X:: [[Finance]], [[Economics]]
- There are some legitimate use cases where it can (but does not currently) provide a better economic value than centralized counterparts, such as market-making, contract enforcement, and (to an extent) privacy. I try to find and invest in these projects.
- I abhor the fact that the silliness, tech-forwardness, and gambling-esque nature of some platforms (especially NFTs) allow people to handwave away the seriousness of fraud, theft, and money laundering. Economic violence can just be as damaging as physical violence.
- Example: significant amounts of activity on crypto exchanges is wash trading, which is illegal and skews volume information in traditional markets. [^cong_crypto_2019]
- I worry that increased mainstream adoption will exacerbate inequalities between the haves and the have-nots, as it becomes very easy to take advantage of uninformed market participants due the lack of regulation.
- People can have extremely liberal views in “real-life” but extremely libertarian (even anarchistic) views in crypto-land. Similarly, people can have very Keynesian economic views but subscribe to Bitcoin which is effectively the gold standard. The dissonance is palpable.
- Reversibility of transactions (righting economic wrongs), fixing hacks and fatal flaws in a decentralized blockchain, and the whole idea of a stable, usable currency, are not yet realized. There’s a lot of activity on the 3rd but feedback loops are too slow on 1st and 2nd.
[^cong_crypto_2019]: Cong, L. W., Li, X., Tang, K., & Yang, Y. (2019). Crypto Wash Trading. _SSRN Electronic Journal_. https://doi.org/10.2139/ssrn.3530220