Currency With No Currency

anyone who bought crypto over the past year because of the ubiquitous ads you see watching US pro sports pic.twitter.com/QEEEq3Ii9U

— Aaron Rupar (@atrupar) June 15, 2022

As I understand crypto, it’s supposed to replace money, that government backed paper and metal stuff that your bank will turn those numbers in your bank book or the app on your phone into upon request. Crypto was supposed to replace that, right?

Now I understand if a currency loses value. Hyper-inflation in Germany in the last century turned the Deutschmark into worthless paper. But the Deutschmark was valued in itself, not in how it would convert to dollars. Apparently crypto was only valuable in terms of “real” money.

All it took was the Fed to raise interest rates and suddenly nobody wanted their dollars in Bitcoin or anything else. And the only value of crypto was in its value in real money.

At the moment, that value is disappearing. Now what government is going to move to protect that value, the way they might their own currency?

My money in the bank may lose value against a stronger national currency, or diminish in purchasing power because of inflation. But my dollar won’t suddenly drop to zero value in my account. And I mean suddenly, as in a period of time reasonably measured in hours. If it did, it would mean the collapse of the U.S. government, at least. And I’d have far more serious worries than my bank balance.

I mean, if Bitcoin was a real currency, it would be the Weimar Republic Deutschmark, wouldn't it?

The world's largest cryptocurrency fell as much as 7.8% to $20,079.72, its lowest since December 2020. It has lost about 33% of its value against the U.S. dollar since Friday, dropping more than 50% since the beginning of the year. It has slumped about 70% from its record high of $69,000 in November.

Bitcoin was last down 3.4% at $21,336.

If I owned stock losing that much value that vast, I'd dump it instanter.  But I'm under no illusion that stocks or money markets are a currency.

The value of the global crypto market has tumbled 70% to under $900 billion from a peak of $2.97 trillion in November, CoinMarketCap data shows.

"Some parts of the broader crypto ecosystem are facing a rather harsh reckoning," said Mikkel Morch, executive director at digital asset hedge fund ARK36. "As the reality of the bear market starts to settle in, the hidden leverages and structural weaknesses of projects that only worked when the prices went up are finally brought to light."

Again, if crypto were a real, government backed, currency, these reports would indicate an economic disaster on a global scale.

So what kind of currency is it, exactly?