There is a moral argument against crypto

Three weeks ago I used this column to explain why I still don't take crypto seriously, although many supposedly very serious and adult investors get involved. Since then, the market has collapsed by about 30 percent, with many so -called “stable coins” as anything but proven. The value of Bitcoin has broken up by more than half since its highest stands last year; Dogecoin by almost 90 percent.

A reader wrote to me over the weekend to propose a column idea: "This week I thought you should write a massive 'I told you' article :)".

The truth is that it would be a little incorrect to say that I actually told them. To argue that crypto should not be taken seriously is not the same as to argue that it is about to be crashed, and in a market that is driven by little more than mere faith - and whatever Elon Musk tweeted - is an attempt to predict future prices.

It would also be a little incorrect to do as if I are not taking a certain level of satisfaction of wealthy crypto brothers that seem particularly sensitive at the moment, or from crypto exchanges that brag about their shareholders as "greedy" they are missing their quarterly sales goals of $ 1.5 billion.

But I am not enjoying seeing small investors in the middle of a cost of living that loses large parts of their money to a market that was assured that they would only rise, or "stable" coins, which they were told as they were as reliable as the real currencies to which they were coupled. Not to see lists with numbers of suicide hotlines, which are attached to the top in the Reddit forums.

therefore it seems more appropriate to use the youngest market crash as an opportunity to put the moral argument against crypto. Because it is not just that we should not treat it as a serious asset class; We also have to stop imagining that everything is just a bit harmless fun.

I recently interviewed Jonathan Haidt, a social psychologist with a focus on morality. I took the opportunity to ask if he had bought crypto. To my surprise, the answer was - he had put more than 1 percent of his money in.

"I realize that it could go to zero, [but] it could rise several times.. And if I don't buy myself at all, I would feel bad if it went so far up and I missed it," he told me. I have heard variations of it from a number of people, and at first glance, such a "fear of missing something" seems sensible.

But the crypto market is a "negative game game". This means that it is not just a "zero sum" - that is, the loss of one is the win of the other - but that it also causes "negative external effects" to use the market jargon. And the problem is that most people who play this game don't even realize that they are.

The most important environmental argument against crypto is that the CO2 footprint, which is created by the “mining” of Bitcoin and other coins, exceeds that of * medium-sized economy *. According to an analysis of the New York Times, Bitcoin Mining consumes 0.5 percent of the entire stream in the world. This is seven times more than what is used by Google's global activities.

There is also a growing electronic waste problem: A recently appreciated by researchers from the study carried out and the Dutch central bank that the waste that arises in every single Bitcoin transaction-there are usually about 300,000 a day-that of two iPhones corresponds to the short lifespan of the mining hardware. They make mathematics, as they say.

The social damage is more difficult to measure, but we can get an idea. This crash was devastating for anyone who had put a lot of money in Luna that had collapsed almost to zero last week; Social media is full of accounts of Suicide attempts and financial ruin. Then there are the extensive frauds that their victims cost $ 14 billion in 2021.

and even without crashes and fraud, the pyramid structure of crypto itself is harmful. This means that Early Adopters - who are still doing well, thank you very much - constantly new members with false promises about how Bitcoin is the future of money, or the latest dishonest slogan have to recruit: "We will all deserve it" or #wagmi.

"we" will not actually do it- in a negative-sum or even zero-sum game this is impossible. The people who use this management maybe, but that is because they got on before all others. They rely on the "bigger fool" - from which they hope that he, dear reader, includes them - who continues to believe this lies and continue their dishonest plans.

The next time you think: "What hurt to invest a little money in crypto?", You should perhaps remember that this is actually not a rhetorical question.

jemima.kelly@ft.com