OPINION: We are not all going to the moon

Cryptocurrency should never take over government functions, writes guest columnist Caelan Reeves CM ’24. (Courtesy: Rawpixel.com)


For many invested in cryptocurrency, crypto and conducting transactions on the blockchain provide an opportunity to level the playing field of finance. Cryptocurrency is decentralized, meaning anyone with a computer and a willingness to study the intricacies of the field could turn a profit. It has the potential to challenge the monopolies of longstanding financial institutions.

This mindset comes through in a phrase common in the community’s vernacular: “We’re All Gonna Make It,” often abbreviated to “WAGMI.” The purported “We’re All Gonna Make It” mentality stands in stark contrast to the attitude of another community that runs parallel to crypto enthusiasts: day-trading, particularly of call and put stock options. The online day trading community is characterized by a self-effacing nihilism, with boards like r/wallstreetbets full of memes of people making fun of themselves and others for facing losses in the stock market. Where the crypto community is earnestly invested in the profitability of cryptocurrencies, day traders generally demonstrate a more healthy understanding of the volatility of stock options and the elusiveness of profit. 

The issue with the WAGMI mentality, however, is that it directly contradicts the process that makes crypto profitable: when a currency or token “goes to the moon.” When a coin “goes to the moon,” its value is inflated such that it momentarily becomes extremely profitable for the small handful of people that bought in at the right time and can now sell at this inflated price. It’s hard to describe this moment of hyperdeflation in words that don’t carry seedy connotations because it is, in essence, a longform pump-and-dump scheme.

By definition, we are not all going to make it. A select group of people with the time, resources and blind faith to get ahead of the right coin at the right time will successfully convince others of its value and will profit immensely. To get ahead of a coin before it “goes to the moon” requires a great degree of faith that can often veer into naivety.

The consequences of this naiveté have already been plentiful: it has made the crypto community highly susceptible to scams. Many of these scams consist of the rapid inflation of token values, followed by the coin’s founders cashing out and leaving those that bought into the coin in financial high water, a move called a “rug pull.” If that mechanism sounds familiar, it should: it’s similar to what Jordan Belfort and other Stratton Oakmont executives went to jail for in 1999, as depicted in “The Wolf of Wall Street.”

The crypto community that operates a few degrees of consequence below big contenders like Ethereum and Bored Ape Yacht Club is rife with Ponzi schemes and theft. The ease with which one can fake an NFT’s validity and the apparent tendency of NFT owners to willingly give away their ETH wallet information has culminated in a virulent scam issue.

Candidly, watching people admit how much money they have to burn by whining about getting tricked into sending some scammer their awful uncanny-valley ape profile pictures is hilarious. This is the blockchain, baby. It’s the wild west, and that’s supposed to be the appeal. The lack of a centralized governing figure is meant to be crypto’s main selling point. What’s happened, however, is an influx of firms have emerged to serve as mediators and regulatory agencies. Which, beyond just being kind of funny — go ahead and call the blockchain police to get your glorified Club Penguin puffle back — has sinister implications for the future of personal finance on the blockchain. 

The thing is, monumental environmental consequences of blockchain mining aside, this could all, in theory, be fine. If people want to throw money at different currencies until something sticks, at least those consequences are contained to the individual. The issue comes when people argue for the application of crypto infrastructure to government and personal finance

It’s hard to overstate how much of an absolute disaster that would be. The selling point and entire ethos of the blockchain is its decentralized nature. The history of how banks behave under pressure and with respect to marginalized groups suggests that, if decentralized autonomous organizations (DAOs) and private regulatory agencies are granted any more weight as financial institutions, there could be disastrous consequences for financial equity. 

Optimistically, the blockchain is an ambitious experiment in potential outcomes for the future of finance. The urge to move commodity exchange entirely virtual is an understandable reaction to the rapidly shrinking viability of the physical realm — the planet — as a site of commodity production. The future of finance may have to look like something resembling cryptocurrency, but the currently existing infrastructure, and the culture surrounding it, are not that future. 

Caelan Reeves CM ’24 is a member of TSL’s editorial board. They did not enjoy Econ 50.

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