Are we living through the final days of crypto?

It has been a fun ride.

But 2022 may well go down in history as the year the cryptocurrency bubble popped. The popping has been going on since at least this summer. (The Big Bubble here is actually composed of a bunch of smaller related bubbles.)

The Big Crypto Bust likely began in Spring, when the whole "Terra" ecosystem collapsed. Terra is a blockchain created by Terraform Labs largely in order to constitute the foundation for two cryptocurrencies: TerraUSD and Luna. These were "stablecoins." In contrast to most cryptos, they were deliberately tagged to the US dollar in value.

Personally, I never saw the point of the stablecoin family. IF YOU BELIEVE that the US dollar is a stable store of value: own US dollars. Why in such a case are you in the market for any cryptocoin? The reason for a sane person to be in the market for cryptos is if the sane person believes the US dollar is NOT a reliable store of value. But in that case, why not invest in one of the many cryptocurrencies on blockchain that make plausible cases for having improved on the US dollar in just this respect?

At any rate, stable coins had become an important niche within the crypto world by the early months of '22. So much so that in Feb. of that year, the Terra community and the Washington Nationals baseball franchise entered into a sponsorship agreement. A stadium club and lounge was rebranded the Terra Club as a consequence.

The Terra ecosystem was a wide range of institutions, starting with the blockchain and those two currencies I named but not ending there, that thrived within this niche. Yet it all went kabloeey in May. Both of the currencies involved abandoned their dollar peg, and then it turned out they had no friends at all. I don't know what that baseball team's lounge is now called.

Even shortselling didn't work as a hedge. According to Seoul Economic Daily, the Korean cryptocurrency investment fund Uprise lost 99% of its customer funds when they tried to Luna during its collapse in May. Although Luna

crashed in price from around $90 to fractions of a cent, brief price spikes were enough to wipe out Uprise's positions. The firm lost 99% of its customers' funds, or ₩26.7 billion ($20.5 million), as well as an additional ₩3.9 billion ($3 million) of its own money.

In August an interrelated bubble called the "crypto lending" world, also popped.

I could go on, but I'll skip forward. By October there was an outcry, audible in much of the financial world, coming from the cryptonauts, shouting "Only Sam Bankman-Fried can save us now." The then-common idea was that the multi-billionaire SBF, young and brilliant and the man behind the FTX exchange, could buy up a lot of the distressed assets in the industry by this point, rationalizing and consolidating as necessary to turn matters around.

The emperor has no clothes. As troubles spread, it became obvious by October that FTX and its native currency, FTT, were both also in trouble. In November, Bankman-Fried had to quit as its CEO -- a new caretaker CEO came in and under him (John Ray) the exchange declared bankruptcy. Earlier this month, SBF was arrested by the Royal Bahamas Police Force.

I trust I've said enough here to support the suggestion that this will be remembered as the year in which all of THAT happened.

A Story About Coleridge

This is a quote from a memoir by Dorothy Wordsworth, reflecting on a trip she took with two famous poets, her brother, William Wordsworth, and their similarly gifted companion, Samuel Taylor Coleridge. We sat upon a bench, placed for the sake of one of these views, whence we looked down upon the waterfall, and over the open country ... A lady and gentleman, more expeditious tourists than ourselves, came to the spot; they left us at the seat, and we found them again at another station above the Falls. Coleridge, who is always good-natured enough to enter into conversation with anybody whom he meets in his way, began to talk with the gentleman, who observed that it was a majestic waterfall. Coleridge was delighted with the accuracy of the epithet, particularly as he had been settling in his own mind the precise meaning of the words grand, majestic, sublime, etc., and had discussed the subject with William at some length the day before. “Yes, sir,” says Coleridge, “it is a majesti

Five Lessons from the Allegory of the Cave

Please correct me if there are others. But it seems to be there are five lessons the reader is meant to draw from the story about the cave. First, Plato is working to devalue what we would call empiricism. He is saying that keeping track of the shadows on the cave wall, trying to make sense of what you see there, will NOT get you to wisdom. Second, Plato is contending that reality comes in levels. The shadows on the wall are illusions. The solid objects being passed around behind my back are more real than their shadows are. BUT … the world outside the the cave is more real than that — and the sun by which that world is illuminated is the top of the hierarchy. So there isn’t a binary choice of real/unreal. There are levels. Third, he equates realness with knowability. I only have opinions about the shadows. Could I turn around, I could have at least the glimmerings of knowledge. Could I get outside the cave, I would really Know. Fourth, the parable assigns a task to philosophers

Searle: The Chinese Room

John Searle has become the object of accusations of improper conduct. These accusations even have some people in the world of academic philosophy saying that instructors in that world should try to avoid teaching Searle's views. That is an odd contention, and has given rise to heated exchanges in certain corners of the blogosphere. At Leiter Reports, I encountered a comment from someone describing himself as "grad student drop out." GSDO said: " This is a side question (and not at all an attempt to answer the question BL posed): How important is John Searle's work? Are people still working on speech act theory or is that just another dead end in the history of 20th century philosophy? My impression is that his reputation is somewhat inflated from all of his speaking engagements and NYRoB reviews. The Chinese room argument is a classic, but is there much more to his work than that?" I took it upon myself to answer that on LR. But here I'll tak

Jamesian Philosophy Refreshed

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