Matt Levine on the missing blockchain in the bitcoin financial system

Even though I'm dabbling in the exchange of cryptocurrency like a whole lot of other people, I still have no idea what I'm doing or why. I keep looking for sources to read that provide nice analysis, but quite a few people either:

  • (A) want everyone else to buy, buy, buy whatever currency they've already bought in the search for greater fools.
  • or (B) don't get it, won't get it, but like to complain about it.

Of course it doesn't make sense that Bitcoin is "valued" so high. Of course it shouldn't be valued that high. But I still want to read smart things about it. 🙂

Anyhow. Matt Levine's regular Money Stuff column has been a nice read in that I get the impression he knows it's crazy, but is also approaching it all with a level head and good financial background.

From today's column:

If you want to rebuild the regular financial system along blockchain principles, you have to wrestle with the fact that even the bitcoin financial system doesn't really operate on blockchain principles.

Matt Levine

This is a fun point!

The blockchain is supposed to be a public log of transactions. It'd make sense if all of our cryptocurrency trades were on a blockchain. But it's still too slow for day-trading currency right now, so the whole system reverts to the old way, only using the blockchain to transfer currency in and out of the system to other "wallets".

Or at least, that's how I think it works.