SEC Doesn’t See Cryptocurrencies Lasting Long(wsj.com)
wsj.com
SEC Doesn’t See Cryptocurrencies Lasting Long
https://www.wsj.com/articles/secs-gensler-doesnt-see-cryptocurrencies-lasting-long-11632246355
41 comments
I understand the appeal and benefits of decentralized services, and how they could apply to currency, but I think there's something wrong with the idea that a successful currency should increase in value by orders of magnitude (or even at all). Like, E-mail is a very successful decentralized service, and people make money in relation to e-mail protocol specifications by providing value on top of it. Nobody got rich just for getting their gmail account early. I know there is a lot of experimentation being done in stablecoins, but it seems like speculative quests for the next 1000x return drive development instead of just trying to solve the problem of safely, quickly, and reliably digitally storing and exchanging value.
I do think it’s counterproductive that it was even possible for people to use Bitcoin as an asset. I doubt that Satoshi foresaw Bitcoin billionaires.
Currencies have historically worked that they’re stable (ish). And to become rich you have to acquire more units. Not hope your units grow in value. If you expect appreciation then your currency is deflationary which makes it unsuitable for a currency.
Currencies have historically worked that they’re stable (ish). And to become rich you have to acquire more units. Not hope your units grow in value. If you expect appreciation then your currency is deflationary which makes it unsuitable for a currency.
So, the USD, which has been inflated every time they expanded the empire over the last XXX years, but their citizenship/working class feels it's deflationary, so they keep chasing it as fast as they possibly can...?
What?
You're claiming inflationary currencies have never been suitable.
Nonsense. Until recently, we've seen the currencies of large empires like Britain and US do nothing but inflate, yet their currency and their economies function just fine.
Nonsense. Until recently, we've seen the currencies of large empires like Britain and US do nothing but inflate, yet their currency and their economies function just fine.
No, I'm claiming deflationary currencies are unsuitable. Inflationary currencies are much more desirable, which is why the world powers tend to have slightly inflating currencies.
Obviously they could be wrong, but this prediction feels very reasonable to me.
I am extremely skeptical of cryptocurrencies in general, so you may take all of my claims with a grain of salt, but coinmarketcap.com tracks something like 6800 different cryptocurrencies. I very much doubt all but a tiny, tiny fraction of them have any use case at all.
After more than ten years, I still don't see a use case for Bitcoin (perhaps El Salvador will surprise me, but I doubt it!). There is nothing I'm aware of that I need to do financially which I can do with Bitcoin (or the like) which I'm not better able to do with the regular banking system. (I don't have much need for contracts in my life, smart or otherwise, but I would vastly prefer to deal with a real lawyer and the actual legal system, expense included, than rely on a smart contract.)
It could be that that amazing use for cryptocurrencies is right around the corner, but after a decade I don't expect to ever see one. Certainly it's not NFTs!
I am extremely skeptical of cryptocurrencies in general, so you may take all of my claims with a grain of salt, but coinmarketcap.com tracks something like 6800 different cryptocurrencies. I very much doubt all but a tiny, tiny fraction of them have any use case at all.
After more than ten years, I still don't see a use case for Bitcoin (perhaps El Salvador will surprise me, but I doubt it!). There is nothing I'm aware of that I need to do financially which I can do with Bitcoin (or the like) which I'm not better able to do with the regular banking system. (I don't have much need for contracts in my life, smart or otherwise, but I would vastly prefer to deal with a real lawyer and the actual legal system, expense included, than rely on a smart contract.)
It could be that that amazing use for cryptocurrencies is right around the corner, but after a decade I don't expect to ever see one. Certainly it's not NFTs!
> There is nothing I'm aware of that I need to do financially which I can do with Bitcoin (or the like) which I'm not better able to do with the regular banking system.
I would suggest that your life experience may not be the best yardstick for every other human.
I will provide an example of a recent situation in which I would have loved to be able to use e.g. Bitcoin. I (US based] did some consulting work for a company in France and they owed me something like $6k. Arranging an incoming international bank wire was a huge pain (if you don’t do this regularly, you’ll have to navigate multiple layers at your bank to find someone who can provide the actual wire details to provide to the counterparty), it took many days to finalize, AND I was charged $25 by my bank for the privilege.
In contrast, I should have been able to provide the French company a BTC address, have had them transmit for pennies or a few dollars at most, and have payment secured and confirmed within the hour.
