Sometimes people start out poor, and end up rich. Sometimes this is because they create real net value for the world, and sometimes this is because they gambled, where their wins came from others’ losses. But to the people involved, this difference may not be noticeable. What they see is how they started poor, then initiated many particular risky and effortful activities, had ups and downs which tempted them to quit, but had attitudes that made them persist, and then they finally succeeded.
Such newly rich folks are quite often sensitive to criticism about their wins. They wanted not just wealth but also respect, and so resent skeptical suggestions that they won due to luck, exploitation, or cheating, and so don’t deserve much more respect than others. If they do not deserve their wealth, maybe it should instead be shared with others.
To resist such skepticism, rich folks typically generate key narratives along the way. These are stories about the world, their personal nature, and the role that people like them play in a world like that. In such stories, people like them show key virtues in their efforts, and then naturally end up adding value to the world. When such people get rich, they look to continue to act in ways that support such narratives, so that they can continue to affirm them relative to less flattering narratives.
Of course most individuals aren’t especially good at constructing and maintaining narratives. But communities that together struggle to get rich can achieve this together. Thus in different industries and areas of life we see different standard stories about how people there got rich. Stories about what sort of personal features contribute to that outcome in what sort of situations, and how that behavior changes the world. So once rich, people in different areas tend to do different things to affirm their local area wealth stories.
And this, I’ve come to think, is the key value of crypto. Yes, crypto can be a hide-able store of value, and ease and speed money transfers, especially internationally. But these values were mostly there right from the start, and don’t much explain or justify the vast subsequent activities in this area. Yes, crypto also uniquely satisfies a deep widespread desire to speculate and gamble, desires widely thwarted by regulations supported by common beliefs that mere gambling is socially harmful. But the big value, I think, comes from what crypto speculation winners then do with their lives.
Crypto folks tell a distinctive type of story about the world, who they are, and how people like them get rich via crypto in a world like that. In such stories, the world is ignorant and broken, and could be much better, while these people have unique penetrating insights which let them see past the lies and conformity to bravely and in teams fight to create and pursue long-shot bets toward new kinds of tech and systems that could make for a much better world. And when people like that get rich, then in order to continue to support this sort of story, they tend to initiate, fund, and participate in long-shot bet projects to make new better tech and systems.
In addition, crypto rich tend to get rich at much younger ages than do other kinds of rich, as speculation under high crypto asset volatility creates wealth inequality much faster. So crypto folks get rich when they are still young and energetic, not set in their ways, with plenty of time to try to prove that all of their other contrarian beliefs are also based on deep insights that could plausibly enable big revolutionary changes to the world. They weren’t just lucky, you see, and they will soon prove that to you.
Yes, I see real personal harms suffered by the losers in such worlds of intense speculation, but now I also see real social gains from such worlds. The sorts of stories that people in such worlds tell themselves about why it is they who got rich tend to push them to then, once rich, pursue ambitious interesting projects to change the world. And as I tend to agree with them that the world is in fact quite broken, and that there are contrarian-belief-based projects with great potential to improve the world, I now see great value arising from crypto speculation. Even if the use of crypto itself hasn’t yet, and doesn’t seem likely to, add that much value to the world.
I suspect the historical record will show that past bursts of speculative fever tended to be followed by bursts of interesting projects funded by the speculation winners.