Cryptocurrencies: Debased coinages
Holding on for dear life will become costly rather than remunerative
Year-end reviews like to identify words and phrases that have captured the zeitgeist. Lex’s choice is “hodl”, an in-word as niche as many of the cryptocurrencies to which it is applied. The term describes a determination to hang on to bitcoin’s latest rival, in hopes that it too may appreciate ten times in twelve months.
The neologism dates from 2013, penetrating mainstream media this year when the cryptocurrency phenomenon itself became too big to ignore. “Hodl” is the exhortation an over-excited cryptocurrency investor mis-types instead of “hold”. It may then be explained away as the acronym for “hold on [for] dear life”.
Further post-event rationalisation will be required when the crypto bubble pops. Hodling will then become costly rather than remunerative. There is practical potential in the blockchain technology on which cryptocurrencies depend. Distributed electronic ledgers could reduce costs in securities settlement. Cryptocurrencies themselves are useful for two things: furtive payments and speculation. They are not investments.
The onus for promoters is to talk about them as if they were. It is the same in any speculative frenzy, going back to the South Sea Bubble in the 18th century. This spawned an advert for shares in a company “carrying on an undertaking of great advantage, but no one to know what it is”.
Creators of new cryptocurrencies have a similar talent for ambiguity. Crypterium, which launched an initial coin offering in October, promised to “erase geographical and mental boundaries between different currencies”. The venture claimed to be “the JPMorgan of cryptocurrencies”. This was a nice flourish, given that the boss of the US bank dismissed bitcoin as “worse than tulip bulbs”.
PlexCoin appeals to both greed and fear in its literature. A “huge success” awaits a token with “a value based on the current market” held via a bank “that secures your cryptocurrency from market variation”. In December, the US Securities and Exchange Commission filed charges, accusing PlexCoin of “false and misleading statements”.
There will be plenty more verbiage from crypto ventures while the craze continues. Promoters can produce as many cryptocoins and sales spiels as required to soak up demand. Assets of enduring value are depressingly finite.
Big Read |