Why Crypto Just Won’t Die: A Look at Its Enduring Mystery
Many new crypto explorers, or even millennials who have always been used to paper money only, wonder about cryptocurrency. Can it someday fail and leave all investors shocked? Can crypto disappear all of a sudden? Can someone scam you? Well, scamming is possible, my friend, but it will not be from the way crypto works—you might get hacked or something!
Cryptocurrency is a new development, and while some oldies might not be very open to what it means or can do for them, this financial trade is safe and here to stay. Despite numerous crashes, scandals, and seemingly nonsensical justifications, the cryptocurrency market continues to defy expectations. This article explores the reasons behind crypto’s resilience and the factors contributing to its recent surge.
A Phoenix From the Ashes?
Bitcoin, the poster child of cryptocurrencies, recently reached a record high, seemingly resurrected from its 2022 slump. This defies logic, considering the lack of widespread adoption and the numerous busts the market has endured. Speculative frenzy during the pandemic fueled its initial rise, followed by a swift decline as interest rates climbed. Cryptocurrency exchanges faced legal troubles, and celebrity endorsements faded. Yet, the market never truly died. Prices steadily recovered, and the total market capitalization now surpasses $2.5 trillion.
The Allure of Decentralization
Part of crypto’s appeal lies in its design. Free from central bank control, it leverages cryptography to maintain a decentralized ledger of transactions. This eliminates a single point of failure and imbues it with a sense of trust as a store of value. However, the question of purpose remains unanswered.
A Spectrum of Justifications
Over time, various justifications for crypto have emerged. Initially, some saw it as a haven for criminal activity due to its anonymity. Others envisioned it replacing the US dollar as a global reserve currency due to its limited supply and perceived inflation resistance.
As the crypto landscape evolved, new justifications arose. Non-Bitcoin digital assets promised to streamline cross-border payments and support the development of a decentralized internet (Web3) free from Big Tech dominance. Decentralized Autonomous Organizations (DAOs) were touted as revolutionary tools for collective action.
The Flawed Facade
Scrutiny reveals flaws in these justifications. Public transaction records make crypto a poor tool for crime. Its volatile price fluctuations render it an unreliable currency, as evidenced by El Salvador’s failed adoption as a legal tender. Web3 remains clunky and ineffective, and DAOs often fall short of their promises of decentralization and autonomy.
The Strength in Numbers (and Excuses)
The very abundance of justifications, however flawed, seems to be crypto’s secret weapon. Different groups find different reasons to buy in, creating a resilient market with no single point of failure when it comes to justifications. This makes debunking the entire market difficult, as one can always find counter-arguments to specific criticisms. The complexity surrounding technical aspects like zero-knowledge proofs and Layer 2 blockchains further muddies the waters.
A Delusion That Works?
Comparisons are often drawn to assets like gold and art, which lack inherent value but hold value due to societal agreement. However, such assets hold status symbol appeal, something crypto lacks (although some use it to acquire Lamborghinis and yachts). Crypto thrives on a different kind of collective delusion — the belief that no matter the current price, someone will always be willing to pay more tomorrow. And so far, that delusion seems to be working.
