ATHENS – The history of money has been the history of the struggles to control the payment system and the money tree. Today, with control over both resting in the hands of bankers, central banks’ efforts to boost business end up amplifying inequality while failing to address either economic stagnation or the looming climate disaster. The time for ending this scandalous cartel is now; the way to do it is by creating a central-bank cryptocurrency.

Whether you are charging a cup of coffee to your debit card or wiring money, the transaction passes through a digital system fully owned by bankers. What should be a public utility, like roads or sewers, is a lucrative cartel. Similarly, every time bankers lend, they mark up the balance of the borrower’s account, thus creating new money. Dollars, pounds, euros, yen, and so on are conjured mostly by private bankers out of thin air.

Defenders of the status quo will protest that bankers’ access to the money tree is constrained by the central bank. By imposing on bankers a minimum ratio of safe debts (such as US government bonds or real-estate collateral) for every loan they make, the central bank limits the production of new money. But while that may be true in theory, during a crisis, debts turn bad en masse, forcing the central bank to choose between letting banks fail and accepting increasingly worthless collateral.

Society’s reliance on banks for its payments system has meant that since 2008 – and more so during the pandemic – central-bank money has been showered, via private bankers, on the ultra-rich, while everyone else suffers stagnation and austerity. Once caught in this trap, it became impossible for central banks to revive the economy while keeping financiers on a leash. To escape, it is necessary, though insufficient, to end bankers’ dual monopoly of the payment system and the money tree. But how?

Bitcoin-like, non-state cryptocurrencies do threaten the bankers’ monopoly over the payment system, domestic as well as international. But they are a terrible alternative in every other respect. Of their many defects, the one that stands out is that the crypto-money supply cannot be adjusted to reflect economic activity.

If such currencies had prevailed before the pandemic, governments would not be able to support locked down workers and firms. As for developing countries that do not borrow in their own currencies, turning a bitcoin-like cryptocurrency into legal tender, as El Salvador did recently, promises to cause even worse problems than those caused by dollarization.

The aim ought to be termination of bankers’ monopoly of payments and money creation, albeit without passing their exorbitant power to the central bank’s bureaucrats. Central bank digital currencies based on bitcoin-like transparency-enhancing technologies are a promising way to achieve three objectives: liberating the payments’ system from rentiers, guaranteeing unprecedented transparency regarding how much money is plucked from the money tree, and democratizing access to the tree’s fruit.

Interestingly, the idea of central bank digital currencies is gaining support from the financial establishment such as the Bank for International Settlements, known as the central bank of central banks. These financial gatekeepers are embracing central bank digital currencies because they can see that, if they do not, someone else will, whether it is the People’s Bank of China, whose own digital currency is at an advanced stage of development, or, more ominously, Big Tech. Their objective is to usher in digital currencies that preserve the current oligarchy’s monopoly over money. The objective of progressives must be to wrest control away from them in order to promote shared prosperity with monetary stability.

The first step is to separate payments from the bankers’ money tree. This can be achieved easily if the central bank automatically granted every resident (but also selected non-residents trading with residents) a digital account, a PIN, and a web/phone application that enables free, immediate money transfers.

In addition to the lure of free payments, a tax discount of, say, 5% on funds transferred to one’s central bank account and used to extinguish taxes a year later would attract idle savings from commercial banks and give the government access to prepaid taxes. Bankers will have to offer customers genuine services to keep their business.

As for concerns about privacy, it is possible to anonymize central-bank accounts with digital tags that only an independent ombudsman, a post created in the spirit of a new separation of powers, can trace to physical persons. After all, lest we forget, our current payments system (with the strict “Know Your Customer” rules imposed on bankers) offers next to no privacy.

The second step will be to end socialism for the ultra-rich, also known as quantitative easing. Instead of the central bank financing banks that lend to corporates, which then use the money to buy back their own shares, thus boosting their wealth without a cent of actual investment, the central bank would automatically credit a monthly sum to every resident’s account – with the government taxing, at year’s end, the receipts of well-to-do folk. As economic conditions change, this direct dividend would fluctuate accordingly.

This system should be built on a bitcoin-like transparency-enhancing distributed ledger for two reasons: resilience and trust. Any central-bank digital currency would be extremely vulnerable. But a distributed ledger architecture would be impervious to hacking or physical damage. And since the quantity of money would be set by the central bank, there would be no need for bitcoin-like mining which requires planet-endangering electricity consumption. Furthermore, it would give us common knowledge of the quantity of money in the system, thereby preventing the central bank from covertly inflating the economy while preserving anonymity.

