By now, there have been so many crypto scams and even outright fraud — like the collapse of Sam Bankman-Fried’s FTX and its sister trading company, Alameda — that it’s tempting to write all of cryptocurrency and the blockchain off as a snakepit of potential fraud waiting to happen. But Scott Alexander, who writes at Astral Codex Ten (an anagram of his name) says there are a few reasons why he doesn’t think we should write it off completely:
- Crypto is full of extremely clear use cases, which it already succeeds at very well, including the use of cryptocurrencies in countries such as Venezuela, Ukraine, and Vietnam:
“Vietnam uses crypto because it’s terrible at banks. 69% of Vietnamese have no bank access, the second highest in the world,” Alexander says. “I’m not sure why; articles play up rural poverty, but many nations have more rural poor than Vietnam. There’s a history of the government forcing banks to make terrible loans, and then those banks collapsing; maybe this destroyed public trust? In any case, between banklessness and remittances (eg from Vietnamese-Americans), Vietnam leads the world in crypto use.”
- Big crypto projects are rarely scams:
“I searched for articles called things like The Top Crypto Projects Of 20XX, and then I checked how many of those projects, years later, had turned out to be scams. I chose four articles for this experiment, which bBetween them described 54 different crypto projects. Looking back at these from our position in late 2022, as best I can tell zero of them have been revealed to be outright rug-pull-style scams.
A few fizzled out for lack of interest, like any business can. Two of the ten stablecoins lost their pegs, going to 70 – 80 cents instead of the expected $1¹. One exchange got in trouble for money laundering, although this didn’t negatively affect users. But overall this doesn’t seem worse than any other industry. If you split $1000 and invested it equally in all the top crypto projects of 2015, you would now have $25,400.”
- Crypto is valuable insurance against authoritarianism:
“Freedom of speech is hollow if you can’t pay the print costs for your magazine. Freedom of religion is hollow if you can’t pay the rent on your church. The freedom to protest is hollow if you can’t pay bus fare to the protest site. If the government hates Islam, it’s hard from a legal and PR perspective to imprison imams or ban the Koran. But it’s easy to subtly convey to banks that it will regulate them out of existence unless they ban transactions to imams, or to any bookstores that carry Korans. And this has pretty much the same effect. The most obvious example of this is the way Paypal bans sex workers