Why I still don't take crypto seriously

I am always told that it is time to take crypto seriously. Krypto, according to the chorus, has "become a mainstream" - from Blackrock to UBS "researched" at least every major investor, while the large companies each have tens of million small investors.

The governments are also optimistic: Great Britain takes a " Forward approach " Hoped to transform the country into a global crypto center and to attract Great Britain with El Salvador, where Bitcoin is now a legal means of payment. I can jokes, but if I haven't bought myself in crypto, the joke actually goes at my expense, or something like that keeps saying.

And yet, as much as I try to take it seriously, I keep being pushed to new ways to find crypto absurd. This week, the comedy came with the friendly approval of the nominative determined Sam Bankman-Fried, CEO and founder of the crypto exchange FTX, a company that was recently estimated at $ 32 billion. On Monday, Bankman-Fried, who was recently rated at $ 24 billion, appeared at Bloomberg’s Odd Lose podcast and was asked to explain how a new crypto phenomenon called Yield-Farming works.

yield-fining-a fairly complex practice that essentially offers the opportunity to convert their crypto into more crypto by lending money from the customers, in return giving them a “governance token” and this crypto into other coins and “defi” convert projects with high returns. Promises, but also to the fact that private investors do not really understand and are therefore not fully aware of the associated risks.

not that much. Bankman-Fried, who uses the analogy of a box to describe one of these Yield farming platforms, explained her promise of values ​​as follows: "This is a valuable box, as the whole money shows that people apparently decided that it should be in the box. And who are to say that they are wrong?" Then he described how all this becomes a kind of self -fulfilling prophecy, because as soon as the investors start to feel optimistic about it, the token becomes more valuable and "go and pour another $ 300 million into the box. And then it goes into infinity. And then everyone earns money."

Matt Levine von Bloomberg, obviously quite stunned, pointed out that Bankman-Fried seems to say something like that: "Well, I'm in the ponzi business and it's pretty good."

The comments by Bankman-Fried have been widely mocked, and they are indeed ridiculous, but what is perhaps funnier is that what he describes can also be applied to the rest of cryptography. I compared crypto with a ponzi scheme for a long time, although there are some differences, such as the lack of a central administrator.

crypto, like Bankman-Frieds Box, has no inherent value; It is simply worth what everyone has decided for their value. And just like this box, which, as the FTX founder explains, can be created "in about five minutes with an internet connection", crypto token can be created just as easily. For this reason, there are now almost 20,000 cryptocurrencies that mock the idea of ​​digital scarcity.

But still there is always the argument "Crypto is like the Internet in the early 90s", right? Apart from the fact that the comparison of crypto with the greatest technological breakthrough of the past century only on the grounds that nobody understood the internet at the beginning, even a bit like a nonsense quit, the early 90s seem to consult a little. The risk capitalist Marc Andreessen said at a conference in 2014 that Bitcoin felt like the Internet in 1994; In 2019, he said, it felt like 1992 - presumably we are now somewhere around the 1991 brand.

could there be an argument that despite all of this it makes sense to put a little money in crypto? Sure, there could be a risk that everything goes to zero, but that is a well -known risk; There is also a risk that it could increase several times and miss it. Wouldn't that be reason enough to take it seriously?

In order for this to be valid, one would have to imagine that crypto did not do any damage, although it is actually a negative game game. Apart from the environmental damage and billions of bills for open frauds, it is impossible to count the number of people who have been given false hopes.

So no, I'm sorry, I will not take crypto seriously - neither as a wealth or a form of money, which is actually two contradictory statements. In fact, I will only consider it a serious risk of society and maybe something that you can laugh about every now and then.

jemima.kelly@ft.com