Central-bank digital money will happen sooner or later. The great struggle over who will control the payment system and the money tree will continue. But we have a chance to use new technology to democratize money, to reclaim control over the money supply, to offer savers a decent interest rate without precipitating a new depression, and to lay the groundwork for a universal basic dividend – in short, to press the money tree into the service of people and the planet.

Who controls transactions, interest rates, and money creation controls politics. That’s why the powers-that-be will fight this proposal tooth and nail.

WASHINGTON, DC – Bitcoin and other privately issued cryptocurrencies have generated a frenzy of excitement, with most of the analysis focused on their appeal and apparent drawbacks. But relatively less attention has been paid to an even more important development: the increasing likelihood that countries will shift partly or entirely to a central bank digital currency (CBDC).

Economists have long recognized that money performs three functions. As a medium of exchange, it enables transactions that otherwise would require difficult bartering (as in trading chickens for a car). As a unit of account, it allows one to know whether one has saved or dissaved over the past year. And as a store of value, money enables current income to finance future purchases.

There is an emerging consensus that Bitcoin and other privately issued cryptocurrencies can serve as a (speculative) store of value, and hence as an asset class. But whether these instruments can develop into a medium of exchange or unit of account remains dubious. In Bitcoin’s case, the currency has no anchor, and will forever have a fixed quantity of 21 million tokens. While this might permit some hedging against inflation, Bitcoin’s wildly fluctuating value and lack of any backing raises doubts about its stability. The Bitcoin mania has rightly been compared to the tulip mania in seventeenth-century Holland – only without the bulbs.

Cryptocurrencies will doubtless develop further, but most will be anchored in an existing monetary unit like the US dollar (with a guarantee of exchange into that unit). Though technical issues will need to be resolved to improve the usefulness of privately issued coins, there is no reason to think this won’t happen sooner or later.

Meanwhile, the US Federal Reserve, the European Central Bank, and others have begun to assess the prospects of issuing their own digital currency. The People’s Bank of China has already distributed packets of digital renminbi in pilot cities, and the Central Bank of The Bahamas has gone even further, having fully issued a CBDC known as the “sand dollar.”

At the retail level, a CBDC would offer some obvious advantages, and would operate much like a credit card in effecting payments. A common argument is that it would help the poor and others who are currently underserved by the banking system. It would also make it much easier for governments to administer social transfers like the household cash disbursements made during the pandemic. And a well-functioning international system of digital currencies would sharply reduce cross-border transaction costs.

But CBDCs have complications of their own. One crucial question is where CBDC accounts would be held. If it is in the central bank, how will privacy for transactions be preserved? Equally unclear is what role would be left for private banks, which are currently the predominant source of credit in most market economies. If banks no longer receive deposits, how will they issue loans?

For such an arrangement to function well, the CBDC would need to strike a balance between anonymity (privacy) and control of the system. Otherwise, there will be an abiding concern that the government can too readily access individual account holders’ information and intervene in credit allocation. The alternative is that central banks would allocate deposits to member banks, which would then continue to function as sources of credit. In this case, there would need to be strong fractional reserve requirements, or other problems might arise.

There are also complications at the international level. Would central banks be willing to accept payments in other central banks’ CBDCs? Could countries retain control of their money supply once it has taken a digital form? In any case, it is difficult to imagine that major central banks would be willing to underwrite the international financial system without a high degree of cooperation, coordination, and control.

These international questions are of particular importance for the United States, because the greenback has served as an international reserve currency, a unit of account, and a means of payment for the past 75 years. For better or worse, the dollar’s key role in the system has enabled the US to impose reasonably effective financial sanctions on countries such as Russia and Iran, and the US is not going to surrender this tool willingly.

But, of course, the increased use of sanctions by the US has lent momentum to efforts to create an alternative to the dollar. As the Chinese race to enhance the renminbi’s international role through digitization, there will be strong political pressure for the US to adopt its own CBDC before all of the aforementioned complications are resolved. While competition among the Fed, the ECB, the PBOC, and other central banks might prove healthy, it also might lead to developments that threaten the entire international financial system.

