In the world of digital money known as cryptocurrency, the losses were far worse.
At root, money or currency is built around trust.
But that is a bit of an illusion – involving an advance on money that still takes traditional financial institutions hours or even days to transfer.
And in theory, users don’t need to trust any of the players in the system, only the technology and the assets that back it.
Rattled by real-world inflation, shortages, and war, stock markets in the United States and around the world have stumbled.
Another digital currency called TerraUSD, designed to be worth $1 at all times, collapsed along with its sister token, Luna.
In May, a law firm based in Dubai, United Arab Emirates, began accepting payment in bitcoin and a few other digital currencies.
Will it be worth its promised value? Cryptocurrency may seem to have failed that test, yet people are turning to it for reasons that go beyond stable value relative to traditional dollars.
For high rollers interested in investing in cryptocurrency, as opposed to using it as a currency, the volatility has been part of the appeal – at least when prices are going up.
“Finding ways to make cheaper and faster, and finding ways to make people that are unbanked or under-banked able to send peer-to-peer value to each other, in real time, and for no cost, is going to be a game changer for economies, not just in this country but elsewhere in the world,” Republican Sen.
But that is a bit of an illusion – or a Ferrari front end on a horse-and-buggy back end, as one digital asset banker puts it – involving an advance on money that still takes today’s plodding world of government-issued cash and authorized financial institutions much more time to transfer.
Instead of relying on central banks, it’s designed to be decentralized.
It “is definitely a time to question the trustworthiness of a lot in crypto,” says Omid Malekan, a Columbia Business School professor and author of “Re-Architecting Trust,” a book on cryptocurrencies that will be available in July on Amazon.
And anyone who downloaded the app got $30 worth of bitcoin, a considerable sum in a poor country like El Salvador.
And the government’s vision of giving free digital financial tools to its poor and unbanked people – 9 in 10 Salvadorans don’t have a bank account – has fallen short.
“The main concern people have … is trust,” says David Argente, an economics professor at Pennsylvania State University and a co-author of the study, which surveyed 1,800 Salvadoran households.
Here in the Boston area, Bentley University uses a crypto exchange called Coinbase to automatically make the conversion for a small fee.
The failure of bitcoin to act as a stable currency has attracted investors and consumers to a different kind of cryptocurrency: stablecoins, which are built to maintain the same value as the U.S.
The question not yet resolved is who will issue a stablecoin that can gain the world’s trust.
Here in the U.S., the Federal Reserve Bank of Boston and the Massachusetts Institute of Technology have partnered to find solutions to the technological challenges of creating a stable, safe, and secure digital dollar.
“Because there’s no intrinsic value, as people begin selling, there’s no place to go except zero, because there’s no collateral to sell,” Thomas Vartanian, executive director of the Financial Technology & Cybersecurity Center, warned at the American Enterprise Institute forum.
“I don’t think cash will completely disappear,” says Andy Long, chief executive of White Rock Management, a Swiss-based bitcoin mining firm that’s expanding to the U.S.
“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight.
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