In the Divine Comedy, Dante reserved one of the most terrible punishments for the crime of forgery. In canto 30 of Inferno, the forger Adamo is sent to the 8th circle of hell, one level above Lucifer in the 9th circle. In Canto, Dante and Virgil, who guide him through the underworld, encounter two forgers. One of them is the unfortunate Adamo, a real-life forger who tried to disparage Florin of Florence during Dante’s youth. Adam lived in Brescia, a city competing with Florence, where he was persuaded by wealthy Brescian merchants to degrade Florin by replacing the three carats of pure gold with copper. The coins weighed about the same, but were fake. Dante pairs Adam with another liar, Simon the Greek. Simon is the man who fooled the Trojans into thinking that the Trojans were an innocent gift. This betrayal led to the destruction of the entire civilization.
Why would Dante equate Adam, the everyday, opportunistic forger, with Simon, the man who betrayed Troy? It seems incongruous, but only if you don’t understand Florin’s role in supporting Florence’s power.
For Dante, money was sacred, and Florin’s integrity was the center of power in Florence. If you mess up money, you mess up the foundations of civilization. This has always been the case. There are very few everyday signals that capture the rise or fall of a great nation in terms of its monetary value. All kinds of fraud, counterfeiting, and attempts to pass off tokens as real money have been repeated throughout the history of finance. Bitcoin in particular and cryptocurrencies in general are the latest incarnation of an age-old story.
Various characters have attempted to manipulate and control the currency, including the despicable Emperor Nero, Dante’s counterfeiter Adamo, and even Adolf Hitler. These are all efforts aimed at privatizing public funds, and the latest example in this illustrious list is cryptocurrencies. Presented as a rhetoric of liberation for the common man, cryptocurrencies are a form of private money, printed, created, disseminated, and funded by private individuals.
Introduced in 2008, around the same time as the iPhone, Bitcoin is the original cryptocurrency. It was touted by enthusiasts as the future of money, an alternative to the dollar and other official currencies. That’s not happening.
The promise of cryptocurrencies was a new form of money that was democratic, egalitarian, and honest, and its manifesto included a kind of revolutionary appeal to break the establishment’s grip on finance and open up a world of money beyond Wall Street. At least, that was the spin.
Rather than being issued by supposedly corrupt governments, cryptocurrencies such as Bitcoin are controlled by incorruptible algorithms, backed by a new technology called blockchain, made possible by the ongoing global data revolution. Blockchain is the clearing house for all transactions in cryptocurrencies and is designed to eliminate the role of banking systems in settling transactions.
Bitcoin has a built-in self-destruction algorithm, and there is a finite number of Bitcoins that can be mined. A total of 19.6 million Bitcoins are available. More than 93 percent has already been mined, and the rest continues to be extracted by so-called Bitcoin miners. More or less an elaborate scam, cryptocurrencies took advantage of a time when public trust in democratic institutions and markets had reached new lows.
Bitcoin’s status as a cryptocurrency is sometimes debated by its proponents, but it is generally considered to be part of the cryptocurrency family, and like other speculative funds, its price has fallen significantly in recent years.
( What you need to know about the secret battle over the future of moneyopens in new window )
Bitcoin’s price is now down 40% from its October high of around $70,000 (39,580 euros), leaving many people who bought it during the recent rally feeling hurt and angry. Quite apart from the problem of individual investors losing money with this new form of “big money” private money, there are major intellectual difficulties with cryptocurrencies. What problem is it supposed to solve? If it is to have a place in the great pantheon of innovation in money, it must solve a problem. If not, what’s the point?
The idea that there is a large and inefficient global payments system and that its waste can be solved by Bitcoin, cryptocurrencies and their ledgers, digital blockchains, while not unfounded, does not seem to be as big of a problem as claimed. There are already many digital payment systems that process billions of online transactions priced in regular money, especially dollars. Should we add a cryptocurrency aspect to exchanges where old money is functioning?
Compared to traditional credit cards and global banking payment systems, blockchain is still in its infancy, although it has its problems and can be hacked sporadically.
The claim that “Bitcoin is money” is clearly not true. An important characteristic necessary for money to be useful is that its value must be stable. That means you have to manage your money. For day-to-day transactions, Bitcoin is practically unusable due to the rapid increase in price. This price volatility comes down to basic traditional economics. In other words, the price of Bitcoin goes up and down because the supply of Bitcoin is fixed.
As Bitcoin became popular and more people bought it, its price rose quickly. This prevents it from being used for transactions. Proponents of Bitcoin sometimes portray the spike in Bitcoin’s price as evidence that it is money, when in fact the opposite is true.
Why use Bitcoin when its value is increasing compared to others? Because the supply is fixed, it cannot act as a stable medium of exchange and will eventually be hoarded for capital gains. Rather than functioning as money, it becomes an asset of sorts.
( Forget traditional cryptocurrencies – new digital currencies are coming for 2026opens in new window )
But is it an asset?
If you think about speculation and investing for a moment, another red flag arises. Assets require an income stream to pay for the investment. Unlike bonds and stocks, cryptocurrencies do not generate cash flows or income. Cryptocurrency does not come with any legal claims. When you buy a stock, you are buying a small amount of the actual company. When you buy a bond, you also buy a claim on the asset underlying the bond, whether it’s a company or a nation.
Unlike these other investments, cryptocurrencies do not contribute to capital formation. When you buy stock in a company, your money goes to that company, where it can be used to buy equipment or finance expansion into new markets, and you can expect to make a profit from it. The outlook for this investment depends, among other things, on underlying economic activity. Cryptocurrencies, by contrast, are the ultimate speculative instruments and tradable gambling contracts, trading solely on emotion.
Crypto is not money. That will never happen. If it completely falls to Earth, then we can expect retaliation for the various impostors who pushed and pumped it. The eighth round of hell may be a bit extreme, but it’s not pretty.