No monetary system has ever functioned perfectly. But it is generally agreed that the current one has performed well over the past 20 years of crises, especially when compared to earlier systems such as the gold standard. Although a CBDC could improve financial inclusion, most experts caution that it should not be inaugurated until there are assurances that credit allocation, payments systems, financial-stability safeguards, and other aspects of the new system would function at least as smoothly as they do under the current one.

CBDCs almost certainly will continue to be developed. The question, then, is whether their many issues will be resolved before the switch is made.

BERKELEY – The debate over stablecoins has come a long way since Facebook announced the creation of Libra (now rebranded Diem) almost exactly two years ago. An obscure corner of the digital sphere that was poorly understood then is now subject to increasingly intense scrutiny by central bankers, regulators, and investors. The stakes, including for financial stability, are high. Market capitalization, or circulating supply, of the four leading US dollar stablecoins alone exceeds $100 billion.

But more intense scrutiny does not mean better understanding. Start with the belief that stablecoins are intrinsically stable because they are “fully collateralized.” The question, of course, is: collateralized by what?

Naive investors in dollar-linked coins assume that the collateral takes the form of dollars held in federally insured US banks or their close equivalent. But that is only partly correct. After being criticized for its opacity, the leading stablecoin issuer, Tether Limited, recently revealed that it held barely a quarter of its reserves in cash, bank accounts, and government securities, while holding nearly half in commercial paper and another tenth in corporate bonds. The second leading stablecoin by capitalization, USD Coin, says only that it holds its reserves in insured US depository institutions and other “approved investments.” Whatever that means.

Such murkiness creates risks for stablecoins themselves, for their investors and, critically, for the stability of financial markets. Lack of transparency about what quality of commercial paper, what kind of corporate bonds, and what other “approved investments” are held as collateral is a source of fragility. This kind of information asymmetry, where investors don’t know exactly what has been done with their money, has given rise to bank runs and banking crises through the ages. In this setting, a fall in the value of commercial paper or in the corporate bond market could easily spark a stablecoin run. And the fact of falling bond prices would mean that the stablecoin issuer lacked the wherewithal to pay off its holders.

In addition, there is the danger of contagion: a run on one stablecoin could spread to others. What are the chances that a run on Tether would leave confidence in USD Coin intact? The European Central Bank, which knows a thing or two about financial contagion, has warned against just this scenario.

To limit such problems in the banking system, governments insure retail deposits, and central banks act as lenders of last resort to depository institutions. Some commentators, such as former Bank of England Governor Mark Carney, have suggested that central banks should provide similar support to stablecoin issuers.

The authorities would agree to this, of course, only if those issuers were subject to stringent supervision designed to limit the incidence of problems. Stablecoin purveyors would have to apply for the equivalent of bank charters and be subject to the relevant regulation. A stablecoin would then be nothing but a so-called narrow bank, authorized to invest only in Treasury bills and deposits at the central bank, with a Paypal-like payments mechanism built on top.

Alternatively, stablecoins could be regarded as the digital equivalent of prime money market funds, which similarly invest in commercial paper. The problem with this model, as we learned during the 2007-08 global financial crisis, is that normally liquid commercial paper can abruptly become illiquid. When this happened in 2008, the US government sought to quell the ensuing panic by temporarily guaranteeing all money market funds. To prevent that from happening again, the Securities and Exchange Commission then issued rules requiring that funds, rather than maintaining a $1 share price, post floating net asset values as a reminder to investors that money market funds are not without risk. It allowed money funds to institute redemption gates, under which they can limit withdrawals and charge temporary fees of up to 2%.

Revealingly, Diem’s latest whitepaper similarly foresees redemption gates and conversion limits to protect the stablecoin against runs. But a stablecoin that is redeemable only for a fee or that can’t be redeemed for dollars in unlimited amounts won’t be an attractive alternative to Federal Reserve money, just as shares in money market mutual funds are an imperfect substitute for cash.

The more worrisome financial stability problem is that the market capitalization of the four largest US dollar stablecoins already approaches that of the largest institutional mutual fund, JPMorgan Prime Money Market Fund. A panic that forced these coins to liquidate a significant share of their commercial paper and corporate bond holdings would jeopardize the liquidity of those markets. And dislocations to short-term money markets can seriously disrupt the operation of the real economy, as we also learned at considerable cost in 2008.

The upshot is that the stability of stablecoins is an illusion. They are unlikely to replace Federal Reserve money, unlikely to revolutionize finance, and unlikely to realize the dreams of their libertarian enthusiasts.

