A Critic's Bitcoin story has no happy endings but questions everywhere
Jan 28, 2018 Posted / 3885 Views
Belief has been called the core of all that is thought to be true and many times belief supersedes factual truth. Many have manifested it in religion and politics and when the same happens in finance, it is called speculation.
Belief is the running principle behind Bitcoin and many other cryptocurrencies. The currencies work on the principle of crowding beliefs and while the technology seems a most promising invention of the current era, there are many sceptics who say repeatedly that you should not bet on these virtual currencies far too much. However, there are many believers who would invest their lives for their belief that bitcoin is the new gold or as promising as any other precious metal.
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Prof. Robert Shiller, who teaches economics at Yale and is an expert on bubbles and speculation advises that we should pay close attention to the story behind Bitcoin. According to the wise teacher, Bitcoin carries remarkable and tremendous closeness to the Wizard of Oz, which was certainly a veiled parody on the absurdity of the gold standard (the "yellow-brick road").
Prof. Shiller is someone who has painstakingly investigated both the housing and dot.com bubbles and won a Nobel Prize in economics for his research. Lately, he called the Bitcoin craze a bubble. Just see a quote from his interview with Quartz earlier this year:
“I think that has to do with the motivating quality of the bitcoin story. And I think, what’s so exciting? You have to think like humanities people. What is this bitcoin story?”
Millions understand that Bitcoin will make them rich with little or no effort. The virtual currency's reference price has escalated more than 600% in last some months, however, it's curtailed this month - off 50% from its peak value.
So if Bitcoin at all is not enough there is an attraction of blockchain technology. The enthusiast will tell you that the government doesn't control it, computers around the world proctor it and it's rooted in the cryptic code, which means that it would be hard to hack. However, the critics think that there is something mysterious about all these claims. Shiller in his recent lecture at the Chicago Humanities Festival explained how Bitcoin can be valued as there are no earnings, dividends or price/earnings ratios? While he didn't offer a direct reply when the valuation question was asked, he just gave his observations on the story behind Bitcoin and why it's valued so highly.
"Bitcoin is the best narrative possible," Shiller replied with a smile. "It's a great story. It's a mystery based on a person who wrote a brilliant paper that nobody seems to have found (Satoshi Nakamoto)."
"Who is this person? Maybe he doesn't exist. But when I'm lecturing at Yale, my students wake up when I talk about Bitcoin. I can see it in their eyes. I'm interested in the narrative."
Well, this is a famous emphasizing point for all the critics as for now, the audience needs to pay caution to the other parts of the Bitcoin story. so the rant goes on, "It's uncontrollable, although government agencies are casting a gimlet eye on it. Big banks hate it. Drug dealers reportedly use it on the dark web. Transactions are really hard to trace, if at all."
However, if one has to ask about the CBOE and CME Group offering derivatives that allow the investors to hedge or speculate based on the cryptocurrency price. Certainly, blockchain and Bitcoin and its many relatives are not something going away if persuaded by the critic.
Both positive and negative narratives have encircled the bitcoin. Nonetheless, every story has its ups and downs. And, only future will tell its history.
Applancer is an open platform for discussion on all things like Blockchain , Cryptocurrency and Ico news updates. As such, the opinions expressed in this article are the author's own and do not necessarily reflect the view of Applancer .
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