I have a very clear memory from the 2008 financial crisis. My dormmate walked into my room and said "The bank that owns my student loans just went under. I don't know what happens now". We joked that she wouldn't have to pay the loans back, but we knew that such an easy out wouldn't exist for her.
We graduated into the resulting depression. I saw Occupy Wall Street spring up, and though my incredible privilege of landing a tech job, moved to Seattle where I saw a similar Occupy encampment at Westlake Park every day as I waited for the bus. I, personally, was OK in this environment. I could also see that plainly, lots of people were not OK. I did everything I could to learn about the underlying causes of the disaster. I watched the causes get rewritten to suit political purposes: Not the repeal of the Glass-Steagall, but individuals acting irresponsibly. Not the fraudulent and deceptive practices of gigantic firms, but ignorant home buyers extending themselves beyond their means.
Regardless of the perceived causes, the US Federal Government response to the crisis was not well received. The best defense for the bailouts is that they prevented a larger crisis. The harshest criticism is that the bailouts rewarded failure with no commensurate punishment, and set us up for another crisis in the near future while giving no relief to those who suffered the most. One response to these highly criticized bailouts was the creation of Bitcoin.
I haven't said too much on this blog about my opposition to cryptocurrency. In short, I think blockchain is technologically unimpressive (1, 2, 3), socially a scam (1, 2 , 3) and ecologically devastating. In the past month, it has experienced a sharp collapse related to several kinds of shady activity which draws several natural comparisons to 2008.
Matt Levine, a financial commentator, says:
I keep saying that crypto is having its 2008 financial crisis, but it’s much more interesting than that, isn’t it? [...] In a sense crypto is having many different tiny 2008 crises all at once
The products that were invented as a response to perceived financial corruption are now experiencing (another) sharp collapse related to financial corruption. If this is truly a 2008 analogue, we can expect another set of distractions related to the root cause: It's not the fault of a lack of regulations, it's the fault of feckless investors who didn't do their own research. It's not that the entire cryptocurrency ecosystem was built on a house of cards, it's Joe Biden's fault for doing currency inflation.
Of course, the fact that the crypto crash is happening at the same time as several other crises is appropriate for the time. We live in a time of multiple, interlocked crises. Housing, climate, a pandemic, racial injustice, economic inequality, gender and sexual oppression, all have impacts on each other and feed into each other. It is a popular theory that the Covid pandemic fueled crypto investments, it is a popular theory that despair at ever achieving wealth through traditional means (i.e. lack of faith in economic equality) fueled crypto investments. Theories about why crypto would be useful often focus around making housing affordable (through "the blockchain", somehow). Many people started using crypto as a smokescreen for gender and race equality to scam vulnerable people out of their money.
At the heart of crypto is a belief that you can solve social problems with technological solutions. This is a common, but flawed belief. There is no shortage of problems to work on; instead of looking for a piece of software to solve it for us, we can work within our communities. We can ask what we are willing to do. And we can work with other people to achieve our goals. I don't expect it to be easy, but I do not expect to achieve anything in any other way.
