The Conundrums and Paradoxes Inherent in Cryptocurrencies: A Non-Expert Exploration

Whereas I am a big fan of blockchain technology and the attendant cryptocurrencies and tokens, there are certain things I have never been able to make sense of.

Before We Get Started

Before we get too far into this, let me make it perfectly clear that I am neither a true "Blockchainiac" nor am I particularly technologically oriented.

Have a seat for a spell, and let's go over a few things...

In a sense, you could say I am a "representative" for the next wave of crypto users who will come from a broader set of backgrounds than the current "core" group in the industry. I don't get stars in my eyes marveling at "the technology;" nor am I a developer looking for opportunities to create apps.

I'm just a street level user, asking the inevitable "Yeah, but what's it GOOD for?" question and expecting an answer far short of a dissertation on web encryption

I do know something of the stock market and investing; I have also been a merchant "trading in goods" for many years, so I have at least a rudimentary understanding of how markets work.

So, with that out of the way...

TL;DR:

• Cryptocurrencies have a long way to go till mass adoption.
• We have to remarket as "money" instead of "high risk investments."
• Cryptos have to be usable to the average person to gain acceptance
• Less "blockchains are genius!" more everyday applications.
• Many cryptos are JUST as "based on thin air" as Fiats.
• Who needs 2000+ different coins? It's confusing!

END TL;DR

A Sort of Preamble...

Having a moment of hesitation here.

There was a time when an article/essay like I am about to invest myself in here, actually had a chance of organically making it onto the trending page.

The fact that such things don't happen anymore gives me a momentary pause for reflection... as I come to terms with "that was then, this is now."

And then I realize that I am still curious about what people have to say about what I'm about to explore here, so I'm not going to NOT publish this.

I just hope the approximately 5.8 people who'll see this have something interesting to offer as explanations... because I am NOT going to throw perfectly good money at bid bots, just to reach a wider audience.

Let's get the show on the road...

What's REALLY on the horizon?

Aren't We a bit at Odds, Here?

Starting just with Steem, as an example, I hear much talk about the importance of "attracting investors."

Fine. Good. Not a bad plan; most projects benefit from having investors to back them.

At the same time, we have a "currency." What's a currency for? Why are we even calling it "a currency?" Currency, for me, typically means that I can buy fish-n-chips, or gold coins, or a car, or something else with it.

I realize that we are in "early days" here, but eventually I am hopeful that Steem might become an actual means of exchange, for goods and services. Early initiatives like @steembay fueled that hope at first; now we seem to have potential with @dcommerce rising out of the @dstors debacle. Time will tell if it turns into anything.

The "at odds" bit comes up here, because on one hand "investments" tend to be contingent on earning RETURNS, typically through value gain... while "currencies" functionally work best when there is "stability." In other words, I want the $25 blank canvas I bought for a painting last week to still cost $25 when I need another, next week.

But that's directly in conflict with what an "investor" would want. The investor wants that $25 outlay to come back as $30 next week.

See the problem?

The Mass Adoption Challenge

So then we have this "thing" I mentioned up top, namely that we are hoping cryptocurrencies (and Steem) will get to the point of enjoying "mass adoption."

But how do we "sell" the idea of "accepting Steem at your retail location" to merchants, when the price of the currency is wildly unstable?

And I'll make myself "Exhibit A:" I actually have a store. It's actually kind of risky for me to put a sticker in the window that reads "Steem accepted here" when the price of Steem could be HALF next week of what it is this week.

I don't want your stinkin' cryptocurrency... and I don't care that "it's the fastest blockchain in the west." To me that makes about as much sense as someone building Ferrari engines in a village in Alaska with no paved roads.

On the other hand, it's not very attractive to an "investor" if the alleged investment stays within a 10% range all the time.

The two desires for what a Cryptocurreny "is," are essentially at odds at some very fundamental level.

Now, I know Steem has this additional "wrinkle" called Steem Dollars or SBD, but even that has proven itself to be a dodgy proposition.

The Fiat Comparison Challenge

Part of the hurdle we also face is that everything is — ultimately — viewed and priced in terms of fiat currency.

We don't think in terms of a pack of cigarettes costing 9 Steem, and a VW car costing 35,000 Steem. Everything is Dollars and Euros and Yen and Rupees... then converted to Steem.

Which begs the question of what level of market saturation is actually needed before cryptocurrencies actually become "currencies," in the practical sense of the word. Because right now? They are only "currencies" on a theoretical level.

We can even look at stuff like gold and silver... and even though these are bona fide "stores of value," you still can't effectively buy a cup of coffee or a pair of jeans with them. You still have to involve fiat, somewhere along the line.

Oh yes, of course... there are debit cards, and all that. But you're still just laying a thin veil over the very obvious fact that we are converting everything to fiat before we can DO anything with it.

California Poppy

"The Barter Exchange, Inc." — A Piece of History, and an Applied Glimpse into the Fiat Problem

Back in the 1980's when I had a gallery and gift shop in Texas, we were approached by an organization called "The Barter Exchange, Inc."

