Crypto Is a Luxury Good – Opinion

    Approximately 20 minutes into his current interview with Bloomberg, Sam Bankman-Fried, crypto’s favorite entrepreneur, mentioned something interesting about the sector: Crypto is a luxury good and is primarily a shell game.

    “Where do you even begin?” You start with a firm that produces a box, which they most likely dress up to appear like a life-changing, world-altering protocol that will replace all of the big banks in 38 days or whatever. For the time being, disregard what it does or act as if it doesn’t exist. “It’s just a box,” explained Bankman-Fried.

    Crypto is a luxury good: the opinion and what it means

    Machines that print money, offer voting rights over money printers or promise future returns through things like airdrops abound in crypto, notably “yield-farming,” or the generative process of turning tokens into more tokens. He explained that you put a token in the “box” and then take some out. Anyone can construct their own box.

    The discussion lasted a little longer after Bloomberg financial expert Matt Levine asked for a “sophisticated” explanation of yield-farming. The term “sophisticated investors” was invoked, but the meaning remained vague. (“Well, I’m in the Ponzi business, and it’s very good, “Levine summarized.)

    Crypto isn’t just an empty box, though; it’s a fundamental rewrite of how economic activity might be channeled away from centralized gatekeepers and into community-owned organizations. It applies to any situation where developers and entrepreneurs find “market inefficiencies” or “rent-seeking.” Theoretically.

    Bankman-remarks, that Fried’s however, are not hollow. Branding, or the tales that people talk about cryptocurrency, is also quite important. When you ask what Ethereum is for, you’ll likely receive a slew of suggestions, ranging from blockchain cities to unbanked banking, but rarely an answer as self-contained or apparent as Bankman-money-making Fried’s machine.

    There is at least one plausible crypto theory that more people should consider: crypto is a high-end item. There are hundreds of examples of crypto being used for self-promotion or personal enrichment, whether it’s long reads in Bitcoin Magazine about how people in developing countries are using BTC to protect or transfer their wealth or similar stories about crypto dissidents or non-fungible tokens (NFTs) being used for charity.

    Many people who utilize cryptocurrency do so because it represents a lifestyle or connection with a particular movement or set of values. Users of cryptocurrency are frequently visible customers – sometimes by design, as blockchains are public records – and are often more concerned with selecting the correct application.

    Lap of luxury

    “Crypto is a luxury good, and Gucci hasn’t grasped that yet,” I wrote last year. The Italian luxury company just announced that it will accept cryptocurrency in select U.S. outlets. Other high-end brands have also entered the crypto market.

    Hubolt, Franck Muller, and Norqain are among the high-end watchmakers that accept cryptocurrency payments. Travel agency, manufacturer Tesla, and boat shop TJB Super Yachts are among the companies. LVMH, the parent company of the Louis Vuitton and Hennessy brands, is utilizing blockchain to verify the authenticity of some of its products.

    Other corporations are constructing in the metaverse and minting branded NFTs, as well. The theory, albeit potentially hazardous, is that crypto has made many individuals extremely wealthy, and the crypto wealthy may be more willing to patronize firms that support the industry.

    Indeed, capitalism’s history is documented. A lot of stories portraying crypto people as high-powered buyers — in homes, tourism, and luxury services – have appeared in Bloomberg. Your money is just as good as false online money.

    However, cryptocurrency is a luxury in and of itself. Pamela N. Danziger, author of “Putting the Luxe Back in Luxury,” identifies ten characteristics that distinguish a brand as “luxury,” which can be boiled down to superiority or sophistication, rarity, pedigree, and a shared fantasy.

    Digital assets are sometimes referred to as Veblen products or items that see a growth in demand as their prices rise. This is about perceived value, and it can be seen in crypto hype cycles, where more people are willing to buy a hot asset as its price rises. Sure, there are other psychological and market elements at work, but data reveals that at its all-time high above $60,000, there were more bitcoin purchasers than there are today. (Some even claim that BTC is undervalued.)

    Understanding luxury items in the postmodern, postindustrial economy is difficult since anything can become fashionable overnight. Today, luxury is more about identity and aspirational messaging than it is about brand heritage or workmanship.

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