I am most certainly not a cryptocurrency expert. This series of posts puts forth some thoughts, musings, opinions and questions. Please feel free to add comments below, they will be very helpful.
First off, let’s be clear about something: the term “cryptocurrencies” is IMHO a mis-nomer. They are neither crypto nor currencies, at least not yet.
- Digital network creations can never be entirely anonymous, untraceable or unhackable. Yes, it is very difficult to break into encrypted distributed systems but it is certainly not impossible, as the US Federal law enforcement activities have proven time and again (the same is true of other nations’ actions, state or maybe even privately controlled). Hacking has routinely resulted in stolen tokens, while US agencies rapidly recovered ransom delivered in crypto.
- The most basic attribute of a currency is stability. Given the wild prices swings of cryptos is is obvious that they are not currencies, at least not now. Imagine showing up at the gas pump for a fill-up and having to pay 100 Woofers today instead of 50 last week.
- Another attribute of a currency is wide public distribution. Crypto ownership is (obviously) not public, but it is estimated to be highly concentrated. This is also made quite obvious by the wide daily price swings.