Published on 11/17/22
What should Christians think about Crypto?
This is of course a loaded question and has become even more of a loaded question since the implosion of FTX and the downfall of FTX owner Sam Bankman-Fried (SBF). SBF was once the darling of the Crypto world as he became extraordinarily wealthy by discovering discrepancies in the price of BTC between the US and Japan. SBF bought BTC and sold it in Japan because the price of BTC was more expensive in Japan than anywhere else. Exploiting this price discrepancy made SBF very wealthy very quickly.
Everyone was really high on FTX because of Mr. Bankman-Fried’s savvy business dealings and his willingness to donate his wealth away. Of course, he was donating to left-wing politicians and causes that the typical Christian and/or conservative would not approve of ($39M was donated to the democrats for the recent 2022 midterm elections which is second only to George Soros).
But why are we talking about FTX and its founder? So, what if some young kid messed up a billion-dollar business? Does this really have anything to do with crypto as a whole? YES, it most certainly does! Crypto is an abstraction. It may be a useful abstraction for generating wealth if you know how to manipulate it and use it “properly,” but it is still an abstraction and does not exist in any tangible way except for the giant computer farms that are needed to mine crypto. The reasons for the implosion of FTX are many and we don’t mean to discuss all of them in this post. There are many people who have already done that anyway. What we do want to do is say why Crypto may be destined for failure from the onset and why FTX is just a precursor to come.
Now, what we are about to discuss is more hypothesis than it is law, but the Christian person should be concerned with Crypto to some extent as it is telling of where society is headed. And wherever our society is headed, souls will follow.
Our society is becoming more and more abstract. People rarely use real paper money anymore, more and more jobs are done from behind a computer screen, delivery apps and online retailers have made it possible to never leave your home again, and now we have a potential currency that only exists on the internet and nowhere else in crypto. We at C3 are not complete Luddites, but we are extremely cautious of things that cause us to forego human interaction and are not based on anything tangible. Crypto obviously fits into this mold. Therefore, we are skeptical at best.
C3 thinks crypto has the potential in a global economy to be efficient after all the energy consumption and volatility kinks are worked out, but the Christian question is ‘should we be embracing things that push us towards a more global economy?’ Given that any global economy will be extremely secular and most likely devoid of any Christian influence.
A global secular economy that will undoubtedly be manipulated by the few powerful among us is probably not something that should be pursued by the Christian. And by propping up BTC or any other crypto this is probably what you will be doing. This all leads us back to FTX and why crypto may be doomed in one way or another.
One of the reasons that FTX failed was because one of its rivals, Binance, owned the lion’s share of FTX’s native token FTT, and sold it off when they became aware of how much debt FTX had and how much of its capital it had tied up in its FTT token. Now, this was probably a big mistake by FTX to put so much of its capital into FTT and pile up so much debt, but the fact that the big and powerful can easily manipulate the prices of cryptos by pumping and dumping is something that all cryptos are vulnerable to. A common pro-crypto argument that is used is that BTC is decentralized and no one person has control of it. But this is simply untrue. If you wanted to control all BTC you just need $16B and you could purchase the lion’s share of BTC and its mining computers and then you could dictate the price as you see fit. The amount of people and governments that have $16B laying around is actually quite large. The US budget could spare $16B within the next ten minutes and barely anyone would notice.
Crypto has the potential to be useful, we think, but this utility, we think, would only be useful in propping up a global economy. And C3 is not sure that is something the Christian should want to do. Perhaps things will change and Crypto will workouts its kinks quickly and more Christians will become dominant players in the space and influence it in the right direction if there even is a right direction, but this is all very pie-in-the-sky thinking.
The real reason we think Crypto is destined to fail aside from the powerful being able to manipulate it so easily is that it is an abstraction, and dealing with pure abstractions does not seem to be in alignment with the Christian Ethic. If God opposes something then it will fail or simply be corrupted. This is our fear with cryptos at large. Right now, crypto is not an asset because it is not a tangible thing that produces anything and very few people use any crypto as an actual currency because of the fees, lack of mainstream acceptance, and extreme volatility. These are all the problems of abstractions and it takes a much better mind than ours to think of any real solutions.
Please notice that the language we are using n the post includes a lot of “we think(s)” and “Probably(s).” this is because we are not claiming to have the answers when it comes to something as new and as complex as crypto, we simply want to raise a few concerns and give our audience some food for thought from what we hope is an authentic Christian perspective.
Read the full story of FTX’s downfall from a purely financial perspective HERE