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Crypto just won. Not many people have noticed that.


American elections, Brexit, COVID and rows everywhere over lockdowns and vaccines have obscured that cryptocurrencies have moved from the periphery to the very centre of  power.

Last week Michael Saylor, the CEO of MicroStrategy, hosted a virtual Bitcoin conference. There’s nothing unusual in that. There have been many conferences about Bitcoin (the original and the most powerful cryptocurrency) since the first one in New York in 2011. What was unusual was the nature of Saylor’s conference. It was for corporations. The Suits. Business preaching to business.

Until 2020, the typical attendees at Bitcoin and other Crypto conferences were libertarians, anarchists, hustlers, start-uppers, basement-dwellers, code-freaks, citizens of countries with dodgy governments, and miscellaneous misfits. In short, mostly outsiders whose idea of snappy dressing was a clean T-shirt.

In 2010 László Hanyecz, made what is regarded as the first Bitcoin transaction, when he paid 10,000 bitcoin for some pizza. As I write this, in February 2021, Bitcoin has recently recorded an all-time high , with one bitcoin worth 4200O dollars. For a decade Bitcoin was vilified by Wall Street, sneered at by bloated bankers, government ministers, journalists, economists, Nobel Laureates like Paul Krugman. 

Bitcoin was a Ponzi scheme. A fad. A bubble. The payment of choice for drug dealers and contract killers. There was a lot of talk about tulips from the Suits to show how erudite they were, as they derisively flicked their cigar ash towards Bitcoin.
Well, suddenly the tulips smell great. In December 2020, one of the oldest insurance companies in the US, Massachusetts Mutual Life Insurance, stuck a hundred million dollars into Bitcoin. That’s worth repeating. An insurance company, by definition the most ossified, unimaginative dullards in the room, bought some bitcoin.

And with further irony, dodgy governments (Venezuela, Iran) are getting into Bitcoin, while their citizens cling to it as a life raft.
In 1776 Adam Smith blamed ‘the avarice and injustice’ of governments for debasing the value of money and causing the suffering of their citizens. 
In 1976, Friedrich Hayek gave a landmark paper in London calling for the ‘denationalisation of money’, not really meaning that, but rather the removal of governmental interference from money, although he had no idea how to achieve that. 

Around the corner, while Hayek was pondering money, the Sex Pistols were making it by blowing apart the entire music industry. That’s revolutions for you, you can often sense them coming, but you can’t be sure when they’ll arrive. There has never been an entity like Bitcoin.  There were ‘private’ currencies issued by banks or companies in the past, but Bitcoin goes beyond what Hayek imagined or could imagine. 

Bitcoin has no nation, no government, no headquarters with Doric columns and marble behind it. Bitcoin has no CEO (although like the Communist parties of yore, there is a reclusive Central Committee, but that’s a story for another day). It is a thoroughly modern phenomenon, but is now as universal as ancient assets such as gold, silver or cattle, but easier to move.

Bitcoin is at the start of a bull run that could see it reach a 100,000 dollars by the end of year, but even if it doesn’t, even if it tops out, everything has changed. Whether 2020 or 2021 marks the beginning of the Crypto era, when Crypto moved from being something interesting to something significant, is a question for the historians.

In terms of blockchain tech, Bitcoin is now like some Victorian contraption that belongs in a museum. It has completely failed as electronic buy-your-coffee cash. Yet it has triumphed as a store of value, as a digital gold. It is currently the world’s fifth largest ‘currency’ by some measures.

Just as the Sex Pistols opened the gates for dozens of new, eccentric, better-selling acts, Bitcoin has a retinue that will probably outperform it. Defi. Defi: decentralised finance, that offers all the financial services you could ask for, on-chain, in ‘smart contracts’, a term coined by the polymath Nick Szabo. Defi went from one billion dollars in total value locked to some 20 billion in 2020.

Why? Because you can make money.  What has your bank done for you lately? An interest rate of 0.1% on your savings? If you’re lucky? You’d be punched in the mouth for suggesting that in the realm of Crypto. Interest on Bitcoin and other cryptocurrencies starts at around 4% and can go much, much higher.

It’s true that Defi doesn’t have the same safeguards as highstreet banks. There have been catastrophes and swindles, but no worthwhile investment comes without some risk: you can be stripped naked by a bad decision on ye olde stock market. 

The big American exchanges like Coinbase, Gemini and Kraken are almost as solid as banks, and Kraken has actually obtained a bank charter in the Crypto-friendly state of Wyoming, not to mention that the über-bankers, the Swiss, have had a “crypto valley” in Zug for nearly a decade. The old caper of thesis-antithesis-synthesis is being acted out again.  The Crypto companies are becoming the banks they were originally created to destroy, and the banks are opening up to Crypto. When Paypal and Visa are offering their customers Crypto you know it’s over.

If someone at one of the ‘legacy’ banks like J.P. Morgan or Goldman Sachs, even just four years ago, had had the vision and guts to pile heavily into Crypto, they could have truly dominated the world. But it’s too late. They’ve lost out. Obviously they won’t be wiped out. Just as cinema didn’t eradicate theatre, or television cinema, the banks will carry on, but diminished.

And it should be remembered that blockchain isn’t all about money. It does culture too. NFTs (non-fungible tokens) are the frontline for a lot of artistic endeavor. The American artist Beeple (like Banksy with a science-fiction twist and better lighting) has been selling his work on-chain for huge sums and the NBA has begun issuing some of its trading cards as NFTs.

The writing originally appeared here: