cryptocurrency bubble

Number Go Up: Inside Crypto's Wild Rise and Staggering Fall
by Zeke Faux
Published 11 Sep 2023

There still wasn’t much you could do with Bitcoins, and crypto remained largely the domain of geeks and hobbyists. But around that time, a man going by “dacoinminster” had posted a proposal on the popular message board Bitcointalk that would lead to the creation of Tether and make the entire $3 trillion cryptocurrency bubble possible. He called his idea “MasterCoin.” Dacoinminster’s real name was J. R. Willett, and he was a thirty-three-year-old software developer at a calendar-app company in a suburb of Seattle, Washington. When I reached him on the phone a decade after his momentous forum post, he was still working there, and he was happy to recall his moment of glory.

…

With this gambit, Bitfinex earned customers’ loyalty. And judging from what he’d do in the next few years, Devasini had learned a lesson: He could get away with bending the rules. * * * — BITFINEX WAS ABLE to earn the money back so quickly because crypto was in the middle of its first bubble, which lasted from 2017 to 2018. Hundreds of new cryptocurrencies were launched, spurring huge amounts of trading on Bitfinex and other exchanges, which in turn increased the demand for Tether. These new tokens were sold by start-ups to fund the development of apps, just like Willett did with MasterCoin. Their founders promised the coins would be useful once the apps were created.

…

See also specific exchanges Bankman-Fried on solvency of (2022), 168 banks and, 52, 56–57 first big, 48, 102 hacking of, 101–103 importance of, 135 money laundering and, 21, 61 questionnaire sent to thirteen largest, by New York attorney general’s office, 60 security of, 101, 102, 103 CryptoDickButts, 166 CryptoPunks, 143 Cuban, Mark, 124 CumRocket, 15 Curry, Steph, 142 D “dacoinminster,” 34–36 The Daily Show, 107 dark pools, 59 Dash, Damon, 156 Dauphinot, Clarence, Jr., 67 David, Larry, 90, 131 Davies, Kyle, 166, 167 Davis, Noah, 143 Davis, Philip, 77–78, 130 decentralized finance (DeFi) apps, 102, 113–115, 117, 118 Degenerate Trash Pandas, 132 Delitzia, 40 Deltec Bank & Trust (Bahamas) under Chalopin, 67 as sponsor of Crypto Bahamas conference, 136 Tether and, 66, 67 Dentacoin, 114 Devasini, Giancarlo appearance of, 210 background, 41, 42, 44 Betts and, 57 on Bitcoin, 47 Bitcoins seized by FBI and, 109 blog posts by, 44–46 Bukele and, 199, 201 business ventures prior to Tether, 39, 40, 41–43, 47 career as plastic surgeon, 11, 40–41 Chalopin and, 67 as de facto CEO of Tether, 137 Faux’s article blasted by, 68–69 first cryptocurrency bubble and, 51 Keiser and Herbert and, 205, 210, 239 loan to FTX refused by, 231 on Madoff, 45 money transfers from Crypto Capital, 61, 62 percent of Tether owned by, 38, 239 Tether’s business model and, 58 Tether’s line of credit to Bitfinex and, 63 on Twitter, 68 “digital art.”

