Last week my barber started a conversation with me about cryptocurrency trading. He informed me that if the SHIBA INU currency reaches a price of 1 cent per “coin” he will have 2.3 million dollars. I told him that I will look out for that, so that I know I need to find a new barber.

In my mind blockchain is about 97% cryptocurrency pyramid scheme and 3% interesting technology. That’s not really the criticism it might sound like. It’s genuinely cool to democratise the process of making absurd profits off the back of assets whose value has little basis in reality. Previously this was a domain where the mostly the rich and powerful played. Now barbers can get in on the action. Of course, any bubble will eventually burst and it will be mostly inexperienced investors left holding the bag. You can’t democratise ridiculous gains without also democratising ridiculous losses.

One thing that I thought would take down cryptocurrency is its inherent unfairness. For any given coin type there is a core of people who built it or who otherwise got in early. If that coin becomes mainstream and increases its value by orders of magnitude, the general population may be buying their slice on roughly equal terms but as a side effect the early group has been made obscenely rich.

A few years ago I thought that the unfairness of this arrangement would come to dominate the narrative against cryptocurrencies. To my surprise it didn’t happen. It seems that people are willing to accept this craziness and forget about the lucky rich people so long as their own little slice of the pie is growing okay.

The other problem is Proof-of-Work. If you can get a larger share of mining rewards by expending more energy, it offers a way to arbitrage cheap and dirty energy to the disadvantage of a country where energy is cleaner but more expensive. The higher the prices and market cap of PoW coins, the bigger the problem becomes. I assume that the countries with costlier energy will get tired of having money siphoned off their economies and they will eventually regulate against this type of cryptocurrency. Those coins will suffer (but not disappear entirely) and blockchains using Proof-of-Stake or something else will rise to take their place.

I don’t particularly like cryptocurrencies. They have no instrinsic value. They’re not safe or convenient for people who aren’t computer-savvy. I don’t see a compelling reason why we need them. And yet, I also don’t see a compelling reason why they’ll go away any time soon. Maybe my barber will get to retire early after all.