TYLER COWEN: Global economy is no poorer for crypto’s crash

The plunge shows that prices can fall sharply and suddenly without inducing a more general contagion. Picture: BLOOMBERG

Over time I have moved from crypto-sceptical to what I call crypto-hopeful. So this is a good moment to assess how radically lower crypto prices will affect how socially valuable crypto will prove to be. Consider another scenario — one where crypto is poised to provide a lot of useful services. Perhaps crypto assets will underpin useful savings and lending through DeFi, execute online smart contracts at low cost, and provide useful currencies and stores of value for the pending metaverse.

The plunge in crypto prices doesn’t seem to be the result of a newfound understanding that crypto institutions are irrevocably flawed. Instead it is due to an unpleasant mix of persistent inflation, higher real interest rates, lower equity prices for the major technology companies and geopolitical fears. All of that is bad news — but not necessarily bad news about crypto. The same crypto fundamentals are in place.

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