Opinion

The Count of Anti-Crypto

  1. The underlying technology, blockchain, might have uses but a currency isn’t it
  2. Many crypto experts were surprised when governments said that profits from trading in digital currencies were taxable in the same way that as any other capital gains. Why would this be a surprise?
  3. They also claim that it’s great because it’s decentralised. Except, a few companies do a vast percentage of all business meaning that in reality it’s not very well distributed
  4. Much of traditional financial services is not centralised either. There’s no “exchange” for currency trading, for example
  5. The lack of regulation in crypto is considered an advantage, right until the point that one of the few exchanges (see above point about decentralisation) is in trouble and stops accepting sell orders. Regulation is there for a reason
  6. Decentralisation is supposed to democratise trading. Except, trading in crypto is surprisingly expensive. And, just like traditional finance, quickly gets complicated
  7. And it’s slow
  8. Many of crypto’s biggest promoters are economically illiterate
  9. It’s basically a pyramid scheme
  10. Many crypto “experts” claim that it’s possible to reduce the risk of transactions with certain complications. They tend not to use the word “hedging” which is what this is. It’s something that the “old-fashioned” financial services companies have been doing for ever
  11. It’s almost like they don’t understand traditional financial markets
  12. They says it’s progressive and about freedom, but it entrenches existing hierarchies, if anything, more effectively than the existing systems
  13. Except for the use of blockchain, there’s not a lot that’s new. For traditional financial services, regulation means that the worst scams are banned for retail inventors. The “Wild West” of crypto isn’t a feature
  14. And no, this piece is not intended as a defence of the traditional financial services companies or their regulators. They are far from ideal