“I thought we’d be buying our ham sandwiches with Bitcoin by now.”
— Jeffrey Tucker
“I like to think of Bitcoin as something like four steps forward, three steps back,” Jeff Tucker said during our Session this week. “It seems to be this pattern and it shocks people all the time,” he continues. “This time, it even shocked me because I expected that the floor would go up all the time. Right?”
That’s the problem with the arrival of new technologies.
“Where’s the floor?” Tucker asks… Four steps forward, three steps back:
It’s extreme. And what Bitcoin does is it tests the belief of the newbies, right? I mean, first of all, it robs the newbies, and it tests the faith of the old gangsters like me. And we’re like, “Was I right or wrong about this all along?” Sometimes you wonder. But in the scheme of things, because while I was working for you, I wrote my very first article on Bitcoin when it was at $14, and then it went up. And then, after I published that article with you, it went up to $30, and everybody was accusing me of pumping the currency. Oh, like I had that power to do that. And then, it went up to $60, and I was feeling pretty good. Like, “Well, maybe I’m just a prophet here.”
“Well, maybe I’m just a prophet here.”
– Jeff Tucker on his Bitcoin dreams
Call me a luddite, or a “late adopter,” as Tucker puts it, but my running theory is that what’s good from crypto evangelism is not Bitcoin itself, but the detritus and flotsam from the ensuing chaos.
In classical economic theory, this is called Schumpeter’s gale, or “creative destruction.” Here’s how I responded to Tucker’s Bitcoin optimism:
When we went through the tech wreck, there were a lot of companies that were tacking on “dot-com.” I remember Corning was a big deal. They were laying fiber optic cable and they tacked “dot-com” on, and the stock went crazy. And then, people realized that it wasn’t really a thing, and it crashed, right?
We all had that experience. But we were left with email and websites, which I was in the process of developing The Daily Reckoning and trying to figure out how all that stuff fit together. And we’ve built an entire new economy using what I call the detritus from the tech wreck.
This is my theory… it’s going to be the same with blockchain. We’re going to see a lot of these cryptocurrencies just disappear. And there’s a lot of people that are going to have to reposition their employment structure. But we’re going to be left with a really valuable tool. Blockchain allows you to own stuff online in a way that wasn’t possible before and no one had really conceived of, and then the crypto craze made it a thing.
We don’t want to debunk the crypto thesis… or kick Satoshi while he’s down… but it’s worth considering what’s next after this current meltdown.
Four steps forward, three steps back…
Follow your bliss,
Founder, The Wiggin Sessions
P.S. As a lifelong contrarian I get nervous when everyone is thinking the same way. But for what it’s worth, Goldman Sachs says sell Coinbase. Jamie Dimon’s been suspect for a while.