Over Christmas, Barry read a book written by economist David McWilliams called Money, in which he explores the long history of money and naturally, toward the end of the book, he turns to cryptocurrencies.
Summary of McWilliams’ View
After the financial crash of 2008 – remember the tented, global protests outside Wall Street and major stock exchanges – the world turned its anger toward the financial establishment, which many believed was corrupt and self-serving. Protesters demanded disruption and meaningful change.
In response to the crisis, central banks introduced unprecedented policies of extremely low interest rates, in some cases zero. This fuelled a rise in asset prices and unintentionally supported businesses and investments that might not have survived in normal conditions. We entered yet another cycle shaped by speculation, human behaviour, and credit – an old story repeated in a new era.
Then, in 2009, Bitcoin appeared as the first cryptocurrency. Its original purpose was bold: to replace fiat money and dismantle the political and financial order. Crypto promised a new form of democratic, egalitarian, and honest money – an idealistic revolution aimed at destroying Wall Street’s control over finance and giving ordinary people more agency.
Cryptocurrencies were governed by algorithms and underpinned by blockchain technology, a decentralised system acting as a clearing house for transactions. But despite the hype, this technology has not yet surpassed existing clearing systems. It remains energy-intensive, slow (for now) and has not meaningfully improved the payment infrastructure that already processes trillions of dollars daily.
Bitcoin was marketed as a “medium of exchange,” yet, almost 17 years later, it has not fulfilled that role. It has not replaced currency in everyday use.
Instead, Bitcoin has become a store of value. As its price rises, more people are drawn in – driven by FOMO (Fear of Missing Out). This is despite the fact that it has no underlying fundamental value, generates no income, and is privately owned.
Over the past two years, a new dynamic has emerged. A large and growing group of people have a vested interest in maintaining Bitcoin’s price. These investors now appeal to regulators and lawmakers to protect and legitimise it.
Ironically, the very institutions Bitcoin sought to disrupt – Wall Street firms – now play a central role in making crypto more accessible. The outrage at the financial system has faded, replaced by a desire to protect capital. Wall Street’s role today is to distribute crypto to millions of smaller investors, enabling early and larger investors to sell their holdings.
The fundamental problem, McWilliams argues, is that cryptocurrencies are privately owned while attempting to function as money. Functional money is always public-managed by the state. No government will willingly give up the power to issue money within its borders. Doing so would mean surrendering one of its most important powers: the ability to create money.
As you read this, remember McWilliams’ central argument: Crypto (specifically Bitcoin) is not currently money. It has no real-world use case as a medium of exchange. People are not buying goods with it, nor is it replacing traditional currencies.
Veritas View
From a legal standpoint, Veritas is not permitted to provide advice on cryptocurrencies.
However, we have seen investment manias like this before and we will see them again. One year it is crypto, before that it was gold, and now it is property.
We remember the early 2000s when people confidently stated, “You will never lose money in property.” When discussing diversification (using local and offshore equities, or tax-efficient vehicles like retirement annuities or pension funds) the long‑term advice often fell on deaf ears because speculative assets were generating quick, exciting returns.
But every asset rally eventually faces a moment when price must justify itself. If it cannot, the rally will stall and sometimes reverse sharply.
It is difficult today to speak out and suggest that some of these asset prices are hard to justify. We cannot predict what will happen next with crypto prices. What does seem clear is that crypto has not become a true medium of exchange. Instead, it has shifted into a store‑of‑value narrative. When we read McWilliams’ perspective, we thought it worthwhile to share his analysis with you.
Ultimately, the conflict between public money and private money will determine the outcome of this debate.
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