The cryptocurrency implosion shows we’re heading for the end
There’s a reckoning facing many who were persuaded – even tricked – into pouring their savings into meaningless blockchain-powered financial assets
We are living in very strange times indeed. More than two years of COVID-19, which many wrongly deem to be over, has given way to a cost of living crisis, accelerated by Russia invading Ukraine. This means that all the accepted norms of how household and business budgeting work have been thrown up in the air.
I didn’t expect a year ago to be paying over £100 to put diesel in my little Audi. Some wise sages claim that these price squeezes will help propel us to a greener future with houses warmed by heat pumps, and electric cars filled by roof-top solar panels. This is a fine prediction, but wholly inappropriate for those living in cities or the vast majority who simply can’t afford to take on that sort of capital investment. It almost feels like an “end of times” moment; it's a last roar of a grand crescendo of society abusing itself, where the haves distance themselves even further from the have-nots.
There are tell-tale signs we are entering the last years. The current implosion around the various cryptocurrency platforms certainly point in that direction. The value of Bitcoin, for example, plunged from approximately $24,000 to $17,000 over June. While I’m not bothered by the huge venture capital firms losing the shirts of their yacht-owning investors, it’s the heartfelt pain expressed by those who have very little, and who have been persuaded – some might say tricked – into pouring their savings into this new wonder product. They had no idea of what they were buying into, or how it worked, or the risks involved. In the past, they would probably have needed to go see their bank, or talk to a financial investor, and then to set this up with a reputable financial institution. Today, you can wire money around the world, into any jurisdiction, from the convenience of your smartphone.
The whole “I am in control” vibe can be very liberating, if you believe that the evil institutions of the past were only there to repress you. When things go badly wrong, though, which they have done over the last few months, the same people are wondering why they were left stranded and penniless. It is quite heart-breaking to watch.
Now, don’t start me on NFTs. A more pointless example of “end of times” would be hard to find. The right to prove ownership of a link to a JPG of an image. That’s it. Now, even reputable companies are jumping on board, with the so-called benefit of joining an “exclusive club” with special benefits. In one example, an invitation to an “exclusive event” at the HQ; this might stroke your ego and tickle your fancy, but at the end of the day those companies want to sell you a car.
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To Lotus and McLaren, it may seem an easy marketing ploy. They offer a gallery of high-resolution images that fans can download for free, and others can buy NFT versions. I can understand why companies want to push their media story into the wider world, and images are a good way of doing that. These companies like to partner with other firms that provide NFT platforms, though, perhaps thinking they’re distancing themselves from any risk. They are wrong. The reputational damage is potentially huge, and that will come back to haunt many who have been persuaded to play in this space. It is this fear-of-missing-out, coupled with easy access to the global infrastructure of the internet that’s fuelled this nonsense.
We can’t expect the politicians to do anything significant about this. Getting involved in the machinations of the internet, and the global real-time data-scraping and user-modelling process, goes far beyond their capability to understand. It would actually be fairly easy to fix the underlying problems, but the simple reality is that much of the internet would then break. Our reliance on websites and services to data mine every aspect of our lives has become the drug that fuels Web3. Protecting the user by breaking this would lead to a significantly reduced experience for the voters. “Courageous, Minister,” as Sir Humphrey was so fond of saying.
So it comes down to us. To you and me. We need to be pushing the view, long and hard, that this nonsense is exactly that – nonsense. Financial instruments built upon Ponzi schemes and no underlying value whatsoever, are an unacceptable risk. No ifs, no buts. Those who still want to lose their shirts will continue to do so. For myself, my block button on Twitter has never been more active, removing those from my world space who want to pile in and tell me I am wrong; that NFTs and cryptocurrencies are both magical money trees; that they offer a way out from this period of extraordinary worry and stress for everyone. All of this internet-based nonsense is not the answer to the problem. Maybe there is no answer.
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