I would suggest that your life experience may not be the best yardstick for every other human.
I will provide an example of a recent situation in which I would have loved to be able to use e.g. Bitcoin. I (US based] did some consulting work for a company in France and they owed me something like $6k. Arranging an incoming international bank wire was a huge pain (if you don’t do this regularly, you’ll have to navigate multiple layers at your bank to find someone who can provide the actual wire details to provide to the counterparty), it took many days to finalize, AND I was charged $25 by my bank for the privilege.
In contrast, I should have been able to provide the French company a BTC address, have had them transmit for pennies or a few dollars at most, and have payment secured and confirmed within the hour.
The fact that Bitcoin is simpler than the US banking system is a testament to how archaic the latter is, not how useful the former is.
Maybe a different bank would have a better experience for international wires? My experience is that this takes less time than you have relayed.
I’m not sure honestly.
Companies are super risk averse. They’d rather use arcane tools with seriously battle tested guard rails. As an example, if someone hacked your email and sent them a fraudulent Bitcoin address, and they sent the BTC, they’d have no recourse. No way to reverse, nobody to even complain to. Corporations would much rather have those arcane layers to protect themselves.
Companies are super risk averse. They’d rather use arcane tools with seriously battle tested guard rails. As an example, if someone hacked your email and sent them a fraudulent Bitcoin address, and they sent the BTC, they’d have no recourse. No way to reverse, nobody to even complain to. Corporations would much rather have those arcane layers to protect themselves.
Was wise.com not an option? I use them frequently to receive payments in the US from Europe.
As someone who has hired creatives from around the world back in the day - I used to love the BTC option to settle any invoices. Back then it wasn’t as well known so it usually took a little explaining but anyone who accepted it received their payment within minutes. It was so much more preferable than dealing with banks internationally.
NFTs are interesting because they are a start of the conversation on the path of digital ownership and scarcity. As it stands now, this space is not even close to its final form and eventually the idea of digital ownership is not so far fetched.
As an example - say a famous artist decides to create 1 single sketch. I only create 1 item and sell it to you who now in turn owns that piece to do as you please whether it’s lease it out for commercial purposes, stash it away on a HD, launder money, etc etc. Sure it’s just pixels on a screen but the ownership of rights is what you are paying the artist for. (Now imagine the same scenario 10-20 years down the line when super VR is a thing and most of us spend more time in our digital lives than the real world). As the purchaser, you can now track the usage of your asset you’ve purchased through a blockchain.
So it makes sense, but the current state of small iterations of the same piece of artwork are akin to ikea pieces in real value and are completely just advantage of the current hype. There will be a correction at some point as things mature.
As an example - say a famous artist decides to create 1 single sketch. I only create 1 item and sell it to you who now in turn owns that piece to do as you please whether it’s lease it out for commercial purposes, stash it away on a HD, launder money, etc etc. Sure it’s just pixels on a screen but the ownership of rights is what you are paying the artist for. (Now imagine the same scenario 10-20 years down the line when super VR is a thing and most of us spend more time in our digital lives than the real world). As the purchaser, you can now track the usage of your asset you’ve purchased through a blockchain.
So it makes sense, but the current state of small iterations of the same piece of artwork are akin to ikea pieces in real value and are completely just advantage of the current hype. There will be a correction at some point as things mature.
> I very much doubt all but a tiny, tiny fraction of them have any use case at all.
Well, right.
That's why all of the trading volume.
Bunch of no-nothings trying to figure out technological value via herd mentality!
Well, right.
That's why all of the trading volume.
Bunch of no-nothings trying to figure out technological value via herd mentality!
you dont live in a failing economy or one where the govt intervention prevents the free flow of money.
1)chinese were able to smuggle money out of china
2)venezuelans are using it in lieu of their failed currency
3) criminals are using it to launder money and buy/sell illegal products
4) people are using it to send money across national borders without paying fees/tariffs (e.g. to mexico)
I remember not that long ago when the money supply was about 6T. Now with 30T in debt that automatically becomes the defacto money supply. Crypto can act as a stable store of value because all fiat is inflationary, though it is incredibly volatile now.
1)chinese were able to smuggle money out of china
2)venezuelans are using it in lieu of their failed currency
3) criminals are using it to launder money and buy/sell illegal products
4) people are using it to send money across national borders without paying fees/tariffs (e.g. to mexico)
I remember not that long ago when the money supply was about 6T. Now with 30T in debt that automatically becomes the defacto money supply. Crypto can act as a stable store of value because all fiat is inflationary, though it is incredibly volatile now.
