Letter to the Editor: There’s nothing like money in the bank

It was with great interest that I recently read a recent Muddy River News article on digital/crypto-currencies.  I’m not sure if the author is local or not, but the tone of the article was certainly one of a trade organization trying to promote crypto to an unsuspecting public and trying to make it sound both mainstream and safe.  It is neither.

A digital currency is simply an electronic representation of a “medium of exchange,” or something you can later trade to someone else for goods and services you need.  The notion that it contains an investment component is based on nothing but pure speculation that one unit of a given quasi-currency today will somehow be worth more than one unit at some point in the future, but that relies wholly on the “greater fool theory” to succeed. 

You need only to Google “Tulip Mania” or, much more recently, “Dot Com Bubble” to see what happens when something is built on pure speculation — and how it ends. Crypto is the new bubble which will eventually pop.

Unfortunately, there is a great deal of computer fraud in which control over the “keys” to unlock crypto assets are regularly hacked and stolen.  There is no FDIC insurance for that.  In fact, there are very few regulations that protect consumers from the criminal element.  Some folks are pushing to get the government to provide some form of regulations for crypto.  As a matter of fact, you will be hearing a lot more about “stablecoins” in the near future but they are most certainly not stable, as evidenced by the failure of “Terra” in 2022, which saw $20 billion of so-called investors’ money evaporating into thin air overnight.  That’s just one example of many.  Others were Luna, Basis Cash, SafeCoin and BitUSD. The list goes on. 

The main “business use case” for actually using crypto-quasi-currencies to buy things from others still centers around tax evasion and other criminal and money-laundering activity. Right now, we are in the “Wild Wild West” stage for crypto, where there are very few sheriffs to try to help keep people from getting hurt.  So get hurt they will, in droves.

It is a good thing that there are efforts underway in Washington, D.C. to ban the Federal Reserve from creating a Central Bank Digital Currency (CBDC), even though that would be the only cryptocurrency with any chance for true stability.  But it also would give the government control over where it could be spent, and it would most certainly be traceable. No one wants that.

The article also implies that smaller towns somehow benefit from crypto.  America has the best financial system in the world, and no one around here is more than a few short miles from a legitimate banking facility.  With existing digital banking services, no one even has to leave their homes to have access to their funds and make transfers.  

That old axiom still rings as true today as it has for centuries. There’s nothing like money in the bank. And that will still be true tomorrow.

Mark Field
President and chairman, Liberty Bank
Liberty, Illinois