Snap Out Of It—Why Crypto Is Not The Future The World Needs

As big media companies push news articles about crypto touting revolutionary innovation, and while news aggregators like Google include crypto-news and ads in their feeds, people are trying to financially empower themselves using fun and cool-sounding cryptocurrencies with celebrity endorsements that they hardly know anything about (think top sports figures, entrepreneurs, and influencers that are all over social media feeds). As potential solutions are being drafted by the U.S. Federal Reserve to create better digital currencies like a Central Bank Digital Currency or CBDC, other cryptocurrencies are eroding existing systems in the meantime. A more empowering CBDC is needed sooner rather than later. The key question is then: Can governments offer a superior alternative to global digital cryptocurrencies?

 And how exactly can they do this quick enough to stymie or squash crypto-erosion fast in its tracks?

Waved away as just a very risky investment opportunity, crypto is far worse than that. It is gambling-like in that gamified apps are being created to make it incredibly easy and fun to get on board with cryptocurrencies without knowing the larger implications. Users are then encouraged to keep a close eye on wild volatile swings in the value of their investments. New users are brought into the crypto fold through a guise of modern investment lingo that touts "freedom" from large banks. The onus and all the financial risks are all on you, conversely your financial success is too. Beyond personal safety reasons, keeping money in a software wallet that isn't regulated or insured is also in itself a gamble and risk to take, and some users even have private security personnel guarding them. Getting your money back or out of a digital wallet if you decide crypto isn't for you could prove to be a difficult task to convert back to traditional currencies. On top of all that, many "exchange platforms" that promised to hold peoples funds have vanished overnight, like the Cajee brothers with Africrypt in June 2021, while other aspects of the networks have been hacked with no recourse. 


Merely considered a risky "private investment opportunity", crypto is actually a money cult. It is cult-like in various ways, such as how once invested there is a great risk in losing money, so there is a reluctance to bet against the "home team" or "favorite" currency, of which there are now thousands many of which have charming animals or emojis as their logo. The currencies themselves often have a "leader" figure or creator and they compete against each other to form devoted user followings. Many devoted users then don "Laser-eyes" on their profile photos on social networks to signify their belief in the growth of their favorite currency. Others follow in droves the big names, like Elon Musk, who manipulate the value of the currencies for their own benefit (often without reprisal or recourse). The devoted users leverage the fear of missing out, and the idea of "being left behind" to entice new users. This tactic is one often used by multilevel marketing schemes, where the promise is that the new users will "hopefully" increase the value of the currency. Unfortunately, the new users are often oblivious as to the intent and biases of the crypto networks. Inside jokes and lingo are used to both hype positive sentiment ("To the moon!" etc.) and conversely dismiss any necessary critical skepticism (What they call "FUD"-- fear, uncertainty, doubt).


The crypto networks develop their own form of wealth inequalities with "big players"/ "elites"/ "whales" that can disrupt the market by moving their funds around, and by leveraging their existing networks to benefit from introducing new users. This makes cryptocurrencies cartel-like in that authoritarian despots may enforce monetary scarcity—potentially indefinitely. The anonymity and decentralized nature of many crypto's has in the past encouraged violence to get the "vault keys" in order to gain access to wealth in crypto wallets, while some of these keys may be lost due to time, memory, faulty hardware, incorrect transactions, and entropy which may make the crypto scarcity far worse.
 Worst of all, distinctly missing from the blockchain hard code are fail-safes and social protections that older economic systems have, such as the ability to appropriate public funds for critical public services.


Corrosive to existing institutions and eroding the trust of existing institutions, cryptocurrency is anti-government, anti-state, and anti-democratic through attempting to make existing governance platforms irrelevant. Crypto aims to replace existing institutions with software-enabled governance platforms called DAOs, and through intentional design with decentralization via the blockchain, a software that makes appropriating funds impossible by-design. Crypto is also designed to evade regulation through decentralization by setting up networks in deregulated areas throughout the world (or even in space on satellites). While "Bitcoin" artificially creates scarcity by limiting the total amount of currency ever to be created, "Monero" encourages tax avoidance with money tumblers and obscuring transactions completely. This encourages money laundering, theft, and other illegal activities. With increased money scarcity comes conflict and discrimination. Meanwhile, crypto's like "Dash" challenge existing payment solutions by offering fast settlement and low fees that use a DAO, while others make it easier to convert between one crypto to another over and over again.

