The list of frustrated cryptocurrencies continues in parallel with the list of alleged winners of this funny game of entering the fascinating world of cryptocurrencies through certain doors open to curiosity or greed.
As with any Ponzi scheme, ardent supporters of these new digital financial instruments are based on the belief that unsuspecting buyers have a way to earn a lot and quickly.
The hobby is not new. Any technological breakthrough, from the invention of the steam engine to the invention of semiconductors, has always been accompanied by the spread of more or less far-fetched initiatives that have attracted investors willing to risk losing everything in exchange for a small chance of hitting the jackpot. Only after a generally long and disappointing period of trial and error around the central idea, a reasonable and stable choice of truly sustainable solutions is gradually consolidated.
Digital currency in its decentralized and anonymous, and therefore secret, form has not yet reached this first level of maturity. Thanks to the support of the magic tool of the blockchain, it literally exploded in markets that spontaneously emerged due to the seizure of bitcoins, etherium and many other cryptocurrencies, before sometimes falling to almost full height. Of course, the parachute is to blame, because, as Lori Heinel, chief investment officer of State Street Global Advisors, one of the world’s largest asset managers, said last week, “cryptocurrencies have no intrinsic value; they are worth only the price you are ready to offer ”(“ Im grunde kauft man also einen Vermögenswert, der nur so gut ist wie das nächste Angebot ”(“ NZZ ”of 10 June).
And the fall is sometimes impressive: the last price of bitcoin (27,228 francs on June 12) is twice lower than on March 28, in itself far from its historical maximum on November 9, 2021 (61,056 francs).
“Any technological breakthrough has always been accompanied by more or less far-fetched initiatives that have attracted investors willing to lose everything in exchange for a tiny chance of winning the jackpot.”
In its more academic version, the approach to the phenomenon of digital currencies focuses primarily on the risks they pose to the financial system as a whole, and emphasizes their limits, which are much narrower than one can imagine. Whereas, like classical finance, where generalizing an instrument makes it more economical and less expensive, increasing the exchange rate of any cryptocurrency makes each transaction slower and more energy-intensive. In addition, this explains why new ones are constantly being created, as demonstrated very well by one of the speakers (Christopher J. Waller, Member of the US Federal Reserve Board) at the cryptocurrency conference recently organized by SNB and CIF (Innovation Finance Center). University of Basel.
In this context, we consider many aspects of the evolution of decentralized finance, which we are still trying to identify, to, of course, better formulate them to, as they say, protect the average investor by uninformed definition, but also, perhaps, primarily to prepare the ground for the emergence of digital currencies of the central bank, which will return everyone to the right path of financial regulation.