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Everyone Has an Opinion on Crypto Today
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Everyone Has an Opinion on Crypto Today

Everyone Has an Opinion on Crypto Today

Peter Renton·
Crypto
·May. 24, 2021·3 min read

I have had crypto investments since I first dabbled in bitcoin in 2015. Since then, I have expanded my investments to include a wide range of tokens on exchanges like Coinbase and Gemini. For any crypto investor the past seven days has been a wild ride. And it seems that everyone has an opinion about what this all means.

Let’s start with Paul Krugman, the Nobel Prize winning columnist for the New York Times. In this piece last week he basically said that cryptocurrencies have no real use case and have not achieved any meaningful economic role. He even offered up the idea that it has a lot in common with Ponzi schemes. The only hint that Krugman gives any value to crypto is a comparison he makes to gold as a store of value.

I loved the critique of Krugman from Lex Sokolin in his Fintech Blueprint newsletter today:

There is a basic mistake that experts make in looking at new technologies, and novelty generally. And that mistake is to be locked into a particular, well-defined model of the world. When a new thing, whose primary mode of growth is novelty, comes into the picture, it will fail assessment in an excel spreadsheet.

Lex makes the argument that people like Krugman do not really understand what is happening in the world of crypto today. There is a digitally-native generation emerging who are questioning the way things have always been done and they have embraced crypto, not just as an asset class, but as the underpinnings for the restructuring of the financial system.

Hedge fund billionaire Ray Dalio also spoke out about crypto. In an interview that was recorded on May 6 but released today he admitted that he “had some bitcoin”. He has a very different view to Krugman and that he thinks the biggest risk to bitcoin is its success because then governments will be seeking to control the digital currency. He added that he would rather own bitcoin than bonds right now.

Another billionaire that has been quite vocal on all things crypto is Mark Cuban. In this piece today in the Wall Street Journal Cuban explains why crypto is exploding in popularity and the core idea of digital ownership. He was an early enthusiast in NFTs and believes that blockchain technology, in particular Ethereum, is an enormous gamechanger. He is not necessarily bullish on the price of cryptocurrencies but he sees entire industries being transformed with the technology that is underpinning it.

The Federal Reserve has also had some things to say today about crypto. Fed Governor Lael Brainard said in a speech today that a cryptocurrency backed by the central bank could provide a variety of benefits. The first one is that it could help the 20% of the population that is underbanked. It could also lead to a more efficient payments system, particularly for cross-border payments. Here is a quote from her speech:

The Federal Reserve remains committed to ensuring that the public has access to safe, reliable, and secure means of payment, including cash. As part of this commitment, we must explore — and try to anticipate — the extent to which households’ and businesses’ needs and preferences may migrate further to digital payments over time.

Of course, you can’t have an article about high profile opinions in crypto without talking about Elon Musk. And yes, today he added to the large library of commentary he has made about crypto in recent months. He tweeted:

Spoke with North American Bitcoin miners. They committed to publish current & planned renewable usage & to ask miners WW to do so. Potentially promising.

— Elon Musk (@elonmusk) May 24, 2021

Whenever Musk tweets something positive about bitcoin the price goes up and sure enough right after this tweet it jumped more than 5% in just a few minutes. He does point to a real problem with bitcoin and other “proof of work” cryptocurrencies. The energy required to mine new coins is astronomical and needs to be addressed if they are to have a long future.

I used to receive alerts on my phone whenever the price of bitcoin or Ethereum moved more than 5% quickly. After last week I had to turn it off as these notifications were coming in sometimes every hour and in different directions. Volatility seems to be a hallmark of crypto right now and that makes the naysayers even more convinced of their position.

I am in Mark Cuban’s camp when it comes to crypto. While I am bullish on crypto as an asset class the really exciting piece to all of this is that the technology being developed on decentralized networks today will end up transforming finance completely. But that is an article for another day.

  • Peter Renton
    Peter Renton

    Peter Renton is the chairman and co-founder of Fintech Nexus, the world’s largest digital media company focused on fintech. Peter has been writing about fintech since 2010 and he is the author and creator of the Fintech One-on-One Podcast, the first and longest-running fintech interview series.

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