NEW YORK – In June 2019, Facebook made a daring announcement: within a year, it would launch a new global currency, the Libra. The idea was to offer an alternative to national currencies in cross-border transactions, and to provide a payment network for billions of unbanked people. A strictly digital token, the Libra was to be issued by an association in Switzerland and backed by a basket of national currencies, implying that its creators sought independence from sovereign powers.

But Facebook soon lowered its sights. Libra has since been renamed Diem, and the issuing entity has moved from Switzerland to the United States, where it has formed a partnership with Silvergate Bank to issue a token that complies with US banking regulations. A project that began by taking its name from a Roman currency and wrapping itself in the image of Caesar Augustus has ended as part of an online financial-services platform based in a corporate office park in La Jolla.

Libra’s quick rise and fall is a telltale case of a premature and ill-designed attempt to challenge the powers that be. Among other things, its fate highlights the critical importance of building coalitions that are willing and able to play both offense and defense against challengers.

Facebook and the Libra Association did not invent the idea of digital currencies, which had been around for a decade. Nor were they breaking new ground in payment systems. Companies like PayPal have been building alternative systems in the shadow of (and often by piggybacking on) existing banking infrastructure for more than two decades. This low profile was both a strength and a weakness: it allowed new platforms to expand without raising the ire of regulators; but it also left them dependent on legacy institutions and easy to copy.

As a latecomer to the game, Facebook hoped to use its comparative advantage as a digital platform with more than 2.3 billion users to take digital currency mainstream. Building on the “stable coin” fad, Libra was to be tethered to a basket of currencies issued by countries with a reputation for stability, and with reliable backstopping from central banks. Its value would track a weighted average of the British pound, the US dollar, the euro, the Singapore dollar, and the Japanese yen, even though it would be issued by an entity outside any of those countries’ jurisdictions.

The regulatory backlash was swift and fierce. Within weeks, hearings were organized in both houses of the US Congress, and politicians around the world voiced their disapproval. National authorities quickly formed a united front and pledged to scrutinize every aspect of what they perceived as a threat to their monetary sovereignty. The Financial Stability Board, which counts the G20 among its members, launched a review of the existing regulatory frameworks and began coordinating the response to Libra and other aspiring global stable coins.

Nothing unites disparate interests like a common enemy. Libra’s ambition was more than the world’s leading economic powers could take. No matter how much Facebook CEO Mark Zuckerberg pleaded for leniency or fearmongered about China’s efforts to develop a global digital payment system, he could not sway the powers that be.

Facebook was forced to retreat. First, the Libra Association started losing key members. When Visa, Mastercard, and PayPal left, the writing was on the wall, even though the overall number of members continued to increase. To alleviate market and political concerns, Facebook had to renounce its own engagement with the association. Then came the ill-fated renaming from Libra (balance) to Diem (day), which has been tainted by copyright issues.

When the Diem Association finally announced its relocation from Switzerland to the US this month, it was hard not to be reminded of Henry IV’s infamous trek to Canossa in 1077. Though Henry was emperor of the Holy Roman Empire, he was forced to humiliate himself by crossing the Alps in winter to beg for leniency from Pope Gregory VII, whose authority he had openly challenged by appointing bishops in contravention of a papal decree.

Henry’s challenge to papal authority succeeded as long as he had the German kings behind him. But the pope responded by excommunicating Henry, denouncing the other kings’ pledge of allegiance, and lobbying them to deny Henry their support unless he agreed to atone. When Henry’s allies wavered, he had no choice but to submit himself on both knees to the pope.

Facebook’s retreat has been less dramatic: a reshuffling of paperwork and negotiations with a different set of regulators are all it took to decamp to Southern California. Nonetheless, the history of the struggle between secular and religious power, epitomized by Henry and Gregory’s standoff, holds lessons for power seekers today. Above all, it is risky business to reach for the crown jewel of state sovereignty – in this case, money. If you dare to do so, you should be sure that you and your collaborators are sufficiently independent from the power that is being challenged. And you had better have the capacity to backstop your own money, lest it crash when its holders seek safety and rush for the exit.

Monetary incumbents also can learn from Libra’s fate. In earthly matters, power is always contested and therefore always temporary. With challengers perpetually waiting in the wings, incumbents that do not learn how to control them will eventually have to yield.

