That is the topic of my latest Bloomberg column, here is one excerpt:
The last few months of chaos show what Bitcoin and other crypto assets are good for: They are advanced tools of globalization, luxury goods for complex, well-functioning markets — not protections against the depredations of hostile governments.
One common story, especially popular in libertarian circles, has been that when inflation runs rampant and governments confiscate private wealth, crypto will be a vital refuge. It increasingly appears that this story is wrong.
The world has been in turmoil, with a major war, wealth confiscations, and much higher inflation rates. Yet mostly crypto prices have fallen. More theoretically:
Think of some of the possible legitimate use cases for crypto. Perhaps entrepreneurs will build a significant online metaverse, spanning national boundaries and allowing for fruitful interactions, including commercial ones. For many transactions, especially micropayments, crypto transfers might make more sense than trying to process all the trades through current dollar networks. There is at least the promise that crypto will be faster, more reliable and more secure.
In this scenario, crypto is worth the most when global trading networks, and internet connections, are stable. Right now they are moving in the opposite direction, and as a result the price of crypto is falling. The reality is that the crypto world has been a globalized product from the very beginning.