Will cryptocurrency save the world?
Just a few years ago, the "Sharing Economy" was the big thing in technology circles. There were conferences, speakers, and experts, all promising some sort of deep evolution in the way we work and live.
Fast forward to 2018, and the Sharing Economy looks to have been not only a dud, but also a clever marketing ploy that permitted several tech companies to strip a century of worker's rights away, in favor of an exploitative and crass "gig" economy.
Today, instead of the Sharing Economy, technology circles are chattering about cryptocurrency and attendant blockchain technology.
Through my law firm, we handle dozens of intakes about cryptocurrency every month. Here are my conclusions, writing near the end of summer in 2018:
(i) Cryptocurrencies have promise, but they are not a guaranteed way to make money, and there are plenty of scams out there. There are in fact interesting and innovative things that blockchain technology and cryptocurrency can do. But a lot of those things are being drowned out by the froth of ridiculous, unproven ICOs, rampant violations of securities laws, and outright fraud.
Yes, there are stories of people making a lot of money through cryptocurrency, but they are doing that mostly through activity that basically amounts to day trading.
And for every story you hear about crypto-wealth, there is a countervailing story of people losing everything through crypto-gambling as well.
Too many companies and people have lost sight of market fundamentals. A technology that has a lot of bells and whistles, but doesn't provide value to a consumer or a proven return to an investor, is a dud, plain and simple. Avoid it.
(ii) Cryptocurrencies have been a distraction for too many people. For most companies, distributing a crypto asset is not at all a good idea, and will take that company away from its core competencies and strengths.
If you need money, raise capital through traditional private company mechanisms, or even do a crowdfunding campaign. Don't get dollar signs in your eyes from what you're reading in the paper. Greed can lead you to strange places. It's telling to me that some of the same "evangelists" about the Sharing Economy have suddenly become crypto-enthusiasts, updating their LinkedIn and having a sudden, new expertise. This is a pretty big red flag in terms of industry froth.
(iii) There are fundamental problems with our global economic system that cryptocurrency will not solve on its own. There is a risk that cryptocurrencies act as a "shiny bauble" distracting smart people from urgent crises of the day. Companies are extracting too many resources in an unsustainable manner. Pollution is rampant. The Earth is warming at a terrible rate. In fact, Bitcoin mining is producing a dramatic carbon footprint. If entrepreneurs and investors are just going to replicate the mistakes of a failing economic system through cryptocurrency, they are contributing to a large scale die-off of life on this Earth, and potentially even human extinction. This is not hyperbole: this is science.
At the Firm, we are happy to be working with several projects that we think are not only innovative but also socially impactful in meaningful, important ways. That should be the goal of cryptocurrency. It should be the goal of any technology, really: to help liberate ourselves from our own restrictions, and to make the world a better, saner, more sustainable place. If that's not the goal of why you get up in the morning, then it's time to find another goal.