Confessions Of A Crypto Skeptic

I have been a bit of a cryptocurrency skeptic for a long time. The are different reasons why I am one. Before I get into the reasons, I must clarify that you can make money in crypto, as a lot of people have been doing of late. But, that is a different matter.

The primary reason why I am not a big fan is that I do not like purely technology solutions that try to resolve problems that intersect with social behaviour. Large systems rely on consensus that needs to be reached both at the protocol/technology level and at the social level. You cannot overlook the need for social consensus by designing an elegant one at the protocol/technology level. This kind of utopia is often exhibited by governments in recent times. It does not get any less flawed when others do it.

The second reason is that quite a lot of the people I have listened to and read in crypto have a flawed understanding of basic economics, particularly macro economics. For them, anything fiat is an evil, while being blissfully unaware of the fact that systems that the entire world agrees to work with will always have flaws. Any system that aims to get to that scale will inherit the same number of flaws because of the same scale. There are no perfect systems at scale.

Lastly, cryptocurrencies that have no assets backing them are always going to be too volatile to be used as medium of exchange at scale. Their basic function is of a speculative asset that relies on a large number of people agreeing to the value of the CPU cycles spent in creating it. That it does not create anything tangible creates an over-reliance on the consensus.

On the flip side, I am quite intrigued by NFTs, because they have some kind of an asset backing them. I do think there is a much saner future to be explored where there is at least some physical asset somewhere justifying the value of a token. Even the idea of tokenizing your attention/contributions is something that makes a lot of sense to me.

Never mind.