On the Edge: The Art of Risking Everything
by Nate Silver
Published 12 Aug 2024

Ethereum, 324, 326–27 as focal point, 329, 332 poker and, 109 profitability of, 310 See also cryptocurrency Black, Fischer, 479 blackjack, 131–37, 481 Black-Scholes formula, 479 black swans, 479 blinds (poker), 41, 480 blockchain technology, 322, 323–24, 325–26, 480 blockers, 229, 480 bluffing, 39–40, 51, 64–65, 70–75, 77, 101, 125, 509n board (poker), 41, 480 Boeree, Liv, 347 Bollea, Terry G., 274 bookmakers, 480 See also retail bookmakers Bored Apes, 480 Boredom Markets Hypothesis, 310, 480 Bostrom, Nick, 364, 372, 380, 417, 418, 442, 470, 491, 498 Box, George, 447n Bradley, Derek, 198 Brin, Sergey, 259, 406 Bringing Down the House, 131 Brokos, Andrew, 46, 486–87 Brownhill, Jean, 288–89 Brunson, Doyle on bluffing, 39–40, 51, 64 bracelet wins, 98 on computer applications, 39, 47 independence and, 239 poker history and, 40–41, 43, 506n raise-or-fold attitude and, 230 sports betting and, 194–95 Super/System, 39–40, 45–46 on tight-aggressive strategy, 39, 498 bubble, cryptocurrency, 306–7, 307, 310, 311–18, 317 bubble (poker), 480 Buchak, Lara, 364–66 Buffett, Warren, 344, 431n, 497 bullet (poker), 480 bust out, 480 Buterin, Vitalik, 250, 323–24, 326, 327, 329n button (poker), 480 buy-in, 480 C Calacanis, Jason, 252 calibration, 480 California Gold Rush, 139–40 call (poker), 480 calling stations (poker), 48, 480, 507n call options, 480 canon, 481 capitalism, 28–29, 32, 174, 403 Caplan, Bryan, 447n capped (poker), 481 Cappellazzo, Amy, 329–30 Carlsen, Magnus, 84 cash games, 83–84, 115, 251–52, 481 casinos, 5–8 abuse and, 118, 149 advantage play, 478 agency and, 453 analytics and, 153–54 Archipelago and, 22 blackjack, 131–37, 481 card counting, 131–37, 481 corporatization of, 138, 144, 145 COVID-19 and, 7–8, 10, 10 customer loyalty, 156–58, 515n design of, 162–63, 167–68 Downriver and, 21–22, 374, 483 gender and, 166n house edge, 132, 154–55, 155 hustle and, 134–35, 513n Las Vegas history, 139–45 payout structures, 154–56, 155, 156, 166 poker and, 22 private games at, 83 regulation of, 134, 135, 143–44, 157, 513n, 514n safety of, 128n sports betting in, 174–75, 177–78, 182–83, 185–87 Trump and, 142, 150–52, 514n trust and, 143–44, 514n Steve Wynn’s influence, 146–49, 148 See also gambling; slots catastrophic risk.

…

Somehow, between the anxiety caused by the unprecedented mass death of COVID and the boredom caused by the unprecedented lack of social interaction, Americans’ appetite for YOLO (You Only Live Once) behavior exploded, manifesting itself in everything from illegal fireworks displays to traffic accidents to cryptocurrency bubbles. (Bitcoin prices increased roughly tenfold in the year after the WHO declared COVID-19 to be a pandemic.) And so in April 2021—even as schools remained closed in parts of the country—American casinos won a staggering $4.6 billion in gaming revenues from their patrons, 26 percent higher than in the same month two years earlier, before the pandemic.

…

Bracelet (poker): The gold bracelet awarded for winning an event at the World Series of Poker; there are now more than one hundred bracelet events every year between live and online WSOP tournaments, but bracelets remain highly coveted. BTC: An abbreviation for the current market price of Bitcoin, the native cryptocurrency of the Bitcoin blockchain. Bubble (poker): The stage of a poker tournament just before cash prizes are awarded. It can compel significant departures in strategy, such as big stacks avoiding conflicts with one another while relentlessly attacking small stacks who are trying to survive just long enough to receive a minimum prize (mincash).

Boom and Bust: A Global History of Financial Bubbles
by William Quinn and John D. Turner
Published 5 Aug 2020

After a temporary recovery, it collapsed again. On 17 December 2018, exactly one year after its peak, one bitcoin was valued at $3,332 – a fall of 83 per cent.5 Other cryptocurrencies fared even worse: Invictus Capital’s CRYPTO20 index, which tracked the value of the 20 largest cryptocurrencies, fell by over 93 per cent.6 The bubble triangle presents a framework that applies just as well to the 2017 cryptocurrency bubble as it does to any of the financial bubbles over the past 300 years. But how good will it be at predicting future bubbles? The three sides of the bubble triangle all need to be present for a bubble to happen. In terms of money and credit, bubbles are much more likely to happen when there are low yields on traditional assets, low interest rates and unconstrained credit provision.

Chaos Kings: How Wall Street Traders Make Billions in the New Age of Crisis
by Scott Patterson
Published 5 Jun 2023

Sornette, like nearly everyone else with even a passing interest in finance at the time, had also grown intrigued by bitcoin, the computer-generated cryptocurrency. Bitcoin is “one of the largest speculative bubbles in human history,” he and a fellow ETH professor said in a 2020 paper. A phenomenon they called the Social Bubble Hypothesis fueled its growth. Bubbles in this context are good for innovation, driving technology forward through social herding and scaling. As investors flooded into bitcoin—driving its overall value to $300 billion by 2018—the viability of it as a useful financial instrument increased. The bitcoin bubbles “were necessary to bootstrap and scale the protocol and cryptocurrency,” the professors wrote.

