Why decentralised currency is so much popular today
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The idea of decentralised currency mostly came out of the 90s. It’s associated with libertarian views that the role and power of the government should be massively limited (or even abolished) and also with cyberpunk.
The idea was that these currencies would be outside of the control of governments. They would be safe from inflation, from manipulation by governments, and offer much greater privacy – you could do what you wanted with your money (legal or illegal) without the government being able to trace it. (Side note: in fact unless you’re careful to hide your identity, cryptocurrencies are not at all private, but actually make all your finances public.) At the same time, they would be secure and verifiable.
The development of both public key cryptography and the internet gave the technology to manage this kind of money. Decentralised currencies aren’t necessarily cryptocurrencies, but I’m not aware of any existing that aren’t. So I’ll just call them cryptocurrencies from now on.
These cryptocurrencies can work alongside “smart contracts” which are like a cross between a contract and a program, that can automatically do something (like pay out money) when certain conditions are met, and non-fungible tokens (NFTs) which are like a kind of receipt.
So why is all this so popular now?
This is where things get more complicated and contentious.
First of all, the technology developed to a point where it’s – kind of – usable. Not necessarily meeting its promises and with massive negative effects like enormous energy consumption, but able to meet some basic functions.
Second, we’ve been in a period of both skepticism about government and utopianism about technology. If you think government is bad and technology can fix our problems, then cryptocurrencies seem really good.
Third, the financial crash of 2007/8 crashed many conventional investments. Savings have been earning very little interest for the last decade and a half. People (and sometimes businesses) have looked elsewhere for things to invest in. (Note: currencies are meant to have stable values, so if cryptocurrencies are good investments then they’re not good currencies.)
Fourth, some people (and institutions) *have* made a lot of money by betting on cryptocurrencies. (Of course others have lost a lot, but they can be ignored.)
Fifth, crypto has been a massive boom area for fraud, grifters, hustlers, hype and all that kind of thing. You could tie this in with the way internet culture has developed – a distrust of traditional authorities, prone to hype, etc.. There’s an argument that NFTs exist just to get people to buy cryptocurrency, so that people who hold those currencies can make money from them.
Sixth, cryptocurrencies are achieving their goal of being good for moving money around without governments knowing: paying for drugs, money laundering, getting around sanctions.
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