Crypto was never more than a solution in search of a problem
Contributing columnist
Washington Post
October 11, 2023 at 6:15 a.m. EDT
During jury selection in the ongoing federal fraud trial of the dethroned crypto kingpin Sam Bankman-Fried, one prospective juror worried out loud about his lack of knowledge of cryptocurrencies, despite his son’s efforts to explain them to him. “I still don’t understand how it works,” the would-be juror said. Lewis A. Kaplan, the sharp-tongued U.S. District Court judge overseeing the trial, responded: “You probably have a lot of company in this court.”
The confusion is understandable. More than a decade after cryptocurrencies were launched, the promise of these alternative currencies has amounted to little more than broken dreams. Nascent technologies can only remain the next big thing for so long. At some point, regular people need to start using them, which most certainly isn’t happening with crypto. So, while a jury in New York won’t return a verdict on the fate of Bankman-Fried for weeks, the judgment on crypto already is clear: It is a solution in search of a problem.
Crypto was supposed to represent nothing less than a paradigmatic shift in the global finance industry. Its backers, led by Silicon Valley venture capitalists bent on divining their next fortunes, envisioned a new, digital form of currency that couldn’t be controlled by any government. They dreamed of a new method of stored value, like gold. And they foresaw a more efficient way for people to move money across borders, given that the global remittance business is stodgy and controlled by a small handful of companies.
Dreams are all good and fine. But cryptocurrencies had two things working against them from the outset. First, they have no inherent value, no matter what their promoters insisted. Second, not being backed by the full faith and credit of a credible government turned out to be a liability rather than a virtue. Most non-dreamers now see these limitations for what they are, and the trial of Bankman-Fried is a painful reminder of how easy it is to run the big con on a lot of folks.
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