CURRENT AND ANCIENT ECONOMIC REASONS!
By: Professor Gilbert Morris:
This should serve as a cold shower for crypto-evangelists who have deluded themselves into thinking that crypto-money can defy the laws of supply and demand, volatility versus stability or even raise the dead…if you listen to their ignorant blatherings!
The fiat of fiats is not because it’s fiat, but because it’s legal tender and stable.
You may ascertain at type of person who sits at the back of the class without listening: because they’re the ones who compare possibilities at the margins to events at the centre-scale. Such persons respond by saying ‘well, the US dollar fluctuates…’, as if they can’t grasp the difference of a legal tender currency, that fluctuates within a band in a system that is global, compared to narrowly distributed crypto-money, fluctuating wildly in value…driven by a few “crypto-whales”, in a niche transactional vortex.
When one explains these basic, obvious points, crypto-dolts launch into incessant crypto-barking about how people - even Warren Buffett - just doesn’t understand what they understand!
Today, I found just how delusional they are, because even as this young fellow - from FTX - expressed views held by Mark Cuban, Elon Musk and Vitalik Buterin (cofounder of Ethereum) and Warren Buffet, crypto-Talibans can be heard dismissing him; suggesting that he needs to read some article they know of to gain perspective on a product he dominates!
This is their generalised reaction to statements from a person who is a market-maker for crypto, and sits at one of the world’s largest transactional nexus between crypto and fiat and transacts nearly 100 times their country’s GDP!
To the thinking person, the least interesting thing about crypto is it’s price, which is driven by a “beggar-thy-neighbour” model. The most interesting thing is the technology substrata, blockchain, where the true transactional revolution will emerge.
Distributed ledgers running as blockchain ir holochains actually reflect the ancient jurisprudence of Solon (630-560BCE), the great law giver: in that, at last - also reflecting the notion of the commonwealth of humankind advanced by Nicolas of Cusa 1401-1464).
Blockchain in its basic formulation can remake human civilisation.
This is the reason young techs in The Bahamas must grow out of the fat delusion that The Bahamas will be a “crypto-centre”: rather it’s future - if we have the resolve to innovate at scale at the pace of the market - will be in digital asset custody; built on the substrate of distributed ledgers. That means all digital assets, including NFTs, Tokens of every sort, NK contracts - and the holy grail - interactive and interoperable smart contracts will be the trillion-dollar opportunity for The Bahamas now and in the foreseeable near-future.
Crypto will always be a transactional adjunct to both reserve and non-reserve fiat and any first year economics student or statistician can witness that crypto has lost its oppositional trajectory and basically “aligned” with conventional currencies/money and does not now move opposite to it as an alternative should.
Crypto is also not like Gold; as gold is a commodity and possesses inherent or intrinsic value as a conductor of electricity for instance; necessary for advanced electronics such as both this mobile I’m using and this airplane in which I am traversing the heavens.
It has a use function and value inherent to what it is. Crypto does not.
That does not mean crypto is useless: it provides a niche payments channel and more importantly - something which most economists miss - a “savings enclave”, which has been missing outside high savings economies such as Japan. That is, crypto - as a proxy for fiat - operates like a zero interest, ‘proxy savings bond’, with the widest range of yield possibilities for cash-outs because of its volatility; driven by its frenetic value model.
It will play this double proxy role indefinitely, but will never replace fiat; although, it’s flexibility will instigate the rise of CBDC with hybrid Stable Coin features, which will lead the the true and necessary revolution: the destruction of conventional banks!
