On Cryptocurrency

💡 I used to amateur invest in 2021/22, I profited from trading tokens in ethereum, constitutionDAO and ethereum name service -- mostly got lucky. My views have since evolved. I would like to learn more about financial markets someday.

Cryptocurrency is a controversial topic that people have lots of thoughts/feelings about. I’m neither here nor there about the ethics or ideals. Whatever “visions” of the future advocates or critics have on its effects on society, I’m not sure terribly interest me. I’m only interested in how it actually affects the world and how I interact with it.

There are signs of product market fit, to quote:

For example, stablecoins first found product-market-fit through crypto-natives 1) doing cross exchange arbitrage and 2) needing a place to derisk from volatile crypto-assets. Once the stablecoin infrastructure is built and battle-tested, crypto-agnostic use cases can follow on. In that category are payments, remittances, and inflation hedges against quickly inflating currencies like the Turkish Lira, Argentinian Peso, etc. Those use cases were never crypto-native to begin with, but onchain and anecdotal evidence suggests these are growing very quickly in the Global South. Other RWAs will likely follow the same route. T-bills found their way onchain because crypto-natives wanted the yield on their stables after the Federal Reserve hiked rates from 0% to 5%. Many of these crypto-natives are DAOs like MakerDAO and crypto startups needing to diversify their treasury. Crypto-agnostic use cases are starting to show up here too. Crypto neobanks that enable ex-US countries to save in the USDC/USDT now compete to offer a source of safe US yields to their customers. https://twitter.com/QwQiao/status/1777353810958049653

Crypto is/(was?) interesting because of its money properties, it’s unclear if it can ever be used for anything but complex “money stuff” and even that’s debatable.

Stablecoins are settled $10T onchain annually, dwarfing Paypal, on par with Visa, and within an order of magnitude of ACH.

But herein lies the rub?:

One could reasonably argue that much of this onchain volume is speculative activities, rather than “real-world usage” such as currency hedging and cross-border payments.

I’m not sure I care too much, but i’d lean towards yes more than no. USDC solved real problems i had, is it revolutionary? idk but it’s not nothing. I’ve take risks with cryptocurrency that have paid off financially so maybe my opinion is biased. Yet the crypto industry kind of sucks, like moths to the flame it draws all sorts of shady characters.

The FTX Fiasco wasn’t that long ago.

The government in Nigeria(where I live) seems to have very strong negative opinions about cryptocurrency in Nigeria, going so far as “detaining” employees of exchanges - I wonder why? nonetheless, it’s essentially illegal. End of discussion. I wouldn’t touch crypto with a ten foot pole.

The underlying technology is a nerd snipe – does it actually matter? who knows? A distributed ledger/database is an interesting technical problem. Bitcoin, Ethereum, insert your favorite fork() here etc. Lots and lots of hacks though. Alot of money lost to malicious activity but considering the threat model/risk/reward for attacking ethereum or bitcoin you could say it’s somewhat secure and this is a problem that can be fixed – other more fundamental problems remain though and largely haven’t/seemingly can’t be fixed.