Crypto? Hell no!

It would take a heart of stone not to laugh at the ongoing collapse of the market in so-called cryptocurrencies.  The only real question about this whole business was whether it was a scam or just a bubble.  A little of both, it turns out.

Cryptocurrencies always seemed like a solution in search of a problem.  Sure, the central banks, as guardians of the world's conventional currencies, are far from perfect.  Still, in recent decades they've become a whole lot better at protecting the value of those currencies from the ravages of inflation. If you want to understand the inherent nature of the crypto world, you just have to look at the people promoting it -- everyone from the lugubrious Winklevoss twins to, Lord help us, the Government of Venezuela.  Then there's the fact that crypto currencies are bad for the environment, thanks to the prodigious quantities of energy used in the so-called "mining" process.  All in all, Bitcoin, Ethereum and the rest make tulip bulb mania look like the height of conservative investing.

One sad but instructive crypto-related lawsuit is now before the Canadian courts.  It concerns the country's biggest crypto exchange, QuadrigaCX, which is now in dire straits following the untimely death of its founder, at the sadly premature age of just 30. The company's creditors are looking to recover their assets, supposedly valued at C$250 million, though since the bulk of this represents cryptocurrencies, the real value must be almost impossible to determine.  Nobody knows how to recover the money, because when the founder passed away late last year, he took the only password with him.  At the risk of sounding unduly flippant about this, you don't have to worry about that sort of thing if your investments are in greenbacks, loonies or Euros.

Now there are calls for government to step in and bail the "investors" out of their losses.  Really?  Many of the people who jumped head first into this market did so out of a libertarian desire not to have anything to do with government.  Some of them may also have harboured thoughts of avoiding taxes and money laundering regulations. And now that it's all gone pear-shaped, they want the government to ride to the rescue? 

In a masterpiece of understatement, the writer of the linked article says that a "sympathetic view is not widespread" when it comes to compensating these folks for their losses.  With an election campaign now getting under way, you would have to think that any politician putting forward a platform to "save the greedy crypto speculators" might have a death wish.  For sure, the Bank of Canada should be keeping an eye out for any systemic risks that might arise here, but otherwise, it should allow the whole nasty and pointless mess to fade away, with the losses falling where they belong, and not on the taxpayer.