brief notes on crypto

the usual disclaimers: none of this is financial or career advice, I am not particularly well-qualified here, but then again a person with a similar-ish background as mine went on to start FTX so who even knows what qualifications one truly needs. these are my beliefs right now, but they may change

posting this because I want to make my thoughts legible, and I’ve tried to derive my beliefs on this subject from first principles, although I’ve heard strong opinions from all sides

• I often hear “the smartest people I know are into crypto” or at the very least “a lot of smart people are in crypto” from those bullish on crypto. I don’t really like this argument because it’s an appeal to authority

  • The most obvious counterargument is that there are smart people who are not in crypto, or are vocally against it

  • I also find that when “intelligence” is mentioned in this space, there is a conflation between “good at solving math problems” and “good at predicting cultural/economic shifts” when these two skill sets don’t really have much to do with each other. Winning an IMO gold medal doesn’t mean you’re more well-positioned to understand all the systemic changes that need to take place for cryptocurrency to become widely adopted. Was SBF actually better equipped to start a crypto exchange just because he studied physics at MIT and was a trader at Jane Street? But those are the status symbols that helped him instill confidence in investors, customers, etc.

  • Also I have wondered if a lot of math people enjoy crypto because they genuinely believe in its significance, or just because the math is fun. Number theory is pretty cool. But whether a math problem is interesting to solve has little bearing on its practical applications

• I do think there are genuine use cases for crypto, like purchasing illegal drugs or laundering money. Regardless of how you feel morally about these use cases, it’s undeniably useful for making transactions that require anonymity.

  • Other use cases that are perhaps not as relevant to Americans: having more control over your financial assets if you reside in a country with more corruption, being able to operate anonymously if you reside in a country with more censorship (one example to illustrate this second point: if you are posting queer content online and would like to get paid for your content, but your government has strong anti-LGBTQ+ laws)

• I don’t hold much conviction towards widespread adoption of decentralization.

  • Nobody likes regulation and bureaucratic nonsense until lack of accountability and centralization brings about bad actors

  • “Political power grows out of the barrel of a gun” — Mao Zedong. What is a currency worth if it is not backed up by the power of a government’s military?

  • The often-touted example, “Imagine ride-sharing, but blockchain would allow your driver to get all the money instead of Uber” could probably not work in real life because what’s stopping your driver from kidnapping you if they’re anonymous

  • Also, the rise of exchanges like Coinbase, FTX, Gemini, Binance, etc. came about because most crypto users don’t actually care that much about decentralization or privacy and were just trying to get rich, even if it meant trusting a middleman (we saw how well that’s gone…) and using their bank information tied to their real identity

  • Not sure I foresee this attitude changing. Most people don’t give a damn if TikTok or Meta is stealing all their data

• Wrote some stuff about the environmental impact of crypto but decided not to include this because I’m not prepared to make strong claims about our moral responsibility towards climate change, but I do want to acknowledge that bitcoin mining hurts the climate