Fundamental question for crypto: Does it have any real-world value?

IN less than a year, Bitcoin has fallen by 77 per cent from its peak, and Ether has lost 82 per cent. If crypto were an established asset class, this would look like a time to add it to a portfolio. Falls of 80 per cent, which occur only after speculative bubbles, often mark the ultimate bottom. Japan’s three-decade bear market and the Nasdaq’s tech bubble bursting in 2000 both bottomed near the minus-80 per cent mark.

In big bear markets, excesses are wrung out of the system, as time exposes companies that were frauds and Ponzis, like FTX. The problem with crypto is that it is still not clear whether this is a real asset with underlying value.

For most of human history, there was no long-term inflation. Interest on savings involved a high degree of risk where your capital might not get paid back, often commanding rates of 10 per cent or more to compensate for the risk of the borrower running off with your cash. In such an economy, it made sense for people to keep their savings in assets which compressed value into a portable medium, like gold and silver. These assets were kept safe buried in a backyard and utilised, there was little growth in the overall economy.