What has cryptocurrency actually achieved?

My answer to this question, prior to reading a recent opinion piece in Varsity arguing in favour of cryptocurrencies, was “nothing”. After reading the piece, my view was unchanged, but perhaps I’m being unfair. After all, earning $14 billion dollars for scammers and using more energy than a medium-sized country can hardly count as “nothing”. To be precise, my answer to “what has cryptocurrency actually achieved?” is “nothing good”.

I don’t want to just make fun of cryptocurrency and NFTs in this article (well, actually I do, but let’s pretend I don’t), but in contrast to the as-yet-unrealised fantasies of Web3 and “crypto cities”, I’d like to briefly mention something that actually happened. In a Congressional hearing in December 2021, Brad Sherman jokingly referred to a hypothetical “Mongoose Coin” in a remark critical of cryptocurrency. Within hours, someone had made such a coin, and it achieved a market cap of $2 million. It’s now worth less than a hundredth of that. Where has that money gone? Who knows?

“This is not an anti-establishment movement anymore; it is the establishment”

The piece portrays cryptocurrencies as a way for ordinary people to stand up to the establishment, implying that like “hedge fund managers”, all of us should be using them to think “high risk, high reward”. The problem is that this is completely backwards. This is not an anti-establishment movement anymore; it is the establishment. Venture capital firms and trading firms in Wall Street and Silicon Valley are rapidly embracing cryptocurrency. Hedge fund managers are using cryptocurrencies to think “high risk, high reward”; that does not mean that normal people should too.

The public (who buy cryptocurrency using their life savings, not their firm’s capital) are having cryptocurrency marketed to them like never before, by celebrity after celebrity. While British regulators have cracked down on misleading adverts, Americans haven’t been so lucky, with numerous cryptocurrency adverts at the 2022 Super Bowl. People who have never traded on the stock market are spending thousands on cryptocurrency, with predictable consequences. Googling “life savings cryptocurrency” brings up story after story after story after story.

The article refers to the signal that “opposition to crypto from governments and wider society” sends. Firstly, I would say that it’s rather strange to claim that something being opposed by the majority of the population and every major country in the world is an argument in favour of it. Secondly, I would point out that most democracies are not hugely opposed to cryptocurrencies, at least not compared to the views of the public; while the mayor of New York City takes his first pay cheque in Bitcoin and MPs talk about “the queen’s head [leaving] the coin and going on the blockchain”, a plurality of Brits support banning cryptocurrency to combat climate change (perhaps motivated by stories like this one of a crypto-mining firm buying a coal plant due to be closed).

The main thrust of the article involves a juxtaposition of problems that the West has apparently failed to solve, with some proposals for the uses of cryptocurrency that might charitably be called ambitious. Taking down Big Tech! A universal basic income! Local democracy! The problem is not just that none of these have been achieved with cryptocurrency at all (as far as I can tell, the biggest achievement of DAOs (decentralised autonomous organisations, i.e. an organisation with no central leadership) has been to raise $40 million to try to buy a physical copy of the US constitution, fail, and then lose half of the refund money on transaction fees), but that an obsession with new technologies blinds us to making progress, well, normally.

In contrast to the unrealised ambitions of cryptocurrency, did you know that Wales is offering a basic income to care leavers? That the British government wants to introduce “street votes”, giving people the chance to decide on housing projects in their neighbourhood? That Google was fined over £2 billion by the EU’s highest court?

The article concludes by essentially arguing that although the author apparently is opposed to cryptocurrency, we should embrace it anyway to… stick it to governments? Make ourselves take more risks? Change our mindset? This idea of cryptocurrency as metaphor is a rather odd way to finish the article, and my response is:

“An obsession with new technologies blinds us to making progress, well, normally”

Just stop. Complaining about scams, memes, ape pictures, and Elon Musk isn’t focusing on style over substance – all of that is the substance. Don’t embrace cryptocurrency. Don’t embrace an industry that pollutes our world and has a quarter of its users involved in illegal activity. Don’t support hawking a coin based on a joke based on a different coin based on a joke to people on the Tube. Don’t call a system where prices regularly crash by 10% or more (particularly whenever Elon Musk tweets), and people gain and lose hundreds of thousands on a single JPEG, a more stable alternative to gold. Don’t join the media that report uncritically on cryptocurrency schemes that turn out to be scams. Just stop.

I’m not saying that cryptocurrency will never achieve anything good, considering all the money poured into the industry. But instead of wild dreams, we need to live in the real world. In September 2021, El Salvador became the first (and so far, only) country to accept Bitcoin as legal tender, despite public protests and opposition from the IMF. The impoverished country has spent millions on the cryptocurrency, and announced grand plans for a “Bitcoin city” at the base of a volcano. In November, the currency hit a record high of over $67 000.

Two months later, its price had almost halved.