With the booming economy of new technologies, we hear over and over the stories of the few entrepreneurs who just had an idea and made millions (sometimes billions) out of it. The get-rich-quick myth of the internet entrepreneur is the gold rush of the XXIst century that brings massive crowds to settle in the digital economy in the hope of making a go of it. But just like the SF Gold Rush of 1849, most people land in a space that makes money out of them more than they make money out of it.
The latest myth of the digital roads to riches are the cryptocurrencies.
Cryptocurrencies are nothing more than an elaborate Ponzi scheme where the initial buyer of a cryptocurrency will cash in on his/her investment when another buyer pours money in the same cryptocurrency. The latter buyer now has to wait for other buyers to come in and pour their money in the cryptocurrency to raise its value and cash in on it. Cryptocurrencies are just a bubble that will reach a plateau and then deflate, ripping out the cash of the gullible and late-comers.
Intrinsically, cryptocurrencies are here to stay, as their format fits the new digital economy, but they are just a currency, not a profitable asset per say. An economy may build itself around cryptocurrencies, but just like real estate, cyclic crisis will characterize this economy, and strip small investors to make up for the artificially-inflated values that led the smarter ones to cash out before the bubble burst.
With cryptocurrencies, bubble burst now happen in the form of “system hacks” or “crypto theft” : The money disappears and the DeFi platform puts the blame on a malicious hacker. This week, the DeFi platform Wormhole lost $325 million to a hacker who found a loophole in the DeFi’s system. Previoulsy, Polynetwork lost $611 million to a crypto theft, Coincheck lost $532 million, Mt Gox lost $470 million, Kucoin lost $281 million, etc…
Curiously enough, those thieves are untraceable. They vanish with hundreds of millions of dollars in a system that’s supposed to track everything (aka computers), and people just accept this as a fact. When huge chunks of money disappear from a bank, we know who to blame, usually the bank execs who plotted a scheme to evade funds and whitewash the cash. But people in general are so ignorant with computer systems that they will just accept the myth of the diabolic hacker who’s impossible to catch even though he/she suddenly became a multi-millionaire in a matter of seconds.
So can you become rich with cryptocurrencies ? Yes ! But you have to be 1. A Ponzi scheme maker with no sensibility for the gullible people you take the money from, or 2. A crypto hacker, given that you will have to hide your money until your death or justify at one point or the other where you got those millions from.