”My 2-Satoshi” are thought-provoking letters to the audience of The Creative Crypto, submitted from readers and makers from around the world. These are designed to strike up new conversations, new practices, and open up new opportunities for creative minds to enter a decentralized future. If you would like to submit a letter of your own, please contact us at hello[@]thecreativecrypto.com.
Dear Readers of The Creative Crypto,
Bubble blow, bubble grow, bubble pop. The delicate analogy has actually been the source of most doom and gloom for newcomers to the crypto space. Almost anyone that has even considered buying a bit of BTC through their new Coinbase account has faced the knee-jerk criticism “Bitcoin is a bubble!” and “Bitcoin is worse than 17th century tulip mania!” And despite a growing archive of elegant rebuttals (like this one, this one, and this one), the prophecy persists. Though, after a some time researching the crash of the first dot-com era or when dutch merchants bought flower bulbs at magnitudes higher than their own salaries, I as a “HODLer” have come to realize something.
I certainly hope crypto is a bubble.
Why the masochism? Because bubbles are only a terrible thing in the short-term and to those that get caught in its extreme circumstances. What happens in the sticky aftermath of bubbles are actually tremendous.
Let’s start off with the easier example: the dot-com bubble. This happened less than 2 decades ago, with devastating losses in investment and growth. But now, we have dot-com companies that are commanding previously unfathomable figures. Virtually all (well, almost all) of the concerns surrounding the internet – speed, security, public education, utility, corporate adoption – have been solved and those solutions are strengthening at an exponential rate. The bubble “popped” and now global life and industry rely on that very technology.
It’s easy to spot the parallels, as the criticisms of Bitcoin are almost identical to previous concerns of electronic mail and data. Bitcoin is already getting faster (lightning network), more secure and easier to use (with dedicated institutions like Coinbase), and global adoption is happening (broader understanding and increased daily use). But I don’t just want what happened with the dot-com era to recur, I want the advent of a fully revived tulip mania.
Many of us know the famous story (big thanks to Professor Jamie Dimon for the history lesson) – In 1637, the popularity of tulip consumption and the need for higher production skyrocketed, shooting up to almost 10x the average price and falling precipitously back to below its original value. A great number of “investors” (mostly merchants purchasing favorable bulbs) suffered great losses. These merchants were ridiculed and broad shame was cast on anything to do with the leafy ‘asset’. “Tulips” are now synonymous with short-term and catastrophic financial fads.
And tulips disappeared completely from the stage of Dutch history, right?
Consider what the flower does for The Netherlands today, as anything but a relic of a failed past. The tulip generates hundreds of millions for the national economy through exports alone, supplemented by domestic sales and tourism. The tulip is the iconic partner to the country’s windmill and will likely forever remain the official national flower. More so than legalized marijuana, public acceptance of prostitution, ubiquitous bike lanes, and unforgettable canals, this infamous “bubble” is one the premiere sources of the nation’s income, pride, and global standing.
One can only hope that the initial bouts of buzz hyping Bitcoin (Nov 2013, Dec 2017) and their short-lived “collapses” in investment pave the way for a cultural foundation as robust as that of the historical tulip market. A renewed look at any major technology we appreciate on a daily basis clearly outlines an initial premature and indiscriminate hype. Amazon lost the lion’s share of its value during the internet boom, now standing at almost 20x the high it commanded right before the first bust. Henry Ford’s Model T slumped after an initial craze and was brushed aside as a rare and needless luxury item. Now, we all drive cars, order goods online, and Keukenhof is a must-visit during Dutch spring. At this point, we never question what life would be like without these amenities.
So the real question is, not whether Bitcoin and cryptocurrency is or is not a bubble, but why should they strive to be anything less?
Just my 2-Satoshi as we enter Q4 of 2018,
Michael Lee, Director of Operations at Sndbox