I have written a few articles on my personal views of the Bitcoin phenomenon on The Telegraph. These articles did not specifically address the merits of the technology, or the long term viability of Bitcoin – they did address my own personal anxieties created by its volatility. Yet comment threads always point out the former as if I am unaware of these things, and fundamentally wrong about them. Strange, given those views are not really covered in detail.
Views on Bitcoin are an interesting example of extreme polarisation, largely measured by two opposing camps:
- Coiners: people who have been invested in coins before the 2017-2018 mania and have made good amounts of money – they may have even become rich. They may also be referred to as ‘Hodlers‘.
- No coiners: people who dismiss Bitcoin and say it is a fad, or the very definition of a bubble and people involved are speculators.
I am an unusual case in that I have elements of both. I fundamentally believe in the technology, but I believe it is in an extreme type of bubble which is going to end badly, and will take a long time correcting. I haven’t met many other people who share that mix of views. Of course, the vast majority of people have no view on Bitcoin either way. Like most things, they are not involved and do not care.
The 7 dogmas of Bitcoiners
What is interesting about the first group is that their arguments are the same the world over. They often consist of the following:
- Cryptocurrency is the future – therefore its value will go up.
- Fiat / the banking systems is fundamentally flawed/corrupt, so this new technology will replace it.
- The price has crashed, this is a buying opportunity.
- How can you possibly know that the market is going down? No one can predict the future.
- People need to stop spreading Fear, Uncertainty and Doubt – positivity is always the best way.
- It’s a new asset class, it’s different this time, we can’t compare it to the past.
- You should just hodl, it’s for the long term. At the heart of it this all is a denial that parabolic movement in 2017/2018 is just another cycle of Bitcoin’s volatility. The phenomenon of sharing graphs where the Y axis has been warped became common in January 2018 – see this fantasy below:
Because I believe in the nuances of points of view, there is some merit in all of these positions. I do, however, believe the following points are worth exploring:
- This may be true, but to believe specific cryptocurrencies will hold value from their current elastic state is folly.
- This maybe true, and blockchain’s integration into financial systems will happen, but Bitcoin or any other existing cryptocurrency may not actually make this change.
- This might be true, but given Bitcoin is shaping up to be exactly the same as every other asset mania, which means that further capitulation is actually more probable.
- I don’t and I can’t, but you might take note that the overall trend is downwards from a peak.
- People are entitled to their opinion, and are entitled to warn people of the risk. The world does not revolve around endless positivity.
- ‘It’s different this time’ is the title of a well known book on the subject of monetary manias.
- It seems very possible that a parabola of this extremity may be Bitcoin’s last. This does not mean I hate it or that I don’t believe in the underlying technology.
When I have written articles about Bitcoin, coiners drive into the comment sections with strident versions of the first seven points. Sometimes it’s patently obvious they have not read the content of the article. This makes online debates fruitless and irritating, because they will not back down. The other common outcome is ‘debates’ go wildly off from the real point of the article.
Everyone has had enough of experts
Warren Buffet is the most successful investor in modern history. His view of cryptocurrency is summed up: “I can say with almost certainty that it is going to end badly.” The reaction from the coining community is that he’s someone who invests in stocks and doesn’t know anything about crypto. Fine, but he certainly knows a lot about asset classes and their bubbles. He is the most complete expert on investing alive today. To dismiss him is the same sentiment as dismissing all experts. The kind of thinking that is continued to be pushed by ultra conservatives the world over: global warming is a scam, economic forecasts are always wrong, pulling out of the EU will solve our immigration problems, the measles jab causes autism.
I use Bitcoin as an example because I’ve been looking at the price several times a day for months and have observed the sentiment of the crowd. It fascinates me that people can have such a dogmatic view about anything. But it’s the same the world over in any type of online debate where there can be tribes of fandom: sports, politics, even video gaming communities are much the same. The dogma of the opposition being perpetually wrong prevails, and with it a deep sense of entitlement.