The Questioning of Cryptocurrency’s Purpose
As FTX executives testify to the sheer magnitude of ex-boss Sam Bankman-Fried’s seismic crypto fraud during his trial, some can’t help but wonder what legitimate purpose the industry can ever actually serve.
“Crypto can officially be cast aside as a solution in search of a problem.” – Adam Lashinsky
In an opinion piece for the Wall Street Journal on Wednesday, contributing columnist Adam Lashinsky raised doubts about the true purpose of cryptocurrencies.
Different Perspectives on Cryptocurrencies
Data from Statista shows that the share of the United States population that has owned or used cryptocurrencies is 16% as of 2023, which is 14 years after Bitcoin first went live. That figure is far higher in developing countries like Nigeria (47%), Turkey (47%), and Argentina (26%), however, where crypto represents a unique investment opportunity and an escape from the devaluation of local fiat currencies.
Billionaire investors including Paul Tudor Jones and Bill Miller have likened Bitcoin to a form of “digital gold,” that can act as an inflation hedge due to its fixed supply cap of 21 million coins. Even Blackrock CEO Larry Fink – a former crypto skeptic – claimed that crypto is “digitizing gold” earlier this year, shortly after his fund filed to launch a spot Bitcoin ETF in the United States.
While Bitcoin has historically traded alongside the stock market in practice, it has had periods during which it strongly correlated to gold this year.
“Cryptocurrencies have no inherent value, no matter what their promoters insisted.” – Adam Lashinsky
Lashinsky dismissed the “digital gold” narrative altogether, declaring that cryptocurrencies “have no inherent value, no matter what their promoters insisted.” His claim echoes that of numerous central banks including the Bank of Canada and Bank of England, which say Bitcoin’s volatility prevents it from being an inflation hedge, and that investors should be prepared to lose everything.
In 2022, European Central Bank chief Christine Lagarde said cryptocurrencies are “worth nothing.” Another proposed benefit for cryptos includes cheaper cross-border remittances – another promise Lashinsky claims has fallen flat. In 2021, research showed that less than 1% of global remittance volume took place with digital currency.
“Crypto, which exists only in the digital ether, was a made-up concept from its inception. After you switch off your computer or phone, you can’t even look at it.” – Adam Lashinsky
Lashinsky concluded that cryptocurrencies are a “made-up concept” and lack tangible value. Despite the various perspectives on cryptocurrencies, concerns about their purpose and value continue to exist.
