4 Factors that Explain Bitcoin’s Rise


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:

  1. 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.
  2. Technology — the block chain represents a legitimate technological leap, hence there is legitimate excitement.
  3. Decentralization — the global financial crisis has weakened our faith in institutions like big banks, and Bitcoin is basically institution-free.
  4. Resilience — Bitcoin has crashed before, but continues to rise, he says.

He concludes:

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.