@Patrick: I'm not really sure what your thing is about Crypto but I can't take your article seriously when your position is very biased.

> The dominant use case for cryptocurrency is speculation.

Could be money laundering, drugs or tax evasion. As far as I'm aware, there is no research/analysis into this.

> The cryptocurrency community includes many exchanges, each a group of affiliated companies, but it is sometimes clearer to view it as an single entity

This is very wrong. Some exchanges co-operate. But many exchanges are countries/jurisdictions apart. GBTC (https://www.google.com/search?&q=GBTC) is also a "Bitcoin marketplace" and it has a $2bn market cap. Some action is also going P2P through hundreds (maybe thousands) of Facebook groups. The trading of Bitcoin is truly decentralized.

> Most exchanges do not have fiat onramps and offramps

Because anyone (literally) can start an exchange. A real exchange (Coinbase, Gemini, Bitstamp) will have its own banking relations. Most people can't afford that and will default to using a stable coin.

What you are trying to do is painting a picture that Bitfinex (& Tether) are dominant in the crypto market. This "might" have been true to some extent in 2016-2018 but it is no longer the case. Far from it. The largest platform for speculating Bitcoin price is Bitmex, and most people go there because of leverage and fees. Bitstamp and Coinbase are doing more volume than Bitfinex, and they have no exposure to USDT. New stablecoins have started operating and although their market cap is still small comparing to USDT, they are doing a more significant share (no longer in the 0.xx%).

The truth is: Bitfinex leader position has imploded; and (as far as I'm aware) it has survived the implosion. The result was clients fleeing to other options. Tether running out of money might "collapse" bitcoin price by 10%; but then the crypto-currency does that regularly.

Let's now look at your predictions from 2018.

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* Bitfinexed presently does have cash deposits approximately equal to their claimed Tether holdings.

* Those holdings are principally not in name of Tether Limited but rather in FBO accounts held by attorneys.

* Jurisdiction for the bank accounts is likely striped; I'm thinking material mounts in Taiwan, Japan, and EU.

* One or more of those accounts will be de-facto frozen as a result of either a formal demand by the regulator or the bank upgrading an investigation into a preemptive freezing.

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I think these can be ignored as these were highly speculated to be true; and thus as someone reading them back at the time would neither be intrigued nor surprised that they did happen.

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* This results in a liquidity crisis when it is published, and a classic bank run.

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True. The bank run did result in a premium for selling your USDT. Been there.

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* Kraken is the first major exchange to fail.

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Nope. And this assumption seems to ignore that 1. Kraken doesn't trade lots of USDT; 2. Kraken doesn't care about the price of USDT and 3. Lots of exchanges are relying on USDT because they don't have USD-banking (unlike Kraken) and they are more likely to fail first.

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* Bitcoin price as measured by CBOE/CME explodes and hits circuit breaker, due to "got to exfiltrate any value before the exchange dies or goes into protracted receivership."

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= Price of Bitcoin @31/1/2018: $8800

= Price of Bitcoin now: $9400

= Lowest Price in between: $3200

So yeah price went down. But this is not the first time, neither it'll be the last. Bitcoin is volatile. It goes +1000% and then -90%. Business as usual.

> I’m not philosophically opposed to shorting them to zero, but the mechanics of doing that are non-trivial.

That makes no sense. You can short GBTC. It even has a premium over the spot price. Should be more winnings for you.

> My intense skepticism of cryptocurrencies is probably the issue on which I am most in disagreement with many close friends, professional acquaintances, and some of the smartest people I know.

Here is my guess. Bitcoin price going up cycle after cycle has proved you wrong again and again. You have missed the craze, any potential profits and the fun of moving lots of cash by the blockchain. Get over it.

> I have not found a good use case yet

For you maybe. That's like saying I didn't find a good use case for having my own revolver. But it's a multi-billion $ industry in the USA. People like them and play with them (despite the risks).

> And, for better or worse, fraud is also one of my weird hobbies.

Yes, it is weird.

tl;dr: Get over the fact that the world and people behavior do not match with your own expectations of how things should function. Also might be a good idea to welcome the reality that your government is not as strong as you think it is if crypto took over the world.