Why do people still listen to economists? Why does anyone care what they say? Did any successful entrepreneur or inventor ever do anything not original. Do a YouTube search for Bitcoin. Almost all the the top search results are about how to trade and how to make a profit. They call it “technical analysis” and there’s some random self proclaimed expert saying he knows how to see Fibonacci series in the patterns of some random price chart. Do they even know what a Fibonacci sequence is and why it’s important mathematically? Fibonacci never cared about commodity prices. He cared about numbers and sequences. Economists try to predict the behavior of investors by predicting what other investors would do if they had the same information available as all the other investors. This puts the economist in a unique position. The economist knows that what he says or doesn’t say can have an impact on how the market behaves. This in turn gives the economist an opportunity to invest in something else entirely, giving him a head start compared to any other investor. He is incentivized to give away partial information at all times. This is the main reason to why you hear the word “bubble” so often when it comes to Bitcoin.
Bitcoin has had a truly remarkable journey price-wise. It has gone from 10 000 Bitcoin for a couple of pizzas to 10 000 dollars for a single Bitcoin in less than ten years. To your average economist this looks like the mother of all bubbles. What most of them fail to see however, is that this is a totally different beast compared to ever asset class that preceded it. There may be as many altcoins and Bitcoin-forks as you can dream of but there will only ever be 21 million Bitcoin. They call Bitcoin a tulip bubble. Is there a limit to how many tulips the world can sustain? Altcoins are more akin to tulips since anyone can make their own breed and start growing them anywhere but the best target for the tulip metaphor is fiat currency. Central banks are tulip farmers and we’ve all fallen for their scam. Until now. At a faster and faster pace, the world is starting to realize that tulips are worthless and that no emperor ever had any clothes worth noticing. That’s why the price of Bitcoin is skyrocketing. Before you can even start to grasp the concept of Bitcoin you have to learn how money works. Here’s a hint, it doesn’t. The price goes up because of curiosity. Bitcoin makes people question the very nature of money. It makes them ask questions that our so called leaders might not be wanting them to ask. If they did there would probably be a whole school subject about such questions. What is money? Where does money come from? What gives it value and, maybe most importantly, why does the value decrease over time? If people knew these things we’d all be Bitcoiners and we wouldn’t trust our “leaders” half as much as we do today.
Metcalfe’s law states that the value of a network is equal to its number of users, squared. With this in mind, the price of Bitcoin should skyrocket if the same amount of users are added to the network each day. But the number of users that are added is increasing so the price curve should probably be even steeper. Renowned physics professor Albert Allen Bartlett once said that “The greatest shortcoming of the human race is our inability to understand the exponential function”. There’s evidence of this everywhere. Inflation, for instance, simply wouldn’t exist if people understood the exponential function. The true magic in Bitcoin lies in its ability to make people question what they think they know. There’s simply no way of understanding Bitcoin without first noticing the great shortcomings of our current paradigm. The more that do the more fragile our systems become and what most of us haven’t realized yet is that we should want this. Things may be comfortably predictable in the matrix but the red pill is being prescribed en masse and when the effect of the remedy kicks in we’ll all see that our emperors are naked and that economists are hopelessly stuck in their loops, failing to see the true nature of things. So swallow it whole and say goodbye to mr Smith and his lackeys once and for all. There’s no turning back and this is a good thing.