by Jeffrey A. Tucker
September 8, 2017
Five years ago, the following would have been inconceivable. In a 48-hour period, the dollar/bitcoin exchange ratio dropped fully $1,000. A day later, half the gains came back. In the Bitcoin community, this was hardly discussed at all. Not even the websites and writers specializing in the topic wrote much about it. Hysterical claims that “Bitcoin is dead” were at a minimum.
To me, that’s mind blowing. It’s a different world from the one I entered when I received my first bitcoin.
A friend tells me he made a fortune when he bought Bitcoin for pennies, and sold it all when it became $2. His thinking: there is no way this digital nothing could be worth twice per unit the value of the world’s strongest currency. He never bought again.
I recall when Bitcoin went from $14 to $30. My social feed was blowing up about how this was an unprecedented bubble in what is obviously a Ponzi scheme. I defended the price as plausible. When it fell again, people were screaming how I had fallen for a hoax. Something similar happened when Bitcoin reached $250 and fell again to below $100. There’s your proof that this new thing is a complete racket.
As the price stabilized at $350 for a very long time and then started its upward march to eventually peak at $3,000, the incredulity has died down. Now I hardly see it at all. The questions today are more like: how do I become part of this market?
Indeed, vast numbers of people are involved, mining new and strange coins, trading on new platforms, experimenting with new currencies. The market cap of the entire sector, as of this writing, is an astonishing $170 billion. Keep in mind, the cloud-based, decentralized ledger technology on which this is all based was only released in 2009.
Price swings are expected. So are flash crashes. Anyone involved in this sector knows this. Bitcoin grows more anti-fragile by the day. Not even a major fork and the prospect of yet another fork shakes people.
Meanwhile, there are thousands of other tokens out there, some representing direct alternatives to Bitcoin’s currency-like features and others representing broader services associated with larger digital structures like Ethereum. The market for the “Initial Coin Release” (ICO) has exploded as a way of raising capital that bypasses the absurdly regulated and insufferably clogged conventional capital markets.
In this interview, I do a roundup of where we are today: theory, practice, controversies, and the future. Things are moving very fast and the problems and solutions are mounting by the day. I’m happy to say that this interview itself will be outmoded in about 30 days.
These are glorious times to be alive!
— Bitcoin Drops by $1,000 and No One Cares originally appeared at FEE.org.