Don't. Just don't. Tulips look like a better investment than cryptocurrency.
First, the Justice Department has launched a prosecution against an unnamed defendant for allegedly laundering $10 million in Bitcoin:
U.S. authorities filed charges in March after allegedly discovering that a sanctioned country had set up a PayPal-type payment platform system with the defendants’ help, according to Friday’s ruling. It said investigators were able to use sophisticated blockchain analysis tools to trace that person’s actions, since despite cryptocurrencies’ anonymizing features, all transactions to individual accounts are recorded in public ledgers that can be amassed into large data sets.
The $10 million in bitcoin payments originated from the United States and were transmitted for customers of the payment platform, according to a U.S. law enforcement affidavit cited by the ruling. The platform advertised its services as designed to evade American sanctions, and the defendant “proudly stated” it could do so using bitcoins while knowing the country was blacklisted, the ruling said.
The US Magistrate Judge overseeing the case reminded the defendant that despite the mythology surrounding them, cryptocurrencies are traceable and are considered cash for the purposes of international sanctions. They are, in other words, not the perfect vectors for bribing foreign dictators that their proponents promote.
Economist Paul Krugman makes (as you'd suspect) the economic argument against cryptocurrencies (sub.req.), if the legal and moral arguments didn't persuade you:
By now, we’ve all heard of them, but what exactly are cryptocurrencies? Many people — including, I fear, many people who have invested in them — probably still don’t fully understand them. Saying that they’re digital assets doesn’t really get at it. My bank account, which I mainly reach online, is also a digital asset, for all practical purposes.
In any case, as we look forward, the value of cryptocurrencies will have to rest on their underlying economic uses, which are …
Well, that’s just the thing. I’ve heard many discussions in which crypto supporters have been asked exactly what economic role crypto can play that isn’t more easily and cheaply achieved through other means — debit cards, Venmo, etc. Other than illegal transactions, in which crypto may sometimes offer anonymity, I have yet to hear a coherent answer.
As it is, cryptocurrencies play almost no role in economic transactions other than speculation in crypto markets themselves. And if your answer is “give it time,” you should bear in mind that Bitcoin has been around since 2009, which makes it ancient by tech standards; Apple introduced the iPad in 2010. If crypto was going to replace conventional money as a medium of exchange — a means of payment — surely we should have seen some signs of that happening by now. Just try paying for your groceries or other everyday goods using Bitcoin. It’s nearly impossible.
Those who question crypto’s purpose are constantly confronted with the argument that the sheer scale of the industry — at their peak, crypto assets were worth almost $3 trillion — and the amount of money true believers have made along the way proves the skeptics wrong. Can we, the public, really be that foolish and gullible?
Well, maybe the crypto skeptics are wrong. But on the question of folly and gullibility, the answer is yes, we can.
As Julia Ioffe pointed out yesterday in reference to ordinary Russians believing the Kremlin's propaganda, in a country where 30% of the population believe in "replacement theory," our folly and gullibility have no limit.