Bitcoin Hysteria and the Promises of Greed
The end of a boom and coming of a crash, in financial markets, is usually marked by the simple fact that housewives, school kids, retirees want in on the action and join the party. Now everyone talks about Bitcoin. So many are buying.
Yet cryptocurrencies are crashing all the time. No way the bubble is bursting. This is still very early days. Yet there are dangers.
Bitcoin is a modern-day dream headline, rewarding with quick fortunes. Nerds become millionaires, anyone can hit the jackpot.
“Bitcoin Mania: Even Grandma Wants In on the Action,” titles the Wall Street Journal.
You don’t need no job or education, just a bit of recklessness. Bitcoin is the democratization of the monetary universe. Money is no longer under the control of governments, but in the hands of techies wearing t-shirts and colorful socks.
Everyone wants a piece of the cake, yet the rules are heartless and more than a few lose out, even in a market where everything goes up.
Because greed is taking over.
Fear of missing out kicks in. Newspapers, TV, Bitcoin is everywhere. Why wouldn’t you want a piece of it.
Self-styled prophets promise to show the way to the riches, such as Bitcoin guru Tone Vays who probably, and I’m not joking, could talk nonstop for one week without gasping for breath once.
The guru only four weeks ago called the $7,500 Bitcoin top. Four weeks later everything’s forgotten, the same guru predicts quick jumps to $11,000, then $12,000.
To be fair, the guru also predicted how easily Bitcoin can fall back 20 or 30 percent. That’s the name of the game — a game newcomers are not used to. They are confused. They want in, but easily panic and do what everyone does first: buy at the top and sell at the bottom.
Virtual currencies are not easy on the mind. Dealing with the volatility has to be learned, or else you’re easily screwed. Or a rare natural.
The hunt for fast riches can easily wreck families. Many succeed. Many fail. While the establishment — government and traditional finance — fear to lose out. Which they don’t admit. They say they have to protect the people.
Which is why the chorus of Bitcoin enemies will grow louder the more people try to jump on this promised train to fast riches.
Take Nobel Prize-winning economist Joseph Stiglitz. He wants to outlaw Bitcoin altogether, because
“Bitcoin doesn’t serve any socially useful function.”
He laments Bitcoin’s potential for circumvention and lack of oversight:
“The main use of Bitcoin has been to circumvent tax authorities and regulation.”
Quixotic Stiglitz calls Bitcoin nothing more than a favorite pastime:
“It’s a bubble that’s going to give a lot of people a lot of exciting times as it rides up and then goes down.”
While some governments, like Indonesia’s, call for an outright cryptocurrency ban, others only start to realize how virtual currencies might corrupt society as a whole.
The prime minister of South Korea, the country with the probably most active cryptocurrency traders, fears Bitcoin & Co. corrupt the youth:
“Young Koreans including students are jumping in to make quick money and virtual currencies are used in illegal activities like drug dealing or multi-level marketing for frauds.”
“This can lead to serious distortion or social pathological phenomena, if left unaddressed.”
There is some truth in this.
There hardly ever is a fast road to riches.
If it’s too good to be true it probably is.