YOUGHAL, IRELAND – First, RIP Spencer Silver. Mr. Silver, who died earlier this month, gave the world something real, something valuable – the Post-it Note.
But despite the worldwide success of his invention, no fortune came to him. An employee of the 3M company, he lived modestly and retired honorably in 1996.
His greatest glory may have been when he was inducted into the Minnesota Science and Technology Hall of Fame in 2011 – more than 40 years after he developed the adhesive used in the “repositionable pressure-sensitive adhesive sheet material.”
Buying the Dip
Meanwhile… Benzinga reports:
Cathie Wood Loads Up Yet Another $51M In Coinbase As Shares Slump Amid Bitcoin-Led Crypto Carnage
Cathie Wood-led Ark Investment Management on Friday snapped up another 223,181 shares, worth about $50.7 million, in Coinbase Global Inc (NASDAQ: COIN) as the cryptocurrency exchange stock staged a fresh dip.
What’s the connection? Can you compare the discreet heroes of tech innovation, like Mr. Silver, with the showmen and shysters of the crypto era, like Elon Musk and Cathie Wood?
Not really. But you can contrast the two to make a point: that in today’s fake-money world, chemistry has been upstaged by alchemy.
The Bubble Queen, Ms. Wood, is no scientist. She is trained in finance and economics. But her fund, Ark, is a leading investor in the tech world – particularly in cryptocurrencies.
And now that cryptos are dropping, she’s buying the dip.
On paper, crypto speculators have lost more than a trillion dollars. MarketWatch reports:
Bitcoin prices on Sunday afternoon were in free fall anew, with the world’s No.1 crypto spiraling down more than 50% from a peak in around the middle of April, amid another bout of turbulence in the digital-asset sector.
At last check, bitcoin prices were changing hands at $32,632, down 12% on the day, after hitting a 24-hour low of $31,179, which halved bitcoin from a mid-April peak at $64,829.14.
Ether on the Ethereum blockchain, meanwhile, was seeing an even more severe slump, down at one point 18% at $1,922 on the session and down by nearly 60% from its all-time high hit earlier this month at $4,382.73. It was last down 13% at $2,033.
Popular meme asset, dogecoin, was changing hands at 29 cents, 60% from its all-time high at around 74.07 cents earlier this month.
Dreamers and Schemers
The crypto world includes a cast of characters that defies easy categorization. There are the greedy SOBs, of course. But there are also the techy geniuses, like Vitalik Buterin, creator of Ethereum.
There are dreamers and world improvers, too. There are those who earnestly hope that cryptos will take government out of the money business.
And then, there are the millions of kids who think they are playing a video game… with a prize system that can tote to millions… no billions… of dollars.
Sam Bankman-Fried must be a little of all those things. The 29-year-old’s crypto trading brought him a net worth that reached about $16.7 billion.
But that was two weeks ago. Now, his fortune somewhat diminished to a mere $8.7 billion, he can nevertheless carry on with his work – which includes giving a portion of his earnings to charities and bad causes. He donated $5 million to Joe Biden’s presidential campaign, for example.
Crypto Bet
But where do the earnings come from? Not from mining. Not from manufacturing. Not from gainful employment of any sort.
Cryptos are not profit-seeking companies. They make nothing and have no sales. They have no earnings because they contribute nothing (apparently) to the wealth or wellbeing of anyone else.
Minnesota Mining & Manufacturing (3M) makes a profit on its Post-it Notes because the company allowed Mr. Silver to experiment (capital investment), and the sticky, colored paper is worth more to consumers than the sum of the labor and resources that go into making it.
And if 3M chooses to donate half its earnings to widows and orphans, the world is still a richer place.
But when Sam Bankman-Fried makes money from his crypto trades, whence cometh the gains? There is no new wealth created; it must be existing wealth that is trading hands.
Cryptos are merely a bet on “money” itself… They’re a bet that cryptocurrencies will be in such demand (as a better form of money) that their value – relative to the real wealth they can buy – will go up.
So far, it’s been a good bet.
And, in theory, cryptos could be the best money the world has ever seen. Transaction costs with crypto money should be extremely low. And unlike gold, you don’t have to store your crypto money in a vault… or remember where you buried it. And moving crypto wealth across borders is no problem.
Real Money
But money is fundamentally vernacular, not theoretical. That is, it is what it is… not necessarily what we want it to be or what we have put our savings into. It’s what people use… not what they should use.
And someday… one of the 10,025 cryptos in existence today… or one that has not yet been invented… may be real money. The others will probably go where all dead money goes… to Hell.
And while we can hope, too, that one or more of the cryptos will eventually grow up to be real money – that we can use on a day-to-day basis for buying and selling, as well as storing value – we have no illusions that we, or anyone else, are smart enough to know which one.
In the meantime, we don’t know what would have happened if Mr. Bankman-Fried himself had decided to go into chemistry rather than crypto trading.
But our guess is that the world would be a better place for it.
Regards,
 |
Bill
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