Paul Krugman kicks off his new Substack with a look at crypto, the favored tool of tech bro billionaires. Take a look:
The tech bros who helped put Trump back in power expect many favors in return; one of the more interesting is their demand that the government intervene to guarantee crypto players the right to a checking account, stopping the “debanking” they claim has hit many of their friends.
The hypocrisy here is thick enough to cut with a knife. If you go back to the 2008 white paper by the pseudonymous Satoshi Nakamoto that gave rise to Bitcoin, its main argument was that we needed to replace checking accounts with blockchain-based payments because you can’t trust banks; crypto promoters also tend to preach libertarianism, touting crypto as a way to escape government tyranny. Now we have crypto boosters demanding that the evil government force the evil banks to let them have conventional checking accounts.
What’s going on here? Elon Musk, Marc Andreesen and others claim that there’s a deep state conspiracy to undermine crypto, because of course they do. But the real reason banks don’t want to be financially connected to crypto is that they believe, with good reason, that to the extent that cryptocurrencies are used for anything besides speculation, much of that activity is criminal — and they don’t want to be accused of acting as accessories.
Well, Paul, like everything else, we’re rewriting the definitions these days. Crypto currency is noble and pure, used mostly by nuns and priests to send money to orphans. Or so I’m told!
But there’s a third possible explanation of crypto’s rise. Maybe asking “what are the legitimate use cases for this stuff” is the wrong question. What about the illegitimate uses, ranging from tax evasion to blackmail to money laundering? Maybe crypto isn’t digital gold, but digital Benjamins — the $100 bills that play a huge role in illegal activity around the world.
The old adage says that crime doesn’t pay, but of course it does in many cases. And it needs a means of payment, preferably one that isn’t too easily tracked by law enforcement. Traditionally, and to a large extent even today, that has mostly meant large-denomination banknotes.