…

Elon Musk had been a master of bubbles, becoming a billionaire in the early 2000s just as the dot-com bubble was bursting. His coup? Selling PayPal—Musk was the largest shareholder with about 12 percent of the stock—to eBay for $1.5 billion. With Tesla, he was riding what Sornette called the Green Energy Bubble (Musk was one of its principal creators, Sornette believed). Musk was also dabbling in cryptocurrencies—another bubble, thought Sornette. Sornette’s monthly Global Bubble Status Report in February 2020 noted: “As the dragonhead of the Electrical Automobile companies, Tesla has persuaded many people that it is a new ‘APPLE’ of the coming decade and all other petrol-fuel mechanical car companies are just like ‘Nokia.’ ” Calling Musk a “clever CEO with many creative marketing strategies,” the report said Tesla is reminiscent of dot-com bubble stocks and “very dangerous for short-sellers.”

Vulture Capitalism: Corporate Crimes, Backdoor Bailouts, and the Death of Freedom
by Grace Blakeley
Published 11 Mar 2024

And this role has become more important as the destructive power of finance has increased. Ever since financial markets first came into existence, it has been possible to observe “manias, panics and crashes” that nearly bring down the whole system.86 From the tulip bubble in the 1630s, to the subprime bubble before the 2008 financial crisis, to the recent cryptocurrency bubble, these tend to follow predictable patterns.87 A new trend emerges, investors pile into a new asset, betting that it will revolutionize the world economy. The price of the asset rises, before reaching a peak and then falling. Most previous bubbles have followed almost the same graphical pattern.

Beyond Diversification: What Every Investor Needs to Know About Asset Allocation
by Sebastien Page
Published 4 Nov 2020

A decade later, as asset prices reached new highs across markets, in our Asset Allocation Committee we constantly asked ourselves, “Where’s the excess speculation, the latent risk?” In other words, where’s the bubble? The answer isn’t obvious. The postcrisis rally in risk assets has been largely supported by fundamentals. Investors have become more cautious. Some refer to this rally as an unloved bull market. There was a bubble in cryptocurrencies, but it’s been deflating somewhat slowly and, so far, without systemic consequences. However, we do worry about latent risks such as the unprecedented levels of government debt and 0% interest rates outside the United States. As the events related to the coronavirus pandemic of 2020 continue to unfold, pundits like to compare this crisis with the 2008 financial crisis.

…

Yet its impact is greater than anything we’ve discussed so far. Once revealed, it becomes obvious and intuitive. On December 31, 2017, I met with three old friends in Newport Beach, California, for a champagne brunch. We got into a debate on Bitcoin, which had closed above $14,000 the week before. Two of my friends were bullish on the cryptocurrency. I said it was a bubble, about to burst. (I don’t trade Bitcoin.) I converted our fourth compadre to my view. Two against two. To settle the disagreement, we decided to bet on Bitcoin’s direction in 2018. We would meet again for brunch in a year. If Bitcoin went below $5,000—a 64% drop—the other bear and I would win.

The Joys of Compounding: The Passionate Pursuit of Lifelong Learning, Revised and Updated
by Gautam Baid
Published 1 Jun 2020

Prominent historical events include the Dutch tulip mania; the South Sea Bubble (during which a mythical company was chartered “for carrying on an undertaking of great advantage but no one to know what it is”); the Roaring Twenties (including the Florida land bubble), followed by the Great Crash of 1929; the “tronics boom” in the 1960s; and the Nifty Fifty in the 1970s. More recent events include the U.S. biotech bubble and Japan’s asset bubble in the 1980s, the tech bubble in the 1990s, the housing bubble in the 2000s, and the cryptocurrency bubble of 2017. In many of these cases, investors believed they were taking part in an adventure that would reinvent the world. (When it comes to investments, the romantic appeal of being a party to a technological revolution or an entirely new industry or invention often dominates profit considerations in investors’ minds.)

The Infinite Machine: How an Army of Crypto-Hackers Is Building the Next Internet With Ethereum
by Camila Russo
Published 13 Jul 2020

From 2008, when Satoshi Nakamoto created the first decentralized digital currency, to 2011, Bitcoin ruled alone. But by December 2013, dozens of new coins, also known as alt-coins, had been created, and the speculation around them helped fuel the rally that year. When the early Ethereum team gathered in Miami, the first alt-coin bubble in cryptocurrencies’ short history had just reached its high point. As they schemed and dreamed of greatness, they were also planting the seeds for what would become a much bigger alt-coin boom. But that would be a few years later. That week the only thing people in the house cared about was that they were witnessing the birth of the next Bitcoin as in, the next big thing in cryptocurrencies.

