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Crytpo: There’s Just No Legit Use Case for It. But, Man, Are These Bros Lobbied Up

—Jared Bernstein and Ryan Cummings

Anyone who thinks that Crypto "Currency" is anything but a vehicle for gambling, extortion, money laundering, and fraud is either corrupt or stupid.  (Maybe both)

Dan Davies and Henry Farrell have penned an important oped about the systemic risk embedded in digital currencies—the many stablecoins and cryptocurrencies out there—a risk that is significantly heightened by bipartisan Congressional support for legitimizing these non-sovereign assets. The authors explain how Congress’ blessing of these highly volatile currencies, particularly the normalization of stablecoins through the so-call GENIUS Act, could both undermine the role of dollar and create bail-out risk. Re the latter point, should they become a sizable part of the banking system, there’s a good chance that they’d end up being too-big-to-fail, and, should they crash, require tax-payer bailouts to stabilize the system.

But the oped does not say enough about the foundational problems with private digital currencies that should disqualify them from getting anywhere near the broader financial system. In this post, co-written with Ryan Cummings of the Stanford Institute for Economic and Policy Research, we go back a few steps prior to the current moment, and explain why, in our view, stablecoins and crypto are just fundamentally useless-at-best and harmful at worst. And, in agreement with Davies and Farrell, how the so-called GENIUS Act is a dangerous piece of legislation.

Unless you’re a criminal, there are no use cases for these currencies.

Crypto, and by extension, stablecoins, whose primary use is to buy and sell crypto, are, for reasons we explain, useless for normal commerce. Yet, they have two very prominent uses that have fostered their proliferation over the last decade-and-a-half. First, their anonymity makes them the currency-of-choice for scammers and thieves, and second, cryptocurrency speculators can trade them with each other and in so doing, quickly make—and lose—a lot of money.

(emphasis original)

Unlike cash, which is at least as hard to trace, crypto has no use as a currency.

One cannot buy a stick of gum with crypto.  It takes at least a day for the currency to clear.