Cryptocurrencies are a terrible thing. They are the essence of a Ponzi scheme whose value is based entirely on a greater fool prepared to buy it. The promise of alchemy-turning lead into gold has bewitched humanity throughout the ages and cryptocurrencies are just the latest alchemy. Do not get me wrong, if rich people want to lose their money, in this or any other way, they should be allowed to do so. The rich should be the vanguards of new things in case something unforeseen and good falls out of them. But we need to protect those vulnerable consumers whose lives are such that almost any get-rich-quick schemes will be seductive, and seven out of 10 times, they will lose their life savings. Cryptocurrencies are today’s South Sea Bubble – one of the earliest recorded financial bubbles that took place in the 1720s’ Britain. Meme-based currencies like Dogecoin, Dogelon Mars and Doge Dash remind me of the infamous plan of one company during the South Sea Bubble to raise money “for carrying on an undertaking of great advantage; but nobody to know what it is.”

The cryptocurrency bubble is worse than tulip mania. Through the veil of technology, cryptocurrency enthusiasts are leaning on policy-makers to permit them to be exempt from regulation, privatize money, and make money so disconnected from the economy that it would reap financial disaster. There are many reasons to avoid financial disasters, but one of them is that they ratchet up poverty and inequality. The current money–credit system is not perfect, but like democracy, it is the worst system barring all the others. It has evolved from the ashes of the system cryptocurrency enthusiasts are trying to resurrect.

The current system is vulnerable to attack because money is little understood. Cryptocurrency enthusiasts have attracted a following based on the fiction that the central bank or government creates money and are busy debasing it in their self-interest. This is not the case, but then again, there is some overlap between cryptocurrency advocates, conspiracy theorists, and anti-vaxxers. The time has come for someone to stand up for the current fiat money system and explain that while it could be better still, it has been associated with far more growth, much more distributed, and has responded better to economic crisis than what came before.

In today’s money–credit system, banks create money when they issue a loan and place the loan’s proceeds into the account of their customers, creating a deposit. Money is, in fact, a tradable debt. The bank’s deposit can be used as cash because the bank is a regulated issuer of loans and deposit-taker, which gives the deposit credibility and convertibility. The central bank only influences the creation of money indirectly by its regulatory requirement that a proportion of the loans need to be funded by shareholder’s profits. They need to have skin in the game. Money creation then is based on thousands of separate decisions by loan officers and is more distributed than a centralized algorithm like Bitcoin. And its supply is determined by the private demand for loans, which means it is closely aligned to the economy.

Which of the following does best describe attitude of the author towards rich people?Which rhetorical device is employed in ‘cryptocurrencies are just the latest alchemy’?