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Cryptocurrencies and Criminality Continue to Walk Hand in Hand

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Regular readers know I take a dim view of cryptocurrencies. They are not all the same, so one has to consider the differences in algorithms, governance and ceilings on issuance before making determinations on specific cryptos.

That said, cryptos are generally nonscalable, nonsustainable and badly flawed from a monetary perspective. The coding and math can be great, but if the developers don’t know anything about monetary economics (most don’t), then the cryptos are bound to fail in time.

The other problem is most cryptos have no uses cases except aiding and abetting criminal conduct such as tax evasion, drug dealing, terrorism and child pornography. The legitimate use cases are few and far between.

The main use for cryptos has been for zero-sum gambling between buyers and sellers. There have been some big winners and also millions of losers around the world. Still, the net value added created by cryptos has been zero at best and probably negative because of the energy wasted in “mining” the coins in the first place.

With this much connection between crime, waste and cryptos, it’s not surprising to find that a fugitive technologist is proposing a new cryptocurrency to prop up the communist regime in Cuba. As reported in this article, alleged tax evader and fugitive from U.S. justice John McAfee (inventor of McAfee Antivirus Software) is now in Cuba living on his yacht and offering to build a cryptocurrency and blockchain to help Cuba avoid U.S. sanctions on international payments.

McAfee may soon discover that’s he’s stuck in Cuba (other countries would deport him to the U.S.) and he has to use his fortune to bribe Cuban officials to remain there.

This kind of lonely, dead-end existence is exactly what happened to investment scammer Robert Vesco. Vesco fled to Cuba in 1982 and died there in 2007, but not before being sentenced to prison by the Cubans for drug smuggling and other crimes. Today the scams are based on cryptocurrencies, not securities fraud, but the outcome for fugitives may be the same.

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