A slow learner’s road to crypto enlightenment

I have been involved in blockchain for close to five years now, and was a co-organizer of what was probably the first “serious” blockchain conference in Luxembourg in the summer of 2015, focusing mostly on researchers and academics rather than evangelists. I saw the potential of this technology, but was always extremely puzzled by the “bitcoin is the future of money” crowd. In fact, one of my reasons for getting rather deeply involved in blockchain is to show that while crypto is not money, blockchain can be the technology from which a real revolution of our monetary systems might emerge. But that’s another story…

Why do people think crypto can replace fiat?

I have finally come to the conclusion that the reason some people think that crypto can replace fiat is that they think money is somehow created “out of thin air”, without intrinsic value, and that the reason we use it is based on some kind of “common agreement” or “network effect”. If that is the case, the reasoning goes, why could we not go from one belief system (fiat) to another (crypto).

Backed assets cannot be fully decentralised

Anything that is “backed” cannot be completely decentralised, because “backing” refers to the real world of assets and commitments by humans and corporations. Therefore a pure cryptocurrency cannot be backed by anything, its value must derive from its utility and the network effect created by its users.

Crypto for the unbanked? Let them eat cake!

Another meme is that crypto will solve the problems of the unbanked. I have jokingly written years ago about the number of bitcoin transactions that the average Indian farmer could afford given an average income of less than EUR 4 per day, but in fact it is not funny. Telling poor people: “just use crypto” is like Marie-Antoinette telling starving Parisians in 1789: “if you don’t have bread, eat cake instead”. It is simply insulting.