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For me at least, "Imagine the possibilities!" is not an answer to the question, "What's it good for?" Indeed, my experience is that it's almost an anti-answer. For example, in the mid-aughts I was talking with the CEO of a well-funded "semantic web" company about joining. I liked the people and the tech was cool, but I just couldn't figure out how it would turn a profit. His answer was similar to yours, a "what couldn't they do?" answer. Turns out they never found an answer, and got acquired for their technology without ever turning into a real business. As somebody who used to write software for financial traders, it's not clear to me that removing clearing houses is a step forward. They provide important services. And I'm even more skeptical that allowing randos to trade in opaque, unregulated assets is a good idea. Music industry actors, for example, have decades of experience in creative accounting and screwing people over. Real estate has a strong caveat emptor tradition, and property management companies are not exactly a watchword for fair dealing. So from you description, I'm mainly imagining people all over the world getting fleeced with no practical legal recourse. As best I can tell, the cryptocurrency space seems hell-bent on rediscovering why strong markets and government oversight exist in the first place. The only demonstrated market advantage Bitcoin has in a decade of operation is in light financial crime like money laundering, capital control evasion, ponzi schemes, ransom payments, and outright theft. I do hope these technologies turn out to be useful for something. But the "imagine the possibilities" routine worked much better when there was less of a track record. Now I'd rather examine the actualities. |
The problem is that cryptocurrency and the community around it is absolutely crawling with scams to the point that it's hard to find things that are not scams. Bad drives out good. Even if the tech works perfectly and can be made to scale, if the ecosystem is full of scams it will never be used for anything but scams and black/grey market applications. Anyone not looking to scam will run away.
Contrast with the stock market. There are scams, sure, but the majority of stocks are not scams. If you bought stocks at random you have at least >50% odds of buying stock in a real and honest business of some kind. If you participate in cryptocurrency stuff at random I'd say you have a >90% chance of being scammed... probably closer to 99%.
All the ad-hoc regulations and institutions around conventional finance are the outcome of a multiple century long Red Queen's race between productive economic activity and noise. Noise includes scams, frauds, bubbles, and other forms of undesirable action or emergent behaviors in markets that get in the way of productive economic activity. That hodge-podge of adaptations is almost certainly sub-optimal, but you're not going to do better by just ignoring the problem domain and offloading everything onto individual market participants. That means every market participant has to operate their own SEC and investigative journalist outfit to have any chance of not being scammed. Not going to happen.
A recurrent fallacy of techno-libertarians and techno-utopians is to vastly underestimate human avarice and opportunism. The people designing these systems are usually fairly honest, so they have a hard time imagining what sociopaths and con artists will do with the things they create. If you create anything that offers even the tiniest chance at making money or obtaining some form of status or power, it will be DDOSed with fraud and con artistry of every kind.
Edit: I am not totally bearish on this stuff and I see valid uses for it, but I don't think it's as broadly world changing as its evangelists do.