Momentum Breeds Value

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Collective action plays a crucial role in the perceived value of cryptocurrencies, highlighting that momentum and widespread participation can lead to significant shifts in market dynamics. Influential figures, like Elon Musk, can catalyze this momentum, prompting increased interest and investment from the public. The concept of cryptocurrency as a 'collective fiction' emphasizes that the intrinsic value emerges not from fundamentals but from community belief and engagement. This mirrors trends in the stock market, where individual investors often prioritize the sentiments and actions of others over detailed company metrics, suggesting that social factors heavily influence market behavior.

As cryptocurrency surged in popularity during the pandemic, many were drawn by the promise of wealth and revolutionizing sectors like finance, art, and politics. Figures like FTX CEO Sam Bankman-Fried became emblematic of this new era, but his meteoric rise was marred by scandal as his aggressive, profit-driven tactics led to one of the biggest financial fraud cases in U.S. history. Unlike idealists like Ethereum’s Vitalik Buterin, Bankman-Fried’s approach mirrored the risky financial practices that triggered the 2008 crisis. Cryptomania delves into the crypto industry’s tumultuous 20 months, exposing its male-dominated, overhyped world, and chronicling the clash between profiteers and visionaries, the creation of speculative bubbles, and the human toll of its inevitable collapse.

Andrew R. Chow is a correspondent for Time who covers technology, culture, and business. He has written four Time cover stories, including about the impacts of the AI corporate arms race and a prescient profile of Vitalik Buterin months before the 2022 crypto crash. He has previously written for The New York Times, Pitchfork, and NBC News. His first book is Cryptomania: Hype, Hope and the Fall of a Billion-Dollar Fintech Empire.

Shermer and Chow discuss a comprehensive overview of money's evolving landscape and future potential. They trace its progression from fiat currencies to cryptocurrencies, exploring Bitcoin's rise and crypto's utopian ideals. The conversation examines NFTs' role in crypto's popularity and downfall, Sam Bankman-Fried's controversial career, and how crypto's crash mirrored the 2008 financial crisis, revealing similar systemic issues despite promises of revolution.