In a day in which everyone, including the BIS, appears to be talking about cryptocurrencies after last week's China-induced crash, here is one of the more insightful takes on the future of cryptocurrencies, and how thay fit into the existing/legacy fiat system, courtesy of the latest Sunday note by One River Asset Management's Eric Peters.
"Any other thoughts on the matter?" he asked. We'd spent quite some time discussing Bitcoin, Ethereum, and copycat cryptocurrencies popping up faster than North Korean nukes.
I mostly listened, he knew far more about the subject; blockchain, distributed ledgers, mining, halving, hash rates.
Unlike the S&P 500 realized volatility's collapse to 8%, these new creations are realizing at 90%. Which makes them attractive to day-traders, adrenaline junkies, who launched 100 crypto hedge funds just last month.
It's the millennial's wild west. Like all generations, they've discovered a new frontier, with few rules, seedy saloons, gunfights, corpses.
As our earthly unknowns disappear, we find new ones in the ether. Which is where money belongs; it's not real, it's an abstraction, an age-old illusion.
As a golden myth captured mankind's imagination, we built our societies upon a rare yellow metal. For 2,500 years we fought, killed, conquered. Until governments tired of the arbitrary spending constraints imposed upon them by a scarce element. So they invented today's fiction, a printed promise, fiat currency.