Bitcoin: will the bubble burst?

Bitcoin frenzy: human thumbs popping bubblewrap
Will the Bitcoin bubble burst or keep inflating?

Suddenly everyone is an expert on Bitcoin after the cryptocurrency surged past the $10,0000 mark this week, peaking at $11,000 before tumbling down to $9,442 at the time of writing. Not bad for a currency that started the year valued at $1,000.

Amid all the feeding frenzy, there is no shortage of advice by self-appointed experts on this cyberspace gold rush. There are essentially two camps – in the blue corner, we have the conventional market traders who are trash talking this upstart currency; while in the red, we have the Bitcoin traders who are keen to drum up new business.

Bubbles everywhere

The inevitable point of contention is whether the Bitcoin surge is the sign of a new bubble. Most people have heard the stories of the original South Sea Bubble, the Tulip Bulb Craze, the Wall Street Crash, the dotcom crash and so on.

Conventional traders who missed the Bitcoin bandwagon are saying it is indeed a bubble, while the enthusiasts are insisting that this phenomenon is like nothing that has ever happened before.

This author has seen one such enthusiast’s viral post on Facebook insisting that cryptocurrency can’t have the same end result as the Tulip Bulb Craze because it isn’t a flower (well, duh!) and, more specifically, that it’s a revolutionary new technology.

In a Gish gallop of rapid-fire logical fallacies, he went on to say that the world’s first web browser was launched in 1993 and that it would change the world; that in 1997 “they” didn’t foresee that an upstart internet company called Netflix would one day wipe out the mighty Blockbuster video rental chain…  you get the picture. “They” didn’t see those things coming, therefore “they” are going to miss out on the wondrous, never-ending bonanza of the blessed blockchain.

The same sort of logic is often used by pseudoscience pushers who say that “they” laughed at Einstein or “they” laughed at the Wright brothers – and that therefore the pseudoscience merchant will one day be vindicated too. Yes, but they also laughed at Bozo the Clown. Being laughed at or ignored doesn’t mean that it will have the same outcome as history’s famous vindications.

It’s all about confidence

Despite being an economics graduate from a Russell Group university, I haven’t a clue how the long-term future of Bitcoin will pan out. If you have money to spare to gamble on the future, go for it, I’m not your Dad. What I will say, however, is that despite all the protestations that Bitcoin is somehow “different”, the commodity value of anything that is traded – whether it’s gold, fiat currency, houses or cryptocurrency – depends heavily on confidence. As long as the confidence is there, happy days. When the confidence isn’t there… oh dear. The latter is especially the case if you put all your eggs in one basket and you spent money you didn’t have in the hope of getting rich quick.

We have been here before. Joe Kennedy, a famous investor in the early 20th century, sold all his shares after a shoeshine boy gave him some stock tips. He figured that when the shoeshine boys have tips, the market is too popular for its own good and it was time to get out.

Another commentator, Bernard Baruch, described the conversations he was hearing before the Wall Street Crash of 1929: “Taxi drivers told you what to buy. The shoeshine boy could give you a summary of the day’s financial news as he worked with rag and polish. An old beggar who regularly patrolled the street in front of my office now gave me tips and, I suppose, spent the money I and others gave him in the market. My cook had a brokerage account and followed the ticker closely. Her paper profits were quickly blown away in the gale of 1929.”

Fast forward to today and Facebook is full of free advice from people urging you to invest in Bitcoin and get on the ladder while you still can.

But, ominously, one broker quoted in Forbes said: “A month before the 1987 crash, my cab driver said he started day trading. A month before the real estate crash in 2007 in Arizona, my cab driver said he was getting into flipping real estate. Last week, my Uber driver said he just started trading Bitcoin.”

You can argue that, being a venture capitalist, he has a vested interest in putting you off Bitcoin. OK, fair enough. It’s your money, you decide. But remember that “free” advice can actually prove very costly.

 

Monroe refuses to celebrate Hopkins sacking

Of all the people who might be expected to have a view on outspoken columnist Katie Hopkins losing her Daily Mail column, the food blogger and anti-poverty campaigner Jack Monroe would be high on many people’s lists.

But Monroe, who won a libel case against Hopkins in March 2017, has chosen to rise above the gloating that many other commentators have indulged in.

As a columnist paid to stir up controversy, Hopkins (a former Apprentice contestant) certainly made her employers at the Daily Mail and LBC rub their hands in glee at all the viral publicity that her outspoken views generated… until she went too far in a Twitter spat with Monroe. She accused Monroe of supporting the vandalism of a war memorial. This outraged Monroe as her father had served in the British Army, leading to the libel action.

But after winning a crushing victory in the High Court, followed by Hopkins losing her job at talk radio station LBC, Monroe was in no mood to gloat about the news that even the Daily Mail had now ditched Britain’s most famous professional troll “by mutual consent”.

It isn’t all down to compassion and piety, though. Monroe is wary of making a martyr of a right-wing populist contrarian who will only end up wearing her fall from mainstream media grace as a badge of honour in a more extreme publication such as Breitbart.

As Hopkins’ demise has been met with glee on much of social media, Monroe’s subdued and dignified reaction is food for thought.

Murdered journalist Daphne Caruana Galizia is buried

With a few honourable exceptions, such as the Channel 4 News team and The Guardian’s Nick Davies, much of the British corporate media has been reduced to churnalism and unchallenged repetition of government and corporate spin over the past couple of decades.

So the funeral of Maltese journalist Daphne Caruana Galizia, who was murdered in a car bombing while she was investigating corruption surrounding the Panama Papers, serves as a poignant reminder that there are still journalists out there who put their lives on the line to protect the public’s right to know what is going on in high places.

 

 

Now this is why you need good sub-editors

There are times when punctuation really matters – and this is one of them. Remembering to put a hyphen between “first” and “hand” would have saved this Kansas newspaper from a viral humiliation over Twitter.

The high school students in the story were participating in an event called Disability Mentoring Day to gain some first-hand knowledge of the world of work. Unfortunately, the subbing failure in this headline implied a rather less salubrious meaning.

The usual term in any case is “work experience” and there seems to be enough space for it to fit, so it’s even more puzzling that the headline was written in that way.

Maybe if newspapers hadn’t cut back on so many sub-editors over the past couple of decades to help pay for big dividends and executive bonuses, there wouldn’t be so many of these howlers in print now. Subs are more than just glorified spell-checkers.