© Reuters.
Investing.com – Two economics experts from Johns Hopkins University have slammed the crypto industry and said it’s a “cocaine game.” Indeed, Steve Hanke, an economics professor and cryptocurrency critic, and Matt Sekerke, a member of the university’s school of economics, argue that while the devastating cryptocurrency crash of 2022 could technically have been Worse, the existing ties between traditional banks and cryptocurrencies “show how easily a cryptocurrency crisis could spread.”
“Contrary to what marketing experts tell us, cryptocurrency is neither money nor a financial vehicle. It is an elaborate simulation of finance that produces gains and losses.”
Comparing cryptocurrencies to casino chips, the two experts claim that cryptocurrencies are actually worse than gambling because, while people can pretty much guess the odds in a casino, “the odds in cryptocurrencies are subject to blatant manipulation”.
And even government intervention couldn’t fix it either. “Regulation could stabilize house odds and the exchange rate for tokens such as stablecoins,” they said, “but it would not turn cryptocurrencies into finance.”
In a post-FTX world, there are, according to Sanke and Sekerke, two options: regulate cryptocurrencies to mitigate their wildness, or let them burn. It is not difficult to see which side the economists are on.
“Regulating cryptocurrencies would encourage denser and deeper connections, generating systemic risks,” write the two economists, who therefore believe that the government must shut down the entire industry.
The JHU economists continued their elaborate metaphor by comparing crypto to ozone-depleting chemical compounds, antiquated bonds and, of course, the financial industry’s go-to recreational drug in the 1980s.
“Cryptocurrencies are part chlorofluorocarbons, part cocaine, and part bearer bonds,” Hanke and Serkeke conclude. “It’s not the future of finance. More than malignant negligence, the United States needs policies that will eliminate cryptocurrencies and their metastases.”