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These are four reasons why the governments of the world would want to ban crypto.
The blanket proposition that cryptocurrencies in general are going to fail is very different from your proposition, that most cryptocurrencies are going to fail. Look at social media: not too long ago, everybody and their cat was attempting to create the next big social media platform, and people were warning that it was all just a fad. And they were right, but people didn't stop using social media, quite the opposite. Social media is now more used and more important than ever, it's just that everthing clustered around a few winners.
That would be my prediction for cryptos: most of them aren't special enough to be useful, a lot are just pyramids schemes where the creators premined a big chunk and hope it will be worth something once they find users, but there's certainly some that are here to stay. I don't see the original Bitcoin disappearing, Ethereum is having a bit of a rough patch right now but has the potential to become a proper computing platform and I think privacy features like those Monero is offering are always going to be in demand. But we shall see.
That would be my prediction for cryptos: most of them aren't special enough to be useful, a lot are just pyramids schemes where the creators premined a big chunk and hope it will be worth something once they find users, but there's certainly some that are here to stay. I don't see the original Bitcoin disappearing, Ethereum is having a bit of a rough patch right now but has the potential to become a proper computing platform and I think privacy features like those Monero is offering are always going to be in demand. But we shall see.
The use case for Bitcoin is a savings vehicle. The global financial system has reached a tipping point where it is incapable of providing a store of value for people who have accumulated capital without crashing the system and causing mass devastation. The fact that so many people still do not understand this tells me we have tremendous upside remaining.
"...banks issued their own currencies, which they sometimes refused to redeem for their purported value in gold or silver."
Fortunately the government stepped in with its own currency to refuse to redeem for gold
Fortunately the government stepped in with its own currency to refuse to redeem for gold
Then ignore them? The beauty of voluntary systems is that they can thrive or fail and the only people impacted are those that choose to use them.
The SEC picks and chooses which rules to enforce and which parties to police, monetary policy is decided by authorities with no input from or regard for 99.9% of the population.
It's not surprising that people would opt-in to building alternatives with transparent and programmatic rules. It's also not surprising that these alternative systems will be fiercely fought after being ignored and laughed at, and it won't be surprising when they win.
The SEC picks and chooses which rules to enforce and which parties to police, monetary policy is decided by authorities with no input from or regard for 99.9% of the population.
It's not surprising that people would opt-in to building alternatives with transparent and programmatic rules. It's also not surprising that these alternative systems will be fiercely fought after being ignored and laughed at, and it won't be surprising when they win.
> “I don’t think there’s long-term viability for five or six thousand private forms of money,” Mr. Gensler said in a virtual event hosted by the Washington Post.
That's going to age like milk.
That's going to age like milk.
As a consumer, how many currencies do I want to deal with?
How many consumers will be willing to do currency conversions on a per transaction basis?
How many consumers will be willing to do currency conversions on a per transaction basis?
There are hundreds of "official" currencies in the world today, is dealing with them a problem you deal with in your life?
I assume many people here travel (or did pre-covid) frequently and mostly don't even notice the currency that's being used when you swipe your credit card when making a purchase. The details such as whether the merchant gets USD, EUR, or GBP are abstracted away from you and all you care about is buying your souvenir and figuring out where to go next.
I assume many people here travel (or did pre-covid) frequently and mostly don't even notice the currency that's being used when you swipe your credit card when making a purchase. The details such as whether the merchant gets USD, EUR, or GBP are abstracted away from you and all you care about is buying your souvenir and figuring out where to go next.
Well, 99%+ of my transactions are in USD
When abroad, prices are listed in the local currency, and I have to do some mental math, but yes the transaction does currency conversion automatically, with a fee that is typically higher than I would have realized if I swapped beforehand.
The point is, what currency will prices be listed in and do I have to jump through these mental hoops everywhere I buy things? Unlikely that most consumers will want this situation and extra layer. If it's listed in USD, why not just pay in USD and avoid the conversion stuff all together?
That is why a plethora of currencies will not pan out. It's not a out technology, it's about people's minds and behaviors.
When abroad, prices are listed in the local currency, and I have to do some mental math, but yes the transaction does currency conversion automatically, with a fee that is typically higher than I would have realized if I swapped beforehand.
