| Hi, Pat here. When Matt Levine started writing his 40,000-word opus for Bloomberg Businessweek this summer, "crypto winter" had already descended on the financial system's parallel universe. Bitcoin was trading well below $20,000, down from last year's peak of $67,000. Yet even as the erstwhile HODLers were running for the exits, you had to wonder: What happened over the past decade? How did an electronic token backed by nothing get to be worth so much in the first place? Why did ordinary people not only buy those tokens but also turn themselves into crypto day traders and "yield farmers"? What on Earth would possess a person to spend hundreds of thousands of dollars for a digital picture of a monkey? This all needed explaining, and there was no better candidate than Levine, who writes the wildly popular daily newsletter Money Stuff for Bloomberg Opinion. The thing was we didn't entirely know what he'd have to say. What he came back with was so remarkable that we devoted this week's entire issue to what could only be called "The Crypto Story." It's that definitive. I'm tempted to say it's neither pro-crypto nor anti-crypto, but that sounds too blandly even-handed. As any close reader of Levine's work knows, he's an opinion writer without opinions—and he strips away jargon and financial obfuscation to reveal what's actually happening, often with hilarious insights. His story is really a tool for thinking clearly about crypto: You'll see why it's so prone to Ponzis and scams, and why the underlying technology is still such a source of fascination for people who like to play with new financial ideas. And when someone tries to dazzle you by talking about "blockchains" or "decentralization" or "immutability," we promise that after you read this, you'll know what they're talking about and will be able to ask critical questions. "The Crypto Story" has more than one takeaway, but here's one that stuck with me: Crypto finance is still just finance. Crypto starts from the arresting premise that it's possible to build an economic system that doesn't rely on trusting intermediaries such as banks. But it very quickly went about the business of doing many of the same things traditional finance does, building complex structures of debt and intermediaries. And it became fragile in many of the same ways the banking system proved to be in 2008. Crypto technology has accelerated finance, but it hasn't changed how humans—variously calculating or naive or honest or dishonest humans—behave when they trade. Buy it or don't buy it, but it's a good idea to keep an eye on it. Click here to read "The Crypto Story," or here to subscribe to weekly installments of the audio version. —Pat Regnier, finance editor, Bloomberg Businessweek  Featured in Bloomberg Businessweek, Oct. 31, 2022. | 
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