LONDON – Many regard the market for Bitcoin – the world’s leading cryptocurrency – as a game of winners and losers played out among hedge funds, amateur investors, geeks, and criminals. The huge risk inherent in a highly volatile anonymous digital currency is best left to those who understand the game well, or who don’t really care because they can mitigate the risk or absorb any losses. But Bitcoin recently has become more attractive for countries and individuals with limited access to conventional payment systems – that is, those least equipped to manage the underlying risk.

Earlier this month, El Salvador became the first country to adopt Bitcoin as legal tender, enacting legislation that will take effect in September. This means that Bitcoin can be used to pay for goods and services throughout the country, and recipients are legally obliged to accept it.

Salvadorans are not new to this type of monetary experiment. The US dollar became legal tender in El Salvador in 2001 and is the currency used in domestic transactions. At that time, the government of President Francisco Flores allowed the dollar to circulate freely alongside the national currency, the colón, at a fixed exchange rate.

Dollar advocates argued that the expected benefits of macroeconomic stability would outweigh El Salvador’s loss of economic sovereignty, monetary independence, and even seigniorage – the difference between the cost of producing coins and banknotes and their face value. But purchasing power suddenly plummeted and left the economy even more dependent on remittances, which have averaged about 20% of GDP per year over the past two decades.

Using Bitcoin as legal tender will exacerbate the monetary constraints that dollarization revealed – notably, the lack of an independent macroeconomic-institutional framework around which to shape domestic policies. Moreover, Bitcoin is much more volatile than the dollar. Between June 8-15, its value swung between $32,462 and $40,993, and in the period from May 15 to June 15, it ranged from $34,259 to $49,304. Such wide fluctuations – and the fact that they are entirely market-driven, with no scope for policymakers to manage the swings – make Bitcoin an unsuitable instrument for macroeconomic stabilization.

El Salvador’s president, Nayib Bukele, tweeted that Bitcoin will facilitate remittance transfers and considerably reduce transaction costs. The fees that migrants must pay to send their money home are scandalously high, despite many calls by the United Nations and the G20 to reduce them. According to the World Bank, the average global cost of sending $200 internationally is approximately $13, or 6.5%, well above the Sustainable Development Goal target of 3%.

Nonetheless, in 2020, low- and middle-income countries received remittances of $540 billion – only slightly less than the 2019 total of $548 billion, and much larger than these countries’ inflows of foreign direct investment ($259 billion in 2020) and overseas development assistance ($179 billion in 2020). Reducing the fees to 2% could increase remittances by as much as $16 billion per year.

The large but globally fragmented remittance business relies on electronic transfers via commercial banks’ payment systems, and banks charge hefty fees for the use of this infrastructure and the benefit of a safe and reliable international network. But high fees are not the only issue. Many migrants don’t have a bank account in the country where they work, and their families back home may also be among the 1.7 billion unbanked people worldwide. Furthermore, some migrants may need to transfer money to countries that either are not integrated into the international payment system or are restricted in their ability to receive cross-border transfers – for example, Syria or Cuba.

Bukele is right about the need to challenge this system, including by providing low-cost and low-risk alternatives. But Bitcoin is the wrong tool. Yes, it allows people to transfer value directly and globally, without the costly third-party intermediation. But its volatility makes it at best an asset – and an extremely risky store of value – rather than a means of exchange. The risk of a sudden drop in its price means that migrants and their families back home can never be sure about the amount transferred.

Rather than dismiss El Salvador’s Bitcoin adoption as just another example of the crypto craze, we should reflect on why many people around the world are willing to embrace cryptocurrencies for non-speculative purposes. Perhaps the answer lies in the fact that the current international financial system serves them either poorly or not at all.

Innovations in digital money, such as the M-Pesa mobile money service in Africa, have made significant inroads into many developing countries’ payment systems. But more needs to be done to provide the infrastructure and regulatory frameworks to support digital money. For now, the terrain remains patchy.

Coordinated cross-border policies are urgently needed to ensure that Bitcoin and its variants don’t do more harm than good in developing countries. Unless both the public and private sectors embrace critical reforms and make basic banking services available to all at low costs, people and governments will increasingly be attracted by Bitcoin and other low-cost, high-risk, and murky alternatives to traditional banking.

CAMBRIDGE – Ransomware – a type of malicious software that restricts access to a computer system until a ransom is paid – is not a good look for cryptocurrencies. Proponents of these digital coins would rather point to celebrity investors such as Tesla founder Elon Musk, Dallas Mavericks owner Mark Cuban, star football quarterback Tom Brady, or actress Maisie Williams (Arya in Game of Thrones). But recent ransomware attacks, and cryptocurrencies’ central role in enabling them, are a public relations disaster.

