So is cryptocurrency a stupid thing?

Bitcoin, Ethereum, XRP, Tether… cryptocurrencies are like the worst Minecraft world ever, and yes for those like me with a healthy dose of skepticism it all feels like one almighty joke, except that is when you realise the market capitalisation for Bitcoin alone is $2.3T... BTW... T is for trillion USD... OMG... WTF!

As a secure means to hold and transfer currency… well even with my limited understanding I can see the appeal of bypassing the traditional banking sector, but the idea that these coins or tokens hold some sort of value in their own right, subject to the same laws of supply & demand as any other “asset” surely is the height of insanity. Isn’t it?

The counter argument is that value is measured by what someone is willing to pay for it, right?

So with Blackrock and other financial sector behemoths appearing to have moved to a boots and all embrace, should I be assured that greater minds than my own, know what they’re doing, or like most complex financial instruments is this just another fool’s paradise prelude of unregulated mythical invention, ultimately leading to an almighty future correction.

With the likes of sub-prime and global financial crisis seemingly forgotten footnotes to the ever-evolving playbook of insatiable greed in the absence of effective governance, the answer I fear is that they do know exactly what they are doing… and the rest of us are the fools.

Consider this. Blockchain is an open-source technology with extremely low barriers to entry. In excess of 37 million unique cryptocurrencies are estimated to have been created with only a fraction, roughly around 18 to 19 thousand, considered “active”. So how does the market decide which ones have “value”?

Increasingly common are public comments from extremely wealthy and influential individuals, generously labelled as bandwagon advertising or even more ludicrously lauded as thought leadership, which undoubtedly provoke the markets response to these none too subtle signals. Surely this must create a degree of suspicion even for the most naïve among us, but given the silence from regulators, presumably market manipulation isn’t a thing anymore.

Cryptocurrencies are still measured in sovereign currency, underpinned with the conventional ability to “print” new money and tax populations pointing to, at least for now, a reliance on traditional methods of wealth realisation. But should we be concerned with just how much of the record circulation of USD is being swallowed up by imaginary digital currencies?

Robinhood Markets stock received a big boost after their CEO announced earlier this year they would offer “tokenised” versions of company equity, even though one of the companies specifically nominated by Vlad, publicly distanced themselves with the ominous warning that “tokens aren’t real equity.” Undeterred, he has since doubled down stating “Tokenisation is like a freight train. It can’t be stopped, and eventually it’s going to eat the entire financial system”.

And this may just be the window to which we should be peering through to glimpse a future where the uber-rich dispense with the minor inconvenience of having to exert influence over regulatory bodies, in favour of bypassing such trivial annoyances altogether.

Those with invested interests will continue to talk about opportunities for wealth creation and point to an increasing participation of financial heavyweights as mainstream validation, but for those of us less enlightened, on face value at least, it looks like the world has lost its collective mind once again, passively watching on as a minority gleefully hoovers up even more wealth at an alarming rate.

Anatole France once said, "If fifty million people say a stupid thing, it is still a stupid thing". So is cryptocurrency a stupid thing?

Inevitably, I suspect we’ll find out the hard way.