Shortly after becoming New York City’s mayor-elect in 2021, Eric Adams declared on Twitter that he planned to take his first three paychecks in Bitcoin, an unusual pledge supposedly intended to highlight his commitment to making the Big Apple “the center of the cryptocurrency industry.” Since it is not in fact legal to pay workers in crypto, the city explained in a statement that the mayor’s initial salary disbursements were really just being converted after the fact, which prompted one observer to quip that “Adams isn’t being ‘paid in Bitcoin’ any more than using his paycheck to buy Shake Shack equals being ‘paid in cheeseburgers.’”
It might be easy to write off this whole episode as a silly stunt, but Adams is just one of a growing number of politicians from both major parties promoting cryptocurrency as an economic boon for America. New Jersey Congressman Josh Gottheimer, one of the most corporate-friendly Democrats in the House of Representatives, has claimed that the “expansion of cryptocurrency offers tremendous potential value for our economy” and has introduced legislation to ensure it will “grow and thrive here in the United States, instead of overseas.” Sen. Cynthia Lummis (R-WY), nicknamed the “Crypto Queen” for reportedly being the first senator to own Bitcoin, has cosponsored a bill with Sen. Kirsten Gillibrand (D-NY) that would establish a new regulatory framework to unleash the “substantial potential benefits” of crypto.
But what exactly are these benefits? Whatever other valuable applications there might be for the blockchain technology on which it is built, cryptocurrency as it exists today seems to be producing negative net value for society by creating myriad new occasions for fraud, channeling resources into unproductive speculative trading, and degrading the environment through the consumption of astonishing quantities of energy. It is concerning that so many elected officials—some of whom have substantial crypto holdings themselves or accept donations from major crypto players—are now hyping it as a ticket to prosperity.
The dramatic rise of cryptocurrency has taken place over an incredibly brief period of time. It was only fifteen years ago that the idea of Bitcoin was first proposed in a short white paper about how methods from the field of cryptography (the origin of the term “cryptocurrency”) could be used to securely verify and record financial transactions on a “blockchain,” a type of “distributed ledger” in which a database is maintained by the activity of an entire computer network rather than stored in one central location.