It seems like a mere year ago around this time we were lauding the advent of the soon to be Bitcoin revolution, challenging all the financial precepts and eventually rising to the biblical status of the “One-World Currency.” In many ways the rise of Bitcoin invokes a spiritual experience for its believers that is deeper than the potential economic wealth it offers. As Moore’s law observed that the number of transistors in a dense integrated circuit doubles about every two years, such was the belief in the growth of Bitcoin.
The fallen angel has gone from a high of 20,500 on December 18, 2017 on the regulated CBOE, to where we sit today at around 3,150. I’ll let you do the math. You don’t have to be smarter than a fifth grader to know a tulip bulb bubble when you see one. Early disciples of the Holy Bitcoin and its alleged creator Satoshi Nakamoto are reported to have made billions of dollars on the cryptocurrency.
But just like every other omniscient market before it, it knows when the last sucker, I mean investor, is lured in, and then things go wrong. One guesses the lucky few who saw the hype on newspaper covers while standing in line to get their lottery tickets, bought that high at 20,500 and would agree. That is sarcasm. Are we still permitted to use it in this country?
Dan Brown’s Origin crafted an eyry futuristic version of this ideological techno-utopia, where the human species dissipates and morphs into one with artificial intelligence, leaving life as we know it gone. In this fable, technology and science are once again pitted against religion. One would have to consider computer science in the form of blockchain coding to be the latest attempt to free us from ourselves. The decentralization promised and the freedom that may or may not come with it will have to wait.
Europe’s foray into the biblical prophecy creating the European Union and the Euro were the start, and Bitcoin was unfolding as the leading player in the future of money. As Jesus turned the tables of the “money changers” and discarded them from the Temple, the Bitcoin saints have been thrown a death blow. People really wanted to believe in it and invest in it, while not understanding a word of it. That is human nature.
We have come a long way since Bretton Woods and the gold standard, with Nixon unlinking the connection between gold and the dollar in 1971 fearing a run on Fort Knox. Those were soul searching times and the beleaguered techno-utopia of today is fairing no better at the moment. Universally, people want freedom, both economic and political, and Bitcoin has the potential to liberate those in places of authoritarian regimes, with its autonomous structure. However, this thought must get past the internal infrastructure controlled locally that would prohibit access, as well as the massive amount of electricity that fuels the mining of the currency. That switch would most certainly be turned off. The underground pilot program of Bitcoin is playing out now in Venezuela. Electricity is free for now.
The public will surely object to the fact that there is no tax currently on Bitcoin, as there is on their paycheck in dollars. With the bubble bursting it is hard to see how the regular guy will accumulate wealth with cryptocurrency. In addition, other than the CBOE and CME futures, there is no regulation in the underlying coins. Regulators are still uncovering frauds; 56 percent of crypto startups fail within four months of selling coins, says a Boston College study. Caveat emptor!