How Innovative Is Crypto?

A Bitcoin machine in a bodega in New York City, February 9, 2021. (Carlo Allegri/Reuters) The case for crypto as a driver of innovation is thin.

Like those in other emerging industries touting cutting-edge technologies, cryptocurrency boosters never tire of telling the public just how innovative, disruptive, and beneficial the crypto ecosystem is. The sales pitch goes something like this: “The new private, digital money made possible by blockchain technology will decentralize the world’s financial system and become an incorruptible basis that ushers in a new era of economic life. Crypto and other products designed on top of its protocols will displace the Jurassic incumbents in banking and capital markets while giving the entire world access to financial products that cannot be expropriated or inflated away. Everything will be transparent, interoperable, and lightning-fast.”

In light of this impressive sales pitch, discussions about the regulation of crypto invariably gesture at the “need” to balance protections with a respect for “innovation.” But before any balancing can be done, one must determine the veracity of the sales pitch. Just how innovative are cryptos?

Like Moliere’s Mssr. Jourdain, who was surprised and delighted to learn that he had

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