You know, the basic argument that old finance has against crypto is that it is just a complicated replacement of things that already work. Why you need bitcoin, Visa works perfectly. Why would you program a decentralized autonomous organization (DAO) that operates automatically according to votes of all investors, when you have a corporation; because, you know, conceptually it is the same thing, no? When you have a company, shareholders have shares and each share has one vote, etc. 

A lot of the times, crypto can look outright useless too. A few weeks back, a couple of meme traders and activists set up ConstitutionDAO with the goal to raise money to buy a copy of the U.S. Constitution at a Sotheby’s auction. After raising record-breaking $47M, they were still outbid by Citadel CEO Ken Griffin. 

The parody starts with how easy they made it for Griffin to outbid them (the funds they had raised were clearly visible on blockchain); it continues with the sole fact that it was Ken Griffin, yes, the ultimate enemy of all meme traders, who many believe masterminded the restriction on small traders during the Gamestop short-squeeze saga in January 2021, when small traders were almost winning against evil big hedge funds. 

And the parody goes on because, haha, oh yes, the practical side of crypto is still bad? Like, the investors in the ConstitutionDAO now cannot get their money back because gas fees on ethereum are so high that they spent about 50% when they sent the money to DAO in the first place, and would now have to spend another 50% to get it back*? 

When you have a company, shareholders have shares and each share has one vote .. only, they don’t have time to vote on every single thing the company does, so they elect directors, who then delegate some power to executive directors, etc.

This is what happens next: the directors get influenced by other directors, other people, the world in general; they do, of course, make decisions (within limits) that favor them, their relatives, their friends, their friend of friends and also based on their world-view; no they don’t decide optimally, nor based on what the majority would want, but like a human being caught in the mess of social-regulatory apparatus because the world runs on relationships.

And I don’t know if everyone understands that this is the reason why crypto is overhyped for more than a decade now. Not so much efficiency, but elimination of social power structures. People would literally dream of decentralized autonomous organizations run on blockchain instead of going to therapy, or trusting each other, whichever you like.

*Gas fees in combination with the general complexity and multitude of crypto services: for someone to exchange $ to $PEOPLE (the token of ConstitutionDAO), the person first had to buy ethereum on an exchange like Coinbase for a fee, then send it to metamask wallet for a gas fee, then send it from metamask to juicebox for some more gas fees. Because gas fees are so high, around 50% of money sent was consumed by fees.