Why cryptocurrencies are the future of money
The collapse of Sam Bankman-Fried’s FTX last week has, like Mt. Gox before it in 2011, or more recently Terraform Labs and perhaps soon Genesis Global, once again sent the price of cryptocurrencies tumbling, and generating much media commentary on the risks involved in being part of the reinvention of money.
What is the future of something as seemingly intangible, poorly regulated and risky as cryptocurrencies? Anyone who says they know the answer to that question is lying. In reality, cryptocurrencies are an attempt to redefine the concept of money, with all the difficulties and resistance that this entails, to bring it into the digital era: to reinvent money so that it no longer depends on what governments and central banks want to do, but on an algorithm.
The idea, in principle, is a good one: why should we have to accept that a government can issue as much currency as it sees fit, and why do we have to accept that inflation, which destroys the value of the money we have previously obtained, is a natural phenomenon?
Or worse… why can some governments issue practically as much money as they feel like, as the United States did during the pandemic, while others cannot do so without risking a huge fall in its value? To put it crudely, if the dollar says “in God we trust”… what are we doing relying on God or in the…
