LETTER: A step forward?

Apple recently became the world’s most valuable company, with a market capitalisation of $3-trillion. It is followed by Microsoft at about $2.4-trillion.

Such huge numbers begin to make sense if one considers that these two companies have over many years delivered products and services that have contributed to making the world a better place.  

How then does one explain a market cap of about $2-trillion for cryptocurrencies? The stated objective of the obscure creator(s) of bitcoin was to provide the world with a universal digital currency outside the control of governments and the financial establishment. For a currency to be worth its salt the supply in circulation needs to be managed, to accommodate economic growth and maintain price stability. The self-imposed limit of 21-million on the total supply of bitcoin therefore, by design, disqualifies bitcoin as a future currency.

As for bitcoin’s offspring, about 8,000 other cryptocurrencies have mushroomed in various shapes and forms, and in the absence of any controls over the supply none of these deserve to be called a currency. “Cryptotokens” would be a far more appropriate denomination for this phenomenon.

On the other hand, what bitcoin has delivered is useful technology for securely effecting and recording financial and other transactions. This technology will in all likelihood be increasingly adopted by central banks and financial and other institutions, but its worth ought surely to be measured in millions rather than trillions of dollars.

The question may well be asked whether the cryptocurrency project was a progressive step forward based on good intentions, or an elaborate, well-disguised scheme that has fabulously enriched a small number of early entrants and is now further enriching a lot of wealthy speculators. Throw in the Elizabeth Holmes/Theranos debacle and one must ask, as Steven Pinker does in his thought-provoking book Rationality: “What’s wrong with people?”.

I may be a pre-Millennial but I at least know the difference between a dollar note (or digital dollar for that matter) and a cereal box baseball card.

Blignault Gouws 
Waterkloof

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