The attacks include last month’s shutdown of the Colonial Pipeline, which drove up gasoline prices on the US East Coast until the company paid the hackers $5 million in Bitcoin, and, even more recently, an attack on JBS, the world’s largest meat producer. Such episodes highlight what for some of us has been a longstanding concern: difficult-to-trace anonymous cryptocurrencies offer possibilities for tax evasion, crime, and terrorism that make large-denomination bank notes seem innocuous by comparison. Although prominent cryptocurrency advocates are politically connected and have democratized their base, regulators cannot sit on their hands forever.

The view that cryptocurrencies are just an innocent store of value is stupefyingly naive. Sure, their transaction costs can be significant enough to deter most ordinary retail trade. But for anyone trying to avoid stringent capital controls (say, in China or Argentina), launder illicit gains (perhaps from the drug trade), or evade US financial sanctions (on countries, firms, individuals, or terrorist groups), crypto can still be an ideal option.

After all, the US government has for many decades turned a blind eye to the role its $100 bills play in facilitating weapons purchases and human trafficking, not to mention undermining poor-country governments’ ability to collect tax revenues or maintain domestic peace. Although Bitcoin and its crypto variants have by no means surpassed the dollar in facilitating the global underground economy, they are certainly on the rise.

As even top US financial firms seek to offer crypto options to their clients, one might well ask what people are investing in. Contrary to frequent claims that there is little use for cryptocurrencies in transactions and no underlying business, there is a thriving one: aside from being a bet on dystopia, cryptocurrencies offer a way to invest in the global underground economy.

If governments will ultimately have to increase dramatically their regulation of crypto transactions, why have cryptocurrency prices in general, and the price of Bitcoin in particular, soared (albeit with headline-grabbing volatility)? Part of the answer, as economic theory tells us, is that with interest rates at zero, there can be massive and sustained bubbles in intrinsically worthless assets. Moreover, crypto investors sometimes argue that the sector has become so big, and attracted so many institutional investors, that politicians will never dare regulate it.

Perhaps they are right. The longer it takes for regulators to act, the harder it will be to get private digital coins under control. The Chinese and South Korean governments recently started cracking down on cryptocurrencies aggressively, although it is not yet clear how determined they will be. In the United States, the financial-industry lobby has been relatively successful in holding back meaningful regulation of digital assets; witness the recent retreat to the US of Facebook’s digital-currency project in the face of global regulatory pushback orchestrated by the Swiss authorities.

True, US President Joe Biden’s administration is now, at least, moving to force reporting of cryptocurrency transfers of over $10,000 as part of its efforts to collect a larger share of taxes owed. But, ultimately, reducing the potential liquidity of hard-to-trace crypto will require a high level of international coordination, at least in advanced economies.

In fact, that is one argument for why a cryptocurrency such as Bitcoin might justify its lofty value of about $37,000 at the end of May (although its price changes like the weather). If Bitcoin is an investment in the transactions technology underpinning the global underground economy, and if it takes many decades for even advanced economies to rein in the currency, then it can earn a lot of rents from transactions in the meantime. After all, we do not have to expect a company to be in business forever – think fossil fuels – for it to have significant value today.

Of course, there will always be a market for cryptocurrencies in war-torn countries or pariah states, although their valuations would be much lower if coins could not be laundered into rich countries. And perhaps there are technologies for stripping away anonymity and thereby removing the main objection to cryptocurrencies, though one suspects that would also undercut their main selling point.

No one is arguing against the blockchain technology that underpins cryptocurrencies and has vast potential to improve our lives, for example, by providing a trusted tamper-proof network for monitoring carbon dioxide emissions. And although operating the Bitcoin system itself requires enormous energy consumption, there are now more environmentally friendly technologies, including those based on “proof of stake.”

Unfortunately for those who have invested their life savings in cryptocurrencies, ransomware attacks that target growing numbers of firms and individuals could prove to be the turning point when regulators finally develop some backbone and step in. Many of us know people whose small, struggling companies have been decimated by such extortion. While governments may have better cryptocurrency-tracking tools than they let on, they are in an arms race with those who have found an ideal vehicle for making crime pay. Regulators need to wake up before it’s too late.