Cryptocurrency has long been touted by advocates as a way to keep government out of your wallet and tamp down on financial corruption, as well as hedge against inflation and global disasters. “Then came Monday,” writes Megan McArdle in an op-ed for the Washington Post, referencing this week’s wild ride in the stock market, with crypto fanatics praying their preferred currency could weather such a storm unaffected, as “a kind of digital gold.” However, “it seems less like digital gold than a digital slot machine,” McArdle notes, with people watching “the reels spin without knowing whether they’ll pay off.” McArdle points out that bitcoin dropped 15% as the stock market plummeted on Monday, writing, “This is not how a hedge against inflation or disaster acts.” In fact, she adds, bitcoin and other types of crypto “have often done the opposite of what they were supposed to do.”
McArdle describes a system that “appears to be less reliable and stable, and more corrupt, than the established banking system”—ie, it kind of defeats its own purpose. “Its architecture is too cumbersome; transactions take minutes, even hours, to be processed through the blockchain,” she writes. “You can ameliorate this problem by using a third-party processor, like an exchange, but at this point you’ve started to re-create the financial system you hoped to replace, except without the protections against theft and abuse that have developed over centuries.” Sure, crypto might be good in the sense that it may possibly help some people get around rules in transferring wealth to other countries, but even that has its limitations. In short, bitcoin is “not good for much of anything except giving people who have money to burn a novel way to set it on fire,” McArdle writes. Her column in full here. (More bitcoin stories.)