We areworking on a shocking new insight...
It came to us recently as we were wondering about bitcoin, cryptos, and (a term new to us) “microcurrencies.” The crypto sector has lost about $1.3 trillion since the beginning of May. Bitcoin itself has been cut in half. But both colleagues and dear readers insist that the crypto class still has value. “These are not just money substitutes,” said a colleague. “There are many microcurrencies that make business easier and less costly.” But when we tried to pin him down on how they work, it was slow going. “You see, they’re based on smart contracts that are registered on the blockchain and then bypass the middlemen.” NO BEER All the foam was there; but where was the beer? Perhaps we are just slow-witted. But the more
“This is a whole new asset class. It is like the beginning of the auto industry. Most of the car manufacturers that started out failed. But those that remained were great successes.” We still made no headway. The auto industry produced millions of cars and trucks. It made huge profits. Its U.S. “headquarters” – Detroit... Motown – was once the richest city in America. But crypto? What is the “asset?” Why is it an asset at all? As far as we can tell, it is like Artificial Intelligence – one part new technology and nine parts old claptrap. GRAVE DOUBTS Which brings us to our point. We offer no opinion on the cryptos that claim to be useful for things other than money – except that we’ve seen no significant examples. But as to the usefulness of cryptos as money, we have grave doubts. And we were delighted to open the financial news this morning and see that our old friend, Nassim Taleb, shares them. Business Insider elaborates: Bitcoin is worth zero and there is no evidence that blockchain is a useful technology, Black Swan author Nassim Taleb says.
he explained, the less we understood. A smart contract, we discovered, is no
different from a dumb contract. It can be a 200-page document... or a handshake... with as many “if X when Y, then Z” clauses as you care to put in. If there is a dispute, it needs to be resolved. How the “smartness” part helps, we don’t know. “You don’t understand,” an old friend added.
American Consequences
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