This Decade-Long ‘Fad’ is Only Just Getting Started
In today’s Money Morning…the same tired old arguments…the real crooks and gamblers…blinded by bias…and much more…
I shouldn’t be surprised…but I am.
The RBA has once again come out with a scathing criticism of cryptocurrencies.
Or rather, the RBA’s head of payments, Dr Tony Richards, has come out with scathing criticisms…
Funnily enough, he will also be out of his job at the end of this year. This is perhaps the reason he feels so bold in airing his opinion before his departure.
Whatever the case may be, his sentiments are groan-inducing.
His presentation for the Australian Corporate Treasury Association yesterday was filled with plenty of classic critiques. It included comments that crypto is used for financial crime, speculative investment, and — of course — rampant energy wastage.
The same tired old arguments that we’ve seen dozens of times at this point. Calling crypto a ‘fad’ for the millionth time in its nearly 12-year lifespan.
Nevertheless, Dr Richards believes that the future for crypto isn’t all that bright:
‘I think there are plausible scenarios where a range of factors could come together to significantly challenge the current fervour for cryptocurrencies, so that the current speculative demand could begin to reverse, and much of the price increases of recent years could be unwound.’
The real crooks and gamblers
Now, if you’re relatively new to crypto, you might be surprised by Dr Richards’ opinions. After all, we’ve seen a lot of traditional finance and government figures come out in support of crypto this year.
As I discussed a fortnight ago, even Commonwealth Bank is getting involved now. They hope to somewhat legitimise the practice of buying and holding crypto — even if it really is just the banks desperate effort to remain relevant.
Despite all this, Dr Richards still doesn’t believe in crypto.
Rather, he envisions a future where CBDCs and fiat-backed stable coins will rule:
‘If there were to be global policy action to deal with some particular concerns about the use of cryptocurrencies, plus the arrival of new stablecoins and CBDCs, that could safely meet the needs of a wide range of users, existing cryptocurrencies might then have only niche use cases, at best…’
I can certainly see why he supports this point of view. And it is a very real possibility that many in the crypto community have also discussed.
Because no one expects central banks, politicians, or even regular banks to give up their power so easily.
They’re not going to sit back and roll over as the crypto wave passes them by.
And who knows, maybe they will find some way to wrest control of this technology, creating some bastardised and centralised version of it — despite being a solution that is completely at odds with the entire point of blockchain.
But to think that would leave existing cryptos with only a ‘niche’ use case is idiotic.
The whole point of Bitcoin [BTC] and most crypto projects is to remove the need for central banks and other middlemen — institutions that tamper and toy with market dynamics to suit their own ends.
Why should we have to put up with people like Dr Richards, who destroy the value of fiat currency at their own whims? They erode our wealth under the guise of economic stability.
They’re the real crooks and gamblers…
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Blinded by bias
Thankfully, though, Dr Richards seems like he may be an outlier. A vocal minority as it were.
Because, as the AFR reports:
‘Reflecting on the significance of the issues, Dr Richards said the emergence of cryptocurrencies, stablecoins and CBDCs had attached the most discussion, conversation and debate that he had seen in a decade at the central bank.’
So at the very least, the entire institution isn’t ignorant. It suggests that there may be contention within the RBA as to what the future of finance may entail.
I’m sure many share Dr Richards’ belief that central bankers can control the blockchain, using it to their own ends as a new tool in their increasingly limp arsenal.
Others though, I imagine, must be viewing crypto with a slight sense of unease. Because if this technology can truly reach its full potential, it will remove any need for the RBA.
That hasn’t stopped Dr Richards from wallowing in denial, though.
After all, he doesn’t even seem to believe many Australians own cryptocurrency. Again, as the AFR reports:
‘He also questioned the numbers of Australians holding cryptocurrency, suggesting these had been exaggerated.
‘The Senate committee’s report, based on material submitted to the inquiry, pointed to surveys that one-in-five Australians held some sort of crypto asset but “I find these statistics somewhat implausible”, Dr Richards said.’
What are we to make of the opinion of someone who won’t even believe truths put before him?
Because, as far as I’ve read, Australia actually has some of highest levels of crypto adoption in the world. Some reports suggest we may be the third-highest nation in terms of embracing this new technology.
Hell, even Richards himself admitted that he has bought some bitcoin and ether in the past!
For these reasons, it seems as though he simply can’t accept reality. He chooses instead to be so convinced by his own bias that he can’t rationalise any alternatives.
Only time will tell what the true fate of crypto will be at this point.
But with each and every passing year, it grows stronger and more formidable.
The genie is well and truly out of the bottle. And no matter how much people like Dr Richards want to deny it, there’s no putting it back.
Thankfully, everyday people like you and I stand to benefit. Because the only losers in this revolution are those who have exploited the traditional financial system for far too long.
Editor, Money Morning
PS: Ryan is also the Editor of Australian Small-Cap Investigator, a stock tipping newsletter that hunts down promising small-cap stocks. For information on how to subscribe and see what Ryan’s telling subscribers right now, click here.