More on Bitcoin, following my recent Newley’s Notes devoted to the digital currency:
Financial advisor and author Ben Carlson has a post at his (quite enjoyable) blog, A Wealth of Common Sense, on how to explain the rise of Bitcoin. He puts it down to the following factors:
- Storytelling — the narrative — which may be true — is that Bitcoin represents a new kind of paradigm and none of the old rules about other asset classes apply.
- Technology — the block chain represents a legitimate technological leap, hence there is legitimate excitement.
- Decentralization — the global financial crisis has weakened our faith in institutions like big banks, and Bitcoin is basically institution-free.
- Resilience — Bitcoin has crashed before, but continues to rise, he says.
Anyone who tells you they know where this thing is heading, how to value it, where it ends, etc. is nuts. No one has a clue. This is everything you’ve ever read about the markets all wrapped into one — FOMO, supply & demand, human nature, behavioral biases, volatility, booms, busts, uncertainty about the future, etc.
Seems about right to me.