Years from now, we’ll be asked to define the great bitcoin crash of 2021. The one started by a rich man’s attempt to be funny, one that devalued something based on an internet meme.
Bitcoin is the latest in a line of get-rich-quick schemes where the majority were not quick enough to get rich. Yet, this week offered us a sniff of the market, before the door was quickly shut once more.
Hurt by Elon Musk and the People’s Republic of China, the invisible internet money we all covet shed 30% of its value. A primary victim was an internet joke, Dogecoin (which is based on an ancient meme, of course), as it shed 15% of its value after Elon Musk appeared on Saturday Night Live, calling it a “hustle,” because comedy?
After Elon’s bit, China’s regulatory body promised that there would be no crypto-related offerings, due to the apparent risk involved.
“Recently, cryptocurrency prices have skyrocketed and plummeted, and speculative trading of cryptocurrency has rebounded, seriously infringing on the safety of people’s property and disrupting the normal economic and financial order,” the regulator’s statement, issued on Wednesday, said.
Another impact cryptocurrency has had is the mining of gleeful tales of schadenfreude; as we bathe in the woe of the possibly rich in an alternate timeline, stuck here because they threw out something that had no value back in 2009. Or the dude who had $220 million locked away, because he had forgotten his password.
— Gizmodo (@Gizmodo) December 5, 2017
It even inspired a reasonable group of characters to start their own utopia. Calling itself the Floating Island project, the idea was to create a collection of islands completely free of laws, interference, and having to travel to the ATM. The island was forever sunk in 2018, with the creators citing “political” and “financial” problems.
What makes it more opaque are the conversations that are being had around it. The meteoric rise of bitcoin is partially enabled by the trivia that accompanies it. Did you know that it uses more power than the Republic of Ireland? Don’t ask how. We don’t know. The bitcoin experience even involves a murky backstory, as many attribute the cryptocurrency to Mr. Nakamoto, a man who seems to be either Japanese, Australian, or fictional.
Bitcoin is also a metaphor for the destruction of modern-day America, as economist Robert Shiller illustrated to Quartz: “Somehow bitcoin fits into that and it gives a sense of empowerment: I understand what’s happening! I can speculate and I can be rich from understanding this! That kind of is a solution to the fundamental angst.”
Somehow is the operative term.
Joseph Stiglitz, the Nobel Prize-winning US economist, has said it ought to be outlawed. “Bitcoin is successful only because of its potential for circumvention, lack of oversight … it doesn’t serve any socially useful function.”
The bitcoin experience even involves a murky backstory, as many attribute the cryptocurrency to Mr. Nakamoto, a man who seems to be either Japanese, Australian, or fictional.
In the storied English of Stiglitz, we fear it, because it cannot be contained, defined, or valued in any way. However, in the English of a German, Friedrich Nietzche surmised that as soon as you define something, it loses all power.
I’d argue that its inherent lack of value places it as a perfect metaphor for today: A perfect investment risk for an entire generation flying by the seat of their pants while nervously glancing over their shoulder.
Strangely, like everything in the modern experience, it seems to be a kitsch ’90s throwback.
“There are massive similarities between the dotcom bubble and bitcoin,” says Clare Nicholls, senior partner at Invenio Corporate Finance. “The dotcom bubble was driven largely by ‘fear of missing out.’ Many people acted without really understanding what they were doing or the real truth behind it. As a result, prices skyrocketed and now, over a decade later, we are looking at the same volatile situation.”
With the value of a single bitcoin set to be around $500,000 (or nothing) by the end of 2030, one should get onboard before the FOMO washes over you. Who knows, your grandchildren (which you currently cannot afford) may indeed ask you in the auburn summers to come, “What did you do during the great bitcoin crash of 2021?”