The writer is a professor at Cornell, a senior fellow at the Brookings Institution and the author of ‘The Future of Money’
A cryptocurrency winter has set in, with many cryptocurrencies’ prices and the overall value of such digital assets falling below half their peak values from six months ago. Dashed is the notion that crypto assets are immune to shifts in macroeconomic fundamentals and serve as hedges against inflation.
The mayhem has shone a harsh light on decentralised blockchain-based finance, as weaknesses in its basic precepts are coming into focus. For all its promise in democratising finance and broadening financial access, the emerging reality suggests a concentration of economic power, while the risks fall largely on those investors least able to handle them.