And in the past year or so, crypto marketing has really gone mainstream, with endorsements from celebrities — including Matt Damon, Kim Kardashian, and Mike Tyson — not to mention political figures like New York City Mayor Eric Adams and the (unsuccessful) Republican Senate candidate Josh Mandel, who declared his intention to make Ohio “pro-God, pro-family, pro-Bitcoin”. Given all this, it’s hard to see who else could be recruiting for crypto investments.
As a matter of fact, one troubling aspect of this marketing push is that those who have bought cryptocurrencies relatively recently – and therefore lost a lot of money in the crypto crash – are likely to be disproportionately made up of the kinds of people most likely to be influenced by celebrity endorsements. That is, they are probably poorer and less sophisticated than the average investor and ill-positioned to absorb the losses they have incurred in recent months.
Anyway, looking ahead, the value of cryptocurrencies will have to rest on their underlying economic uses, which…
Well, that’s just the thing. I have heard many discussions where crypto supporters have been asked exactly what economic role crypto can play that cannot be more easily and cheaply achieved by other means – debit cards, Venmo, etc. Other than illegal transactions, where crypto sometimes provides anonymity, I have not yet coherent response.
As it is, cryptocurrencies play almost no role in economic transactions other than speculation on crypto markets themselves. And if your answer is “give it time”, keep in mind that Bitcoin has been around since 2009, making it old by technical standards; Apple introduced the iPad in 2010. If crypto were to replace conventional money as a medium of exchange – a means of payment – we should definitely be seeing signs of it by now. Just try to pay for your groceries or other everyday goods with Bitcoin. It is almost impossible.
And then there’s El Salvador, which tried to force the process by making Bitcoin legal tender and heavily promoting and subsidizing its use, in an effort to turn it into a genuine medium of exchange. Everything indicates that the experiment was an abject failure.
But could crypto really have become such a big deal without some clear economic rationale other than pure speculation? Could it really just be a bubble inflated by FOMO, fear of missing out? Those who question the purpose of crypto are constantly confronted with the argument that the sheer size of the industry – at its peak crypto assets were worth nearly $3 trillion – and the amount of money real believers have made along the way proves that. the skeptics are wrong. Can we, the public, really be that foolish and gullible?