As if trying to replace the existing systems isn't audacious enough, some Silicon Valley elites are attempting to make entire existing financial systems irrelevant by replacing them with decentralized ones instead called DeFi or "Decentralized Finance". Cryptocurrency is anti-establishment through new software and with new hardware too, as seen at the point of sale (POS) in both physical and digital transactions. For example, the CEO of Twitter and Square (who is heavily invested in cryptocurrency) is creating both software and hardware to encourage the rapid adoption of crypto. Meanwhile, Facebook is considering rolling out their cryptocurrency called Diem later this year, and Ethereum has partnered with over 116 enterprise members. 
All three of these projects may leverage the effects of existing networks and partners for rapid adoption at an even larger scale than the big players already do since they have the social networks behind them.


In summary, crypto is cult-like, a gambling-like risk, a risk to personal safety, it increases wealth inequalities, encourages violence and artificial scarcity, corrodes existing institutions and erodes trust in existing institutions, encourages illegal activity. All of this is occurring under the guise of market and technological disruption, and a crypto-powered future is one we do not want and must reject.


The Near-future of Digital Currency

Can governments offer a superior alternative to global digital cryptocurrencies?

The last major democracy-enhancing disruption seems to have been the smartphone, although it merely extends the existing technological infrastructures into your hand. The disruption of existing markets is not often a democracy-enhancing endeavor anymore. It seems as if the majority of new technological innovations involve software that is actually increasing wealth inequality because the incentive to create a new technological innovation is now primarily driven by wealth generation for or from the wealthy. Today’s new major software innovations are leading to gig-economies, rent-seeking, and precarious living, while existing networks that were initially set up to be democratizing are becoming pay-to-play and/or filled with targeted advertising. App stores create the illusion of massive variety and opportunity, but instead create new barriers to entry with developer fees. Tech and media conglomeration is leading to more wealth inequality, less choice, less access to information, and fewer diverse points of view. New technology companies revolve around AI, Big Data, and Analytics at the global enterprise level while midsize national company growth shrinks. Paywalls in the media and subscription services in social networks are leading to more social stratification, political discord, and less access to information. Software solutions are replacing jobs, leading to more gig-work. Automation and robotics are reducing jobs, leading to more wealth inequality and gig-work. Uber and Lyft are examples of creating precarious gig-workers. Advertising and subscriptions seem to be the only way to monetize social networks, leading them to adopt both, creating a culture of monetizing social thought and rent-seeking, further entrenching wealth inequality and encouraging more gig-work.

What are the implications of further increasing wealth inequalities and widespread gig-work? People are being left out of civic decision making processes. They’re being left out of access to information, leading to poor choices at the voting booth. People have less material choice overall in general, equating to fewer healthy nutritional choices, and reduced access to healthcare. As services switch to subscription-based monetization, people face more fees, paywalls, and subscriptions in general, ensuring that the path to poverty becomes unavoidable. Younger individuals are strapped with student loans, too. They become caught in a loop of survival, leaving no time to speak out about corruption or how the wealthy affect government as they are merely living to survive, not living to thrive. This also hampers the ability to organize, and to get support they must jump through hoops of bureaucracy. This bureaucracy is often affected by austerity measures, potential corruption, and out of touch leaders, giving young individuals a sour view and distrust of government programs that were initially intended to help them.

Meanwhile, the wealthy are making increasingly larger amounts of money from money on securities markets and rent-seeking. Celebrities, billionaires, and other large organizations are investing in cryptocurrencies, influencing a generation of young people who are now looking to cryptocurrency to gain a financial edge as their work and income prospects diminish.

What does this mean for the near-future economy, and the near-future of digital currency?

Cryptocurrencies are flourishing on social networks like Reddit and Twitter. Data analytics for targeted advertising and suggestion engines or recommendation systems found in social networks can manipulate the culture of society and affect peoples' habits and norms by subtly nudging social posts and advertisements into their feeds. Twitter is doing this, for example, by showing recommended tweets and recommended topics as well as sponsored posts. After starting a new account, users may be offered up various new topics to follow, and they are increasingly finding out-of-place cryptocurrency tweets and ads in their brand-new feed, even if they had not expressed interest in that topic. If someone was not familiar with the symbols and terminology used they may be inclined to learn more about cryptocurrency from these sponsored posts and begin to develop what is know as “fear of missing out”, FOMO.