The point is, what currency will prices be listed in and do I have to jump through these mental hoops everywhere I buy things? Unlikely that most consumers will want this situation and extra layer. If it's listed in USD, why not just pay in USD and avoid the conversion stuff all together?
That is why a plethora of currencies will not pan out. It's not a out technology, it's about people's minds and behaviors.
Well worst case nothing changes and the prices are still listed in the same currencies they are today. But if crypto is even a little bit successful then perhaps the number of currencies used to display prices will reduce to a smaller number and make things simpler.
For the buyer they can use any currency they want transparently and for displaying prices things can only get better.
For the buyer they can use any currency they want transparently and for displaying prices things can only get better.
> Well worst case nothing changes and the prices are still listed in the same currencies they are today.
I would call this best case. There would need to be significant (likely unattainable) effort to change the standard. How many laws, signs, and code would need to be changed?
I would call this best case. There would need to be significant (likely unattainable) effort to change the standard. How many laws, signs, and code would need to be changed?
As a consumer you will (are?) likely only involved in a few economic Microsystems. If you break it down, you probably spend a lot of your money through the same companies as it is, so it’s not a far fetch to think that each of these companies will use a main coin or have their own coin in the long run. This is only going to amplify as more of our payment systems are consolidated under big monolith corporations. So while you may be involved in some economic Microsystems, I will be involved in others. Each having their own currency needs and only having to go in an out of some main coin.
For example take Apple - you have the App Store , iTunes, app purchases, Apple Pay, the new Apple Card and more I probably forgetting. As time goes on, it’s not far fetched to assume that you might rarely leave the Apple economic ecosystem or even need to since everything you have is provided by one corporation. This applies to Amazon, Facebook (not as embedded as Amazon or Apple but has ambitions to get there), and more. So the idea of there being an Amazon coin or an Apple coin, once things mature in the cryptocurrency industry, is not totally out to lunch.
For example take Apple - you have the App Store , iTunes, app purchases, Apple Pay, the new Apple Card and more I probably forgetting. As time goes on, it’s not far fetched to assume that you might rarely leave the Apple economic ecosystem or even need to since everything you have is provided by one corporation. This applies to Amazon, Facebook (not as embedded as Amazon or Apple but has ambitions to get there), and more. So the idea of there being an Amazon coin or an Apple coin, once things mature in the cryptocurrency industry, is not totally out to lunch.
The main issue is that people think in terms of USD. The prices on the page would still be USD. Every currency is talked about in terms of it's price in USD.
Why have the extra coins and conversions, as a consumer? Even if the companies want to use them like DerpCoin (see Hermitcraft), they will still have to take USD. So will they really ever gain sufficient usage to warrant the company time / people investment into supporting them?
I also suspect most people are involved in many more economic microsystems, which sounds like a business I transact with by another name.
Why have the extra coins and conversions, as a consumer? Even if the companies want to use them like DerpCoin (see Hermitcraft), they will still have to take USD. So will they really ever gain sufficient usage to warrant the company time / people investment into supporting them?
I also suspect most people are involved in many more economic microsystems, which sounds like a business I transact with by another name.
Isn't the title another click bait?
He said he doesn't see viability for 5000 cryptocurrencies and not cryptocurrency in general.
Of course no one thinks every dust coins have a future.
He said he doesn't see viability for 5000 cryptocurrencies and not cryptocurrency in general.
Of course no one thinks every dust coins have a future.
It really does sound like the analogous statement about "only five or six computers in the world" from the 1950's.
Some cryptocurrencies and blockchain projects come and go. Let’s wait 8 years then.
Yeah, they're probably right: https://en.wikipedia.org/wiki/Fermi_paradox#Great_Filter
Sounds extremely short sighted on so many levels.
Famous last words
The finance equivalent of our system is unhackable. Might take a couple of years but this will age like milk
Because it's only Good for gambling
That's unfair, it's also a good medium to extract ransoms with!
Eh, I don't think this is the best take.
I'd say they are bad because they just don't work right now. Scaling is a huge issue. Yeah yeah there are 100 theoretical ways to scale to 100000 tx/s with low fees, but until I see it, I will maintain that crypto is useless.
I'd say they are bad because they just don't work right now. Scaling is a huge issue. Yeah yeah there are 100 theoretical ways to scale to 100000 tx/s with low fees, but until I see it, I will maintain that crypto is useless.