Is crypto a scam ? or what is the nature of crypto ?

I often hear this in discussions: crypto is a scam, it’s immoral and you will loose your money.

When I try to clarify their feelings, I usually get very common responses such as “its value comes out of nowhere”, “it’s full of bad people wanting to make money” or “it’s an ecological disaster” and “so it’s a scam”.

There is actually a little bit of truth to some of those statements.

Let’s take a look at them one by one and see what they really hold.

Is it a scam ?

As for everything else, there are scams in the crypto world.

It is a new world, it is like a child. It is fragile and intense, it moves and learns fast. It goes from one thing to the other faster than most of us can even handle. It does things we always dreamed of and tries to break the limits the old world has set upon us.

We’ve seen the Bitcoin rising from 30 cents to 60 thousands dollars in a couple of years. This is unprecedented. The number of DeFi games are continuously breaking the doors of our constricted minds. And yes, this is all money oriented.

In such a context, possibilities flourish and flood our minds at such a speed that it is easy to be fooled.

There are scams out there, this is a reality and you should be aware of it. Don’t trust anyone, do your research, talk to people and decide. Because in the end it all comes down to this: it is your decision.

But, apart from those scams, is crypto, generally speaking, a scam ?

In order to understand why some people feel cryptos are scams, we first need to understand why we give things a value.

Its value comes out of nowhere

As with everything in life, we give things a value. And if other people enjoy the same things, those things usually increase in value. This value is not necessarily economical, it can also be sentimental or whatever else.

That value does not necessarily stay the same either, it fluctuates over time depending on various parameters. For the sake of this explanation, we will take the two most important ones that everyone knows: supply and demand.

Let’s take the apple as the object of our desire.

The supply is how many apples we have and the demand is how many of them are actually needed. If there is more supply than demand, the value will decrease. On the contrary, if the supply is scarse and the demand is high, the rarity of each apple increases, and so does its value.

Ok, but “a crypto coin is not an apple, it is not real per se, it is purely virtual” you would say.

But does that make them worthless ? Of course not.

They are physically stored in computers all around the world and are being exchanged every fraction of a second between millions of people.

The point is, no matter what substance it’s made of, no matter who created it, based on what, no matter where it comes from and if you like it or not, the only thing that matters here is whether it is given a value and whether that value is shared among people or not.

It’s full of people wanting to make money

Yes, this is true and so is the world. But let’s try to understand why, in our current economical context, this is actually needed for new technologies to have a chance to make it.

If you take a look at how the world functions, you could probably see how and what makes many of the new things appear. New ideas, new technologies are fundamentaly being implemented and used for the first time by visionaries and risk takers. They have a vision of where to go and they have to try to figure out how to get there.

The basic principle is that people are doing things in the hope of a reward. We go to work in exchange of money so we can rent a place to live in, feed ourselves, buy a house, a big television, marry someone, have children…

And the same goes for mostly everything in life. Whether we decide to find someone to be with or go running. We all do it because we know or hope we are gonna get something out of it.

In the famous spaghetti Western “The Good, the Bad and the Ugly”, Blondie tells Tuco “You see, in this world, there is two kinds of people, my friend: those with loaded guns and those who dig. You dig.”

I think that’s what most people would like to believe but I think it is not very much like so, at least in developed parts of the world. We are more free than we think. It’s just that with freedom comes risks.

If you ever need to divide the world in two categories, and for the purpose of my point, I would say that there are people looking for security and there are people who are willing to take risks. Of course we all oscillate more or less between the two depending on various parameters and none of them are fundamentally good or bad (nor ugly).

For new things to appear, we need risk takers to implement them and use them. People looking for security will prefer to say within the limits of what they know.

And for those risk takers to be willing to take risks, there needs to be a reward, higher than what they would get if they were not taking that risk. In this case it is money.

Without risk takers, new things will have a much harder time to get through.

As simple as that.

And as time passes, things will slowly move from an intense danse between what works, what doesn’t and who wins, who looses to a less fragile and more stable and secure state where money will be less of a goal, more a medium through which people will transact between each others.

I understand that money is not a subject everyone feels comfortable with but for most of us, this is still the main reason why we work 8 to 14 hours a day, 5 to 7 days a week. In its current state, the crypto world gives us the possibility to make some decent profits. It is not a certainty, far from that, but it is another possibility to make some more money and there is no reason why this should be something less acceptable than any other job out there.

It’s an ecological disaster

I don’t know the exact numbers but this is getting better and better. Far better.

It is true that Bitcoin, the original crypto, is using a system called Proof Of Work (or POW) that requires computers to do very complex calculations in order to secure the system. Those complex calculations require a lot of energy, in this case electricity.

Ethereum, the second biggest crypto in terms of market capitalization is still using POW as well. But it will very soon switch to a much more sustainable system called Proof Of Stake (or POS).

Proof Of Stake will allow the securization of a blockchain network for a fraction of the energy that Proof Of Work needs. As a matter of fact, it can even run on the simplest of mobile phone today. The creation of a block and the validation of it would probably require about the same energy than what is needed to send an email.

And the many of the other networks out there didn’t wait for Ethereum to switch, they are already running on a Proof Of Stake system or similar.

It is normal for any new technologies to go through some rough passages. But as we move forward, we learn and improve along the way. And the speed at which it is being done is astonishing.

Conclusion

Crypto is not a scam, nor is it an ecological disaster and yes it is currently full of people wanting to make money.

Crypto is an attempt to free us from the monolithic and centralized economical institutions that we depend on. It is a bold move and, as such, risky. It takes a lot of dedicated and competent people to achieve this goal.

But as for anything out there, there are scams and you should be very cautious about them as there is no one that will be able to get your money back.

If people feel cold about it, it may be because of their lack of knowledge and the high risks associated with it.

It is a tough world, you need to understand where you’re getting yourself into. There are a lot of things you need to learn to understand even the most basic things about it.

It takes time to get started. It takes even more time to get accustomed to it. And it takes even more time to stay up to date with all the new crazy ideas that come out every two or three months. And for all this work, you reward is uncertainty. You will never be sure, even at 50%, that your efforts will bear the fruits that you’re seeking.

I often hear this in discussions: crypto is a scam, it’s immoral and you will loose your money. When I try to clarify their feelings, I usually get very common responses such as “its value comes out of nowhere”, “it’s full of bad people wanting to make money” or “it’s an ecological disaster” and “so…