Few, beyond the most outlandish prognosticators, would have ever thought such a thing possible, even just a few months ago. But the internet cash system bitcoin has burst the psychological $10,000 barrier. As I write this, it is closing down on $11,000.
At the beginning of the decade the price of a bitcoin was barely a penny. It has been the greatest money-making opportunity any of us will see in our lifetime. A $100 bet in July 2010 is now $16m. If you were one of the libertarian geeks who got in close to the start back in 2009 and managed to hold on, you have made millions of times your money. It is up 1,000% this year alone. Bitcoin has created fortunes beyond anyone’s wildest dreams.
And yet it is also perhaps the greatest bubble in all human history. In terms of multiples from its starting price, bitcoin now dwarfs 17th-century Dutch tulip mania, the South Sea and Mississippi bubbles of the 18th century, railroads in the 19th century, US stocks in the 1920s, Japanese real estate in the 1980s, dotcom in the 90s … You get the point.
Bitcoin’s keenest advocates will say it is the digital gold standard on which money systems of the future will rest. Its sternest critics declare it an overhyped fad that will end in the same grave as Charles Ponzi.
Let me tell you something all bitcoin’s advocates have in common. They have invested. They have been persuaded by the story. They have used the technology and are familiar with it. They are talking their own book.
Its critics, meanwhile, have almost invariably not invested. Often they are cross with themselves for missing the opportunity. Most importantly of all, they have not experimented with the tech.
That’s what people don’t get. Bitcoin is a tech. Those who use it, love it. Those who don’t, dismiss it. It’s like parents not getting Snapchat. Using the tech creates the converts. Almost every criticism you will hear, from the claim that governments will shut it down to JP Morgan’s chief executive, Jamie Dimon, saying it’s “a fraud”, just shows a lack of familiarity with the tech.
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