In 2015, cryptocurrencies will stop being viewed as having “one bad year” — and start being viewed for what they are: modern-day Beanie Babies for ultra-libertarian math nerds. It’s stunning to me how many otherwise intelligent people fell for cryptocurrency, having forgotten (or failed to understand in the first place) what a currency actually is: a medium for exchange and a store of value. As such, currencies that experience acute inflation or (worse) acute deflation tautologically fail. We actually have a lot of (willfully ignored) macroeconomic history that tells us this; central banking was only invented after we had had disastrous experiences with every other way of managing currency (viz. the Panic of 1837). And this isn’t just like, my opinion, man: no one purchasing or selling goods is going to opt into a currency that introduces volatility risk in an orthogonal (and often low margin) commercial transaction. (Indeed, in the you-can’t-make-this-up department, Bitcoin has become too volatile to be reliably used for ransom.) Of course, proponents are now saying that “the value isn’t in the currency but in the blockchain application stack” — which is like saying the value of Beanie Babies is in their soft and cuddly nature: yes the value of Punchers the Lobster is non-zero, but it doesn’t mean that it’s actually worth 2,600 clams.

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