19th century called and wants its crypto back


Crypto is not ultra-modern. It is atavistic. That’s all there is to it.

It’s amusing watching the pundits blame FTX as some kind of crypto outlier. It’s not. It is the epitome of crypto:

Every trader I speak to is stunned by Alameda’s collapse. Not because FTX was found to be shovelling customer money over to Alameda – though that’s sickening enough – but because Alameda actually lost it in the market.

What else but lax governance, crazy trading, uncapitalised balance sheets, insane rehypothecation, unfathomable counter-party risk – and the list goes on – would you expect when ‘crypto bros’ are basically just making up their own money?


That it is packaged as a sound alternative to fiat currency is a testament only to the power of greed and gaslighting. It is stark, raving mad.

Not since the 19th century have we seen such stupidity:

In the United States, the Free Banking Era lasted between 1837 and 1866, when almost anyone could issue paper money. States, municipalities, private banks, railroad and construction companies, stores, restaurants, churches and individuals printed an estimated 8,000 different types of money by 1860. If an issuer went bankrupt, closed, left town, or otherwise went out of business, the note would be worthless. Such organizations earned the nickname of “wildcat banks” for a reputation of unreliability; they were often situated in remote, unpopulated locales said to be inhabited more by wildcats than by people. The National Bank Act of 1863 ended the “wildcat bank” period.


Yes, yes, I know that this is making up money is what our major banks do today as well. It is also what the state does. But, even if we overlook for a moment that crypto pretends to not do so, then the comparison with fiat is still catastrophic.

Sovereign currency is backed by governments’ and banks’ legal, regulatory, social contract and a central bank with unlimited liquidity. It has real powers to support it. Not to mention real guns.

Crypto is the local nerd handing you a badly printed counterfeit note. If he did it in person, you’d first laugh at him and then maybe kick his arse.


I asked a successful crypto trader recently which shitcoin he thought would ultimately win. His answer was as sagacious as it was simple.

The one that central banks choose.

That is, it will be about which technology platform the state chooses to deploy as programmable money. Which is not about crypto at all. It is about blockchain.

I doubt we will see another fantasy so grand as crypto in my lifetime. But, it is so bonkers and reflects such stupidly in the crowd that I am sure to be wrong.


Come to think of it, I noticed that I shit gold this morning.

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.