Paulson argues that crypto has no intrinsic value beyond primary supply and demand principles. The irony in Paulson’s statement is, the same is true of the Fiat Currency system, which is the universally accepted barometer of wealth and financial stability.
Fiat currency itself is nothing more than a societal construct. The society we live in has accepted an unspoken agreement that the money in circulation today, which we use to buy our goods and define our wealth, is worth what we say it’s worth because of the economic principles we have all grown to accept.
The economic system currently dominated by the US Dollar is purely faith-based. If someone goes into their local grocery store and fills a cart with $100 worth of goods, that person has faith that the cashier will ring them out and accept the freshly-minted bills in their pocket because that is the system. That is how it works.
The value of anything is wholly determined by what someone is willing to pay for it. The Stock market is the ultimate example; a stock is what someone is willing to pay for it. Cryptocurrency is identical in principle.
If a million people decide that a cryptocurrency is worth $100, that is its true actual value. The concept of currency exchange does not change because Benjamin Franklin’s face is no longer involved in the equation; anyone who argues otherwise is simply trying to maintain the status quo and keep from disrupting what has worked for them, which is a dangerously archaic belief.
A similar argument emerged during the first dot com boom of the mid-90s. The conversation at that time centered around the longevity, value-add, and usefulness of the internet, going so far as to say it was nothing more than a fad. The best example, the concept of buying a tangible item online without seeing, touching, feeling, or smelling, was something some people couldn’t imagine as reality and something others didn’t want to become a reality.
The actual truth is, society will only ever progress. Horses and buggies served as means of transportation for hundreds of years, but that hasn’t stopped people from embracing bullet trains. It is highly unwise to dismiss the power of the root concepts and factors underpinning the intrinsic value of crypto and DeFi- circular economics, democratization, access, equity and ethical responsibility (to empower and level-up the unbanked, for example), among so many other tectonic forces are at play.