While I laughed at the inevitable crypto so-called currencies collapse, having on this site and elsewhere always mocked cryptos purported rationale, the reports on the price collapse reflect the shallow thinking of so many commentators.
Specifically, I’ve read numerous wise-after-the event gloating commentaries reporting the total loss to the dummies who’d bought in, ranging between 2 and 3 trillion dollars. That’s rubbish and the losses are nothing like that.
To know the total losses from the crypto craze one would have to know the entry price of every sucker involved.
For example, the best known crypto is Bitcoin. In a very short time it dropped from US $70,000 to $20,000. The only losers are those, logically a small minority of current Bitcoin holders, who bought in at prices above today’s price. I suspect they are relatively few in number because they were buying in when there were few sellers, thus driving up the price as the existing holders sat tight, glowing at their brilliance during the relentless price surge over a short time period.
Also; what of those who bought at less than today’s price? On paper they’re still ahead and have actually lost nothing, although if they’re smart which they’re not or they wouldn’t be in at all, should cut and run now before Bitcoin and the other cryptos ultimately reach their true value, namely nothing.
Then what about, (as with irrational speculative crazes throughout history) those who over recent years bought in then sold out at a higher price and made a profit? Tens of thousands will have done this.
While the profits and losses from this mania can never be known without also knowing the factual situation for absolutely everyone whose been involved, my suspicion is the overall net loss situation is a great deal less than the trillions of dollars figures bandied about, when the past profit-takers’ gains are taken into account, plus the actual entry price of all current crypto holders.
What always amused me was the rationalisation for cryptos, namely as an alternative currency. Yet throughout, the ever fluctuating prices have always been measured in dollars, making a mockery of the alternative currency claim.
The crypto mania has been accompanied throughout with shallow thinking. For example we constantly read justification for Bitcoin’s purported value based on the cost of the enormous amount of electricity required to make a fresh unit. That’s unbelievably shallow. Should one desire to dig a 100 metre deep hole at the bottom of the ocean and spend say $100 million doing this, the hole, serving no function, will not be worth $100 million but instead be worthless. The construction cost of ill-considered projects never necessarily reflect their value. Throughout my life-time I’ve observed this with numerous property developers giving no consideration to the importance of location and learning the hard way when they go broke, as is the ultimate fate of most property developers.
When crypto is finally all done and dusted its legacy will be humour at the ever present human folly it exposed. It’s been analogous to religion, namely a rejection of reason for blind faith and wishful thinking.
Well said, sir. Crypto and religion both demonstrate the futility of wishful thinking over logic.
I agree, I’ve never been tempted to “invest” in bitcoin as I think it’s shovelling smoke and people who wistfully profess their regret in not investing years ago forget that the exchanges were regularly hacked and plundered in the early days. Some good may come out of it, namely blockchain technology that is essentially an electronic ledger with cryptographic security and fractional payments in satoshi or sats that may have utility as a kind of barter coin.
Yes, I originally wrote this as a view of NFT’s, but it pretty well covers crypto I feel.
To plunge into the world of NFT’s, (crypto), one has to have faith, an abiding unshakeable faith in humanity.
In that somewhere out there will be an individual that posses an even greater level of stupidity than your own.
Crypto is like the tulip sensation in 17th century Holland. A LOT of money invested and the ultimate return: next to nothing. Smoke and mirrors obsessions
If only fiat currency was backed by something tangible behind also…which it once was…
I’m thinking about going back to batter…and a farmers market is a good start…
Think you’ll find more property trades are on their way also…
History File Note: File crypto under tulip bulbs and South Sea Bonds, not to mention locally – emus, angora goats, and ostriches and for the bankers – fraudulently rated Mortgage Backed Securities.