In many ways the old economic systems are not providing a path out of poverty or providing ways to avoid falling into poverty. People are trying the new systems of cryptocurrencies, only to unknowingly participate in increasing wealth inequality even moreso. A generation of financially hard-pressed individuals are now trying to escape destitution by gambling on securities markets and the new cryptocurrency economies. The wealthy are investing in the currencies that will make them more wealthy, making those the most popular currencies, while large banks and financial institutions are allowing and encouraging their wealthiest customers to invest in cryptocurrencies as part of securities portfolios.

These new economic systems don’t have the fail-safes and social protections that older economic systems still running today have built-in that try to: reduce wealth inequality; avoid depressions through stimulus; reduce poverty with direct cash transfers; help with emergencies; provide funding for essential public services such as clean water, fixed roads, community colleges, fire services and police services; combat political and economic corruption. In fact, the new economic systems are typically anti-government and/or anti-state by intentional design with blockchain and decentralization, including being anti-establishment and thus anti-democratic. In the new economic systems there are no methods for a state to fund crucial public services like schools, neither are their funding methods to combat systemic corruption. A new type of corruption then arises in a global non-state context where national and international jurisdiction may be difficult to reach.

What does a future filled with rising wealth inequality, software automation, robotics, more gig-work (less hours, less income), massive student loan debts, economic globalization, and machine learning hold for people? What happens when new jobs are increasing wealth inequality, while incomes aren’t keeping up with how they should be rising? What happens when many people are trying to empower themselves using fun and cool sounding cryptocurrencies that they hardly know anything about or understand how they work, and how those cryptocurrencies are intended to be biased / to work against the individual's best interest?

While there is currently not a better government alternative to these new economies, people who aren’t getting on board with the new economic systems feel a very powerful sense of "fear of missing out" and the idea of being left behind. As trust in traditional economic, political, and social institutions seem to be diminishing, eye-catching Vegas-inspired gamified apps are being created to make it incredibly easy and fun to get on board with cryptocurrencies without knowing the larger implications. Big media companies push news articles about the new emerging economy, touting revolutionary innovation in these sectors, and news aggregators like Google include cryptocurrency news outlets and ads in their feeds. Tech-hubs around the world are encouraging the use of cryptocurrencies, and big payment processors are creating easy paths to getting on board. Big financial institutions are doing this as well. Social networks like Twitter are nudging users with recommended posts and have major investments in the cryptocurrency space, and Facebook has worked for several years to create their own cryptocurrency (Diem) using blockchain.

This is creating a strong socioeconomic cultural feedback-loop all across the world. It's creating a self-perpetuation of habitual global digital cryptocurrency usage. These new pay-to-play software investments, or “innovations”, involve an increasingly high-risk culture within global securities markets. This culture features a strong draw of sports-fan-like addictive gambling with near-instant results that are associated with negative consequences and biases such as a reluctance to bet against desired outcomes. The cult-like nature can be seen as cryptocurrency market-watchers track "Whales"—large quantities of cryptocurrency in digital wallets—and their movements through various economic markets, similar to tracking big winners in fantasy sport leagues. That culture doesn’t exactly encourage altruism; instead, it fosters apathy or indifference towards issues of increasing wealth inequality and poverty facing their fellow citizens. It is essentially a money-cult without the physical money in hand.

Can nation-states and governments offer a superior alternative to global digital cryptocurrencies and counter the downward spiraling cultural trend that is being entrenched as the new economic norm?

If governments fail to produce an updated modern digital economic system that complements the already existing systems before a generation becomes engulfed by global cryptocurrencies, governments are at risk of being blamed for all the damages of continually increasing inequality that new software and cryptocurrencies are amplifying. Worse yet, governments may become powerless to encourage the adoption of such an alternative due to the entrenched trade-enabled network effects, the decentralized nature of the cryptocurrency systems, the entrenched hardware, and the cult-like anti-government stances that support the wealthier investors already lobbying governments. Grimmer still, beyond increasing examples of corruption and ransomware attacks, some of the most popular cryptocurrencies aim to become the singular global currency and may end up creating the most violence via cartels or authoritarian despots that may enforce monetary scarcity—potentially indefinitely. The anonymity and decentralized nature of some cryptocurrencies may encourage violence to get the "vault keys" in order to gain access to vast wealth in cryptocurrency wallets, while some of these keys may be lost due to time, memory, faulty hardware, and entropy which may make the cryptocurrency scarcity far worse. Extortionists, rent-seekers, scammers, toll-access gatekeepers, organized crime syndicates (ransomware), and mafia-like modern digital tyrants will potentially operate in less democratic areas while affecting democratic institutions and democratically-regulated markets globally. They challenge the rule of law and potentially weaken democratic institutions and norms through bribery, coercion, and media manipulation with the help of cryptocurrencies.

