Crypto’s slide into the status quo

The people who profit from selling gold and silver often cast themselves as prophets of doom, warning of the inevitable collapse of fiat currency and the Western economies it underpins. Yet, in a strange twist, many of those same voices find joy in the untamed wild west of cryptocurrency markets – a realm where unpredictability reigns. As we peer deeper into the murky waters of the digital frontier, however, we find less to celebrate and more to scrutinize.

The risks of hacking aided by AI, the looming specter of quantum computing’s brute force, and the fiasco of FTX – where a crypto CEO squandered the underlying value of the currency with a level of recklessness that would make Bernie Madoff blush – are all stark reminders of crypto’s inherent vulnerabilities. But now, another troubling layer has emerged: third-world kleptocracies are turning crypto and Central Bank Digital Currencies (CBDCs) into instruments of corruption.

Consider the recent exposé by the Human Rights Foundation. It tells a damning tale of corruption in the central banks of China, Nigeria, and Lebanon. In China, Yao Qian, a leading architect of the digital yuan, was ousted for allegedly exploiting his position to enrich himself and favored private entities. In Nigeria, Godwin Emefiele, who oversaw the controversial eNaira project, was found to have stashed millions in unauthorized foreign accounts. And in Lebanon, Riad Salameh’s plans for a CBDC never materialized before he was arrested for embezzlement and fraud. These cases highlight an uncomfortable truth: centralized control over digital currencies creates fertile ground for abuse.

At the same time, cryptocurrency markets themselves are evolving in ways that may dull their luster. The proliferation of crypto-based Exchange-Traded Funds (ETFs) signals a shift. As Kiplinger’s research suggests, the sheer volume of these funds will increasingly tether crypto’s behavior to the broader stock market. What was once heralded as a revolutionary asset class, detached from traditional financial systems, is becoming just another reflection of them.

Layer on the inevitability of government regulation, and crypto’s image as a renegade alternative to fiat currency starts to fade. Regulatory oversight – though necessary to curb fraud, hacking, and financial instability – will bring crypto closer in line with the very systems it sought to disrupt. The distinctions between Bitcoin and the U.S. dollar may eventually blur to the point of irrelevance.

This convergence invites us to reassess our priorities. Perhaps it’s time to give renewed respect to our banker-friends in Southwest Nebraska who, while dealing with unfathomable layers of red tape and regulation, have been the trusted keepers of financial traditions rooted in transparency and accountability. In an age when both crypto and central banking seem tainted by hubris, the folks with their pens chained to the desks are the good guys.

While we’re at it, we might want to give the gold-and-silver crowd a bit more credit. Their calls to hedge against economic instability, though ranging from alarmist to hysterical, at least offer a tangible refuge in uncertain times.

Cryptocurrency was born from a desire to challenge the status quo and offer freedom from centralized control, but as it becomes ensnared in the same corruption and regulatory frameworks it sought to escape, its promise dims. The road ahead calls for caution, discernment, and perhaps a deeper respect for the old ways of safeguarding wealth.