Contribution of cryptocurrency to the real economy, part 1

Hi frens,

I saw someone asked the question:

Sincerely asking, where is the contribution of cryptocurrency to the real economy?

Alternatively, any pointers for further reading would also be appreciated.

Firstly, he agreed that,

Underground money exchange and money laundering are indeed the primary intrinsic values of cryptocurrency, yet they are precisely the things the crypto community is reluctant to mention.

I second that. In my early understand of crypto, money laundering (洗錢) or illegal deposit taking (吸金) is dominating and brings negative impression. After learning about economic history, I realized that fiat money hasn’t been the main type of currency for very long, and people used to exchange many different kinds of money, not just what was legally approved.

ChatGPT explained,

Fiat money has been the main type of currency for about the last 50 years. The transition began in the early 20th century, but it was solidified when the United States abandoned the gold standard in 1971, which marked the start of the modern era of fiat currencies globally.

In short, Cryptocurrencies represent a return to unregulated currency.

When we use fiat money and limit its use to “legal” purposes, we are relinquishing power to the government, which brings the benefits of globalization and the risks of global financial crises in our times.

I have faith in crypto because I understand it originated from the cypherpunk movement, a group of people researching virtual currency using cryptography to ensure privacy.

To be more specific, he asked:

I don't deny the asset value of Bitcoin; I just don't know where its intrinsic value lies in the real economy. This is my original question.

Gold can be worn around the neck, oil can power cars and airplanes, Google is used for searches every day, Amazon is used to buy everything. But Bitcoin?

It’s probably hard to acknowledge that “showing off” is the major benefit of using cryptocurrency, for now.

While privacy is preserved when no individual is linked to a wallet address, it can be an authentic showcase of wealth when an identity is associated with it. This is why, I believe, the main reason of NFT and ENS went popular.

I’d like to continue our discussion next week, including accounting and smart contract.

Your friend,

Denken