Bitcoin to TerraUSD, crypto offers a warning- This stuff isn’t ready for prime time
It's been a wild week in the world of crypto.
Hundreds of billions of dollars in ephemeral wealth evaporated as the price of Bitcoin plunged to its lowest point since 2020, down more than 50% in about six months. The exchange Coinbase dropped to about a fifth of last year’s initial public offering price. An algorithmic stablecoin called TerraUSD, a digital token that purported to be worth a dollar, melted down along with the blind confidence it had relied on.
The crypto market may well bounce back. But the message is clear: This stuff is not ready for prime time.
Those who stand to gain from crypto have been making great efforts to popularize and legitimize what they call a new asset class. They’ve renamed stadiums and hired celebrities to stoke people’s fear of missing out. They’ve encouraged state and local governments to provide tax incentives and even make cryptocurrency “legal tender.” Established financial institutions are launching exchange-traded funds focused on Bitcoin futures and offering over-the-counter trading to wealthy clients. Last month, Fidelity Investments said it would soon enable customers to put as much as a fifth of their retirement savings in Bitcoin.
Yet underlying all this activity is a technology that, for all its ingenuity, hasn’t found much practical use. Bitcoin, by far the largest cryptocurrency, is a terrible substitute for government-issued money. It’s highly volatile, transactions are slow and often expensive, and there’s little recourse when tokens get lost or stolen, as they often do. The computer calculations required to ensure security consume the energy resources — and hence produce the carbon footprint — of a medium-sized country. Efforts to remedy these flaws remain in their infancy
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