Stupid Is As Stupid Does
Thank you Forest Gump. I like things simple and that expression pretty much says it all. Now I am not talking about investors getting hammered last week because we are finally realizing that we will be going into a recession. I am talking about cryptocurrency.
As all of you know, I do not believe in cryptocurrency in any form and it’s fairly simple. It is a scam.
Sorry. I hate to say I told you so (no I don’t) but the believers have fallen into a trench. They are surrounded by media that has drunk the potion, friends that all say they have made a killing in the crypto market and the innate desire to win one with little or no effort.
All stupid reasons for sure.
Let’s revisit my distrust and dislike of all things crypto for a moment. I have repeatedly said that the creation of crypto currencies borders on some sort of geek Ponzi scheme. I create something, I sell it to 50 buyers, they in turn sell it to 50 buyers each and there you have a Ponzi scheme. The fact that you have to “Mine” these coins doesn’t change anything. You are buying from someone who bought from someone who bought from someone as the prices ran up. Now you are trying to sell this worthless digital number to someone who is trying to sell it to someones and so on. It is not an efficient market. The people that run the supposed marketplace are all running for the hills and the marketplace eventually will collapse into nothing.
Now what do you do?
There is nothing you can do. You were stupid enough to buy something that has no intrinsic value other than the value that a system no one understands and no one oversees put on it.
I don’t feel sorry for anyone who has fallen for this. I don’t.
Ok, that is out of the way and it is important to understand why this will not work in the near future.
The number one reason is the volatility of the currency(sic). If you bought a bitcoin at 34,000 dollars and expect to buy 34,000 dollars worth of product don’t be surprised if you can only buy 26,000 dollars worth of product, or 20,000 dollars worth of product. That’s as if you can buy anything at all because it seems all of the places that initially were willing to accept Bitcoin or Etherium don’t accept them anymore. Why? The volatility risk is too great. These nerds may hate the US Dollar but by God when you want to buy something, the value of the dollar is not the reason that you need more of those dollars, inflation is the reason. The dollars value fluctuates but its moves are minuscule compared to how much cryptocurrencies fluctuate.
The next reason is that the US Government will not accept this form of currency as a legitimate means of transaction. They may say they are looking into it and they may possibly regulate it somehow but the fact remains, the whole point of cryptocurrencies existence is that they were developed to skirt regulation and oversight. Some BS about free market transactions. The proponents of digital currency say they will police themselves by constant vigilance. Give me a break, do they really think that people believe that?
That brings me to my next point. The security of these currencies is supposed to be paramount. Another gross lie. Just think about it. You have these incredibly smart people developing these complex algorithms that create these currencies, whats to say even smarter people won’t be able to figure out how to abscond with those currencies and the results could be a wholesale collapse of that particular cryptocurrency.
Boom! You were a Findoogle millionaire but someone cracked the Findoogle infrastructure and now it’s worthless. You can’t call the crypto police. You can’t call the FBI (maybe you can but they won’t know what to do). You can’t call the Winkletinkle Brothers because they are busy scamming someone somewhere. Your sunk.
Lastly. The amount of energy to mine these digital scam pieces is astronomical. Is that good for the environment? No. Is it worth bundling 100,000 computers to use up 1,500 KWH to mine one bitcoin? No. You can bundle those computers to solve things that are a little more pressing to the planet. Cancer research for example. The industry insists that is moving towards renewable power sources and that seems noble but the energy that these Mining camps use could be better allocated to regular citizens who need to power up their WiFi so they can order from Amazon. Mining Bitcoins is the biggest waste of energy that has ever been created. It benefits a select few and adds no value to anything.
Obviously, I am not a fan of this whole crypto currency scam and my opinion has not changed one bit. I have had some very smart people try and explain the benefits and the advantages but yet it all comes back to my four points.
I do think the underlying technology could be a game changer however. I believe Blockchain will eventually revolutionize almost every industry but there will be roadblocks and it will take time.
Finally, I also think that the only successful cryptocurrency will be one directly tied to the US Treasury. Having a crypto type of currency backed by the US Government will be successful and transform industries here and around the World. I just don't think that Bitcoin and it’s cousins will survive and their ending may be a lot sooner than people think.