Barter exchanges are nothing new, of course. However, they tend to be smallish and fairly local. This, on the other hand, was an attempt to create a much larger — national and international — barter system with its own internal "currency."

I got my business involved because it sounded like a really good idea... but soon enough discovered some of the downfalls... and this is where the example becomes relevant to cryptocurrencies, as a concept:

People using BEI really didn't want to barter for goods and services, they just wanted to make money. Phrased a little differently, they didn't want to exchange value, they wanted to extract value.

Companies and individuals would try to dump all their "junk" and overstock merchandise in hopes of "trading" it for gold coins or Rolex watches they could turn around and EXTRACT to pawn or sell for fiat currency.

As such, the system soon enough failed.

Dark clouds gathering?

True Currencies are Boring!

On the whole, currencies tend to be pretty boring things. They are a lot more like Volvos than Lamborghinis.

Yes, of course I'm aware that there are people getting rich through currency trading, but for the most part they are making that money by trading millions and millions of dollars with fractional cent gains. We don't live in a financial system that functions on currencies changing 50% in a week... unless there is an economic or political crisis unfolding.

For example, I am a Danish national. For the past five years, my native Danish krone currency has been priced between 14 and 18 USD cents. It's rare that there be more than a 10% fluctuation, in a year.

Where is this ship going?

The Mass Adoption Challenge, Part II

Now, I've already talked about the hurdle of price instability as one hurdle to mass adoption of cryptocurrencies.

Part two is functionality. Remembering that I am now just talking about "some street level dude," who operates in the world of this stuff is no good to me unless I can DO things with it!

And whereas I recognize that cryptos and blockchain technology are game changing opportunities in the human experience, they cannot hope to go anywhere, as long as they try to live in this autonomous independent "Fairy Land" of mystery. They have to be applied, to something we're familiar with.

The automobile was an "extension" of transportation.
The computer was an "extension" of automation.
The mobile phone was an "extension" of communication.
Email was an "extension" of mailing letters.

Logically speaking, cryptocurrencies might be an "extension" of banking and financial services. Of course, it's more than that, but those are potential core functions.

But is that actually happening? Are we actively creating that future?

A LONG way from here... to there...

Identity Crisis?

From where I am sitting, no, it's not happening.

Just from talking to "regular folks" who are — in general — more plugged in than most, cryptocurrencies (often equated with Bitcoin) occupy a psychological "mind space" somewhere between snake oil sellers, get-rich-quick schemes, high risk biotech stocks and money laundering.

They certainly don't think of "alternatives to Swiss Francs."

Not very pretty.

The other problem we have is that there are so damn many of them! Which one of the 2100 "listed" currencies would you like to use today?

"Yeah, but they all serve different purposes!"

Sorry, but that's a bloody mess, in terms of street level functionality. Imagine a coin purse in which you have 100 different coins, all of which do something different... one for bread, one for lettuce, one for gas, one for doctors' visits. That's not less work, that's more work! And do I even have enough of the right coin to do what I need to accomplish today?

The future is over there. WAY over there...

Irony: No More Tangible than Fiat Currency!?!

So we have some problems, here. Some issues to address, before the world is going to accept we have something awesome here.

And now I will end this exploration by suggesting that most of the crypto industry is — in fact — "creating money out of thin air" JUST LIKE THE FIAT GOVERNMENT PRINTERS WE LOATHE!!!

Am I kidding? Am I blasphemous?

Not exactly. Consider this: The majority of so-called ICOs and crypto projects are raising money left, right and center with absolutely zero accountability and not much of a plan beyond "Let's invent a token and have an ICO!" Oh sure, it's all "transparent, decentralized and on the blockchain," but there is only an idea and zero tangible product delivery... and zero accountability for delivering something. Just a bunch of promises.

It's also "money out of thin air," because there's no tangible deliverable, even if that deliverable is a service.

Recently, for the very first time, I ran into the phrase "Earnings per Coin." It's the first time I have actually seen any project take on any kind of accountability for delivering something to its prospective users, based on the idea that "how we pay for this" actually has to come from somewhere. Other than thin air, that is.

Something that might actually resemble currency status.

And that gave me a measure of hope. Maybe not all is lost...

Thanks for reading!

If you found this post was interesting/worthy/thought provoking, please consider re-steeming it so this discussion will reach a wider audience! Thank you!

What do YOU think? How are we "doing" in the cryptosphere? Are we falling short on the education that precedes broader acceptance? Are too many projects wrapped up in "trolling for Lambos" while ignoring reality? Is the entire industry based on the (false) premise that things only "work" when markets are rising? What can we do to remove the "sketchy undertones" often attached to cryptos? Leave a comment-- share your experiences-- be part of the conversation!

(As usual, all text and images by the author, unless otherwise credited. This is original content, created expressly for Steemit)
Created at 190114 12:18 PST