The New York Times recently published a story: “Crypto’s Rapid Move Into Banking Elicits Alarm in Washington” that highlights the speed with which the industry is challenging the regulatory ability.
Unlike inventions like Facebook or Uber, which come from Silicon Valley (a physical place), cryptocurrency, starting with the mysterious paper by Satoshi Nakamoto, comes from the internet.
It basically comes from everywhere and nowhere simultaneously. So there is no central place to address it, view it, support it, oppose it, or stop it.
This everywhere-reality will factor into how governments respond to it in coming years. At this point, whatever regulators do will act a bit like the engineering of the cryptocurrencies themselves, helping to adjust its trajectory in the coming months and years.
For that reason, crypto’s emergence as a sticking point in the US infrastructure is a moment of disruption.
To the degree that there is thought behind much of the industry, the hope is to challenge, erode and supplant the power and legitimacy of traditional banking. For real crypto activists, the hope is to challenge central banks and the system of currency stability put in place at the end of World War II.
For a look at one scenario of cryptocurrency, have a scan of what’s going on in Lebanon. As the economy and currency crumbles, cryptocurrency and its associated businesses fill in the gaps.
Cryptocurrency promises the ability to conduct transactions with zero trust. But what problem does this solve? Or whose problem? People who live in incredibly low-trust environments such as post-Soviet states, hackers, etc.
You can’t point to many successful societies where almost no social trust exits. So the problem crypto, and its associated businesses, solves is one found in a low-trust society.
For that reason, undermining the legitimacy of government and central banks (especially) is the core of the sales pitch of crypto.
You don’t buy a new mattress, if you’re content with your current mattress. So, a mattress sales campaign shows you that you are indeed missing a better world through better sleep made possible through the new patented technology used to produce the new mattress. It solves a problem you didn’t know you had.
Likewise, cryptocurrency’s sales pitch claims central banks are systemically inflating away the value of the public’s savings held in fiat currency, leaving behind the “unbanked”, and that this is the generationally new way of doing business that represents a kind of new and better world.
If you’re shut out of the housing market and stable full-time work, the promise of a better world offered by cryptocurrency (to say nothing of the change to access quick wealth) could nonetheless be attractive.