It is irresponsible for nations to assume that they would be immune from these groups and their tactics, or that banning cryptocurrencies entirely would eradicate such groups.

Nation-states and governments simply cannot afford to be left behind and outclassed by global digital cryptocurrencies.

Democracy, national patriotism, anti-trust laws, regulation, social security and social protections, government-funded public services, human rights issues, rule of law, policing of corruption, civil resistance, and politics as they stand today... have no place in a world swamped by global digital cryptocurrencies with no superior government alternative.

Thankfully, and crucially, solutions are being drafted to create better digital currencies such as a federal central bank digital currency. This federal central bank digital currency will be built on top of and complement the existing monetary system, so all the socially empowering government programs will continue, and potential new programs and state innovations may be created. The trust in the federal dollar would feed into the trust of the federal digital currency as these systems work together.

In what ways must a federal central bank digital currency outclass the rest?

The new federal digital currency should encourage individuals to be more active and informed in civics using their smartphones with local updates relevant to them. It would need to help bolster the existing fail-safes and social protections previous generations fought for, and it would probably expand them to help restore trust in social, economic, and political institutions. The apps and new local innovation centers and partnerships with libraries should provide information on how the poverty-stricken and homeless can participate in cash transfer programs. It should also show how anyone can take advantage of social-entrepreneurship federal incentive programs and grants. It should have features built into the system to allow for direct deposits (UBI). Creators and innovators would then have a new and safe way to get paid online, and donations for individuals and non-profit organizations would then become far easier to manage without the need for tools like Paypal, Stripe, Venmo and other payment processors. The government would need to find new revenue sources to pay for public services and initiatives through new forms of payment processing taxes from online transactions, trades, exchanges, and possibly new kinds of automation and automation-software/robotics taxes to offset the fast rising gig-economy and offset increasing automation. Existing software “innovations” like Twitter, Shopify, Square, Cashapp, and others would be incentivised to use the federal system that would have lower fees and streamlined methods of interacting with the new digital currency so that rapid-adoption may take place before Facebook’s "Diem" cryptocurrency and its associated cultural-shift takes root.

While all of these applications of the federal digital currency may help tremendously, this new currency alone would not shift the ever increasing tide of wealth inequality, cultural degradation, and the mounting financial and existential problems the younger generation already face.

Besides considering removing the paralysis of student loan debts and taxing the wealthy more to reduce wealth inequality, what needs to be done is to turn disruption and innovation of existing markets back into the democracy-enhancing and empowering endeavors.

The United Nations Sustainable Development Goals (SDGs) are a great start, but what is missing from their goals is an understanding of the initial motivation to begin a new entrepreneurial venture and how that relates to innovation. Before a company can become a company and hire employees and contribute to the market cycle, there must be entrepreneurial motivation. The threat of starvation or destitution is a powerful initial motivator for some entrepreneurs, leading them to focus on what they know that can bring in an income without considering if it is good or bad for society as a whole. This may also lead to the wrong type of initial motivation and the wrong kind of entrepreneurial spirit and company culture. On the other hand, those who do not face such dire wealth-starting-points have less understanding and foresight of the longer-term consequences of their new entrepreneurial ventures. This leads to the types of “innovations” and “disruptions” seen as "safe bets" from venture firms that are becoming more frequent today.

Currently there exists a void where in its place should be two initiatives: Firstly, a financial grounding (UBI) that individuals can stand on so that avoiding the threat of destitution is no longer a primary motivator for profit-seeking entrepreneurialism. President Biden’s American Rescue Plan Act of 2021 is a great step regarding the first initiative. Secondly, social-entrepreneurship needs to be far more encouraged through federal awareness raising (public service announcements), federal provisions of financial incentives, incubation, and provisions of grants. The federal digital currency would complement this support and the two programs together would feed into each other's success.