Crypto Won’t Save the World
Those who thought they could wave a magic wand and disappear all their banking problems were sadly mistaken.
A special series about using the past to visit the future.
As you will soon see, crypto fans were like scalpers. Thankfully they are almost all gone now. How does scalping relate to crypto? It is an understandable ask, but you must read on to find the answer. For now, banish all thoughts of crypto and return to the much more civilized topic of scalping.
What scalpers do is they comb the annals of Facebook Marketplace in search of unsuspecting sellers of collector’s items who do not realize they are selling collector’s items. They make bank when a father sells his daughter’s shoe collection as karma for moving out of state, or when an estate sale manager feels spiritually convicted that Facebook Marketplace is the pinnacle of sales innovation and a symbol of avant-garde client service. Truly, Facebook Marketplace is a haven of client service for sure, only it is the scalpers, not sellers, who are well served.
The kinds of Facebook Marketplace sellers that scalpers search for come from all walks of life, but they share a distinct commonality: they think they’re smart. They are the kind of people who, when told their items are priced well below market value (which I did say once just for the fun of it), prefer expressing their disbelief by blocking me instead of performing a painless bit of Googling to confirm my assertion. Bottom line, these sellers do not know the value of their items, so they get gypped.
Scalpers are skilled at sniffing out these people and the rare items they sell for less than fair value. When they see a good find, they’ll buy it and immediately put it back up for sale wherever aficionados of the item are known to frequent — getting massive markups on everything. Some of the most popular items to scalp are sneakers, sports cards, LEGO, action figures, and gaming equipment. But be warned, competing with professional scalpers for the “good stuff” leaves most amateurs without much to choose from. The more advantageous strategy is to start small — or so they say — with obscure stuff like video game codes from Roblox.
Scalping is fun for the scalpers, but the gypped sellers do not have as grand a time, and that’s the important point that needs to be made. Do sellers lose out on getting a fair price for their stuff? Yes they do. Are they blissful, even arrogant, in their ignorance at the time? Also yes. Does that make scalping a fair and decent thing to do? No, sadly not. No matter how much scalpers might try to turn the narcissism they experience from sellers into sufficient justification for ripping them off, the fact remains that it is all just objectively dishonest.
What could be the worst about scalping, and what most decent people would agree is very bad, is that every time someone makes money scalping, it causes someone else to lose money. In a bargain where they underprice and you underpay, there is no room for a win-win. There never can be, in fact. It’s all black and white: you win and they lose.
And this is where scalping relates to crypto, because the entire crypto industry is a very similar scenario. No, crypto scalping is not a common tactic, but there are very few win-wins when using cryptocurrencies in general. This fact alone should not lead anyone to conclude that cryptocurrencies should be banned or regulated per se — the technology behind crypto is truly innovative and worth finding uses for, perhaps uses that actually provide value. But the fact that there are diminutively few use-cases of cryptocurrencies that cause win-wins is a much-needed reality check for the people who said crypto would save the world.
When talking about crypto, there are a few pieces of context to keep in mind. First is that crypto has no intrinsic value. It is not shiny like gold, and you cannot live in crypto like you can in real estate. Crypto is like the dollar ($): it’s a fiat currency. Second is that crypto’s only value proposition is that it can be a medium of exchange (crypto can be sold in exchange for goods in the same way the dollar can). Stocks, though, have a more legitimate value proposition, because the companies behind the stocks earn their value by creating products or services that provide real value to real people. When people buy a company’s stock, they usually do so because they see how much value the company is making and they want a cut of that value. Crypto is not that. Third, one of the big draws of crypto to early enthusiasts was how it could make transactions anonymous. This was important to people who were afraid of governments freezing bank accounts for political reasons. Oh yes, and it was important to money launderers.
There were early crypto users who treated cryptocurrencies like stocks, investing in and holding Bitcoin and other popular coins or day trading them. Some of those users saw quick gains as crypto’s burgeoning popularity attracted more investors and inflated trading values. The theory was that if new people bought and held crypto faster than new coins were created, it would leave fewer coins left circulating in the market, driving prices up. Some who participated became seemingly overnight “crypto millionaires,” but at the end of the day they were no different from the aforementioned scalpers on Facebook Marketplace. Crypto traders relied on the naive segment of investors whom they were able to convince that cryptocurrency values would always rise. Like scalpers, they searched for items they could identify as underpriced and sold them for higher. Their actions were dishonest and unethical.
Unfortunately, crypto isn’t really anonymous any more, and without that anonymity the usefulness of crypto kind of crumbles. Andy Greenberg, an OG crypto evangelist who wrote one of the first-ever articles about crypto for Forbes and who also authored a book titled Tracers in the Dark which espoused dark truths about cyber criminals getting caught with crypto, said in a WIRED interview that many of his opinions about crypto changed after he realized it was not anonymous. “I would say, at least fast-forward a whole decade, around 2020, that I started to realize how completely wrong I was about this. How not just I was a little bit wrong, but actually 180 fully opposite of correct about this - that Bitcoin is actually fully traceable. In fact, it is much easier to follow the money if you can crack and decipher the blockchain with cryptocurrency than even with traditional finance.”
Whether because of the loss of anonymity, the proliferation of unsavory-looking cryptocurrencies competing with more well-known ones, the wild fluctuations in crypto prices, or broader uncertainties about the economy, cryptocurrency values have so far never recovered from their highs in 2021. It is a shame that crypto has so many problems. An anonymous, online version of cash would — for a lot of people — be quite useful. But crypto is not that — at least not for now. Maybe, hopefully, it will become that later. But for now, it is clear that crypto won’t save the world.
