web3/concepts/externalities.md

Externalities

The problems with crypto assets fall into several categories.

Environmental

1. Crypto investments that use PoW have an absurd environmental footprint.
2. Crypto investments waste energy that is better spent on more productive enterprises.

Legal

1. Crypto investments violate securities laws
2. Crypto assets are largely used to circumvent laws around illicit financing and money laundering.

Financial Risk

1. Crypto investments expose the public to undue risk.
2. It is an enormous opportunity cost the directs capital towards unproductive enterprises and scams rather than into growing other businesses.
3. The structure of it as an invesstment is negative-sum. Most investors are guaranteed tot lose money.
4. It is most likely a bubble.

Social Problems

1. It encourages gambling
2. Coins that use PoS are plutocratic, result in centralization and consolidation.
3. It financializes things, especially abstract things, which should not be financailized.