…

Howard Marks, billionaire investor and Oaktree Capital cofounder, wrote in a letter to investors that “digital currencies are nothing but an unfounded fad (or perhaps even a pyramid scheme).” For one headline writer at The Economist the question wasn’t whether crypto was in a bubble, the question was, “What If the Bitcoin Bubble Bursts?” Other analysts were more bullish. Cryptocurrencies were surging because they were erupting into the mainstream, and their still-low penetration in investment portfolios or merchant acceptance was actually a good thing because it pointed to a higher upside. Fundstrat was the first Wall Street stock research firm to publish a Bitcoin price target, and its analyst, Tom Lee, quickly became one of the biggest Bitcoin bulls when he predicted BTC could soar to as high as $55,000 by 2022.

The Price of Time: The Real Story of Interest
by Edward Chancellor
Published 15 Aug 2022

There were bubbles in industrial commodities and rare-earth elements, in US agricultural land and Chinese garlic bulbs, in fine or not-so-fine art (depending on your taste), bubbles in vintage cars and fancy handbags, bubbles in ‘super-city’ apartments, bubbles in sovereign bonds, bubbles in Silicon Valley unicorns and cryptocurrencies, and a giant bubble in American stocks. Never before in history had so many asset price bubbles inflated simultaneously. But then, never before in history had interest rates around the world sunk so low. The first bubbles of this new era formed in commodities. By late 2010, most industrial raw materials (palladium, iron ore, rubber, lead, copper and nickel) and several agricultural commodities (corn, coffee, soya beans, flaxseed, jute and wool) were trading at two standard deviations or more above their average levels.

…

Never mind that ultra-low rates, by keeping zombie companies on life-support, resulted in the survival of the least fit. Never mind that central bank policies contributed to rising inequality, undermined financial stability, encouraged ‘hot money’ capital flows and fostered numerous asset price bubbles, from luxury apartments to cryptocurrencies. As Draghi expressed it: ‘This is not a question of trade-offs. We cannot shy away from implementing a policy that ensures price stability on account of potential collateral effects.’53 The ECB would pursue its target, let the consequences be damned. 8 Secular Stagnation Is the devil of excessive thriftiness a mere bogey, after all?

…

Over the course of 1719 the share price of John Law’s Mississippi Company climbed nearly twentyfold. The rise in Bitcoin’s market price was even greater. Mississippi shares exhibited extreme volatility. Bitcoin’s price oscillations were even more extreme. By 2017, the leading cryptocurrency had survived several setbacks, the necessary condition for a ‘super-bubble’ to form. Whereas the Mississippi bubble attracted at most half a million foreigners to Paris, Bitcoin’s followers were numbered in millions. Whereas the Mississippi bubble created printed paper millionaires, Bitcoin conjured up digital billionaires, including the Winklevoss twins of Facebook fame.

MegaThreats: Ten Dangerous Trends That Imperil Our Future, and How to Survive Them
by Nouriel Roubini
Published 17 Oct 2022

When GameStop and other shares returned to earth, small investors suffered massively. Indeed, many meme stocks—shares of a company that gained a cult-like following through social media—lost over 70 percent of their value in 2022 from their 2021 bubble valuations. A similar boom-and-bust cycle occurred in 2021-22 for cryptocurrencies, another asset class with no intrinsic value and whose bubble was driven by the FOMO (Fear of Missing Out) frenzy of retail speculators. Many experts brushed off these episodes as a fleeting departure from rational judgment. But can we overlook the fact that the US government had just sent checks to millions of adult Americans?

…

The rout engulfed the robust FAANG group that comprises Facebook, Amazon, Apple, Netflix and Google. Even venerable blue chip stocks wilted. Bad news proliferated. Meme stocks fell by over two-thirds from nonsensical 2021 peaks. The crypto market swooned. Bitcoin plummeted 70 percent from an all-time high months earlier. Flimsier cryptocurrencies fell even further by 80 percent or more. Bubbly SPACs sputtered and deals fizzled. US government bond yields tripled to 3 percent. Credit spreads above and below investment grade widened sharply, unsettling the global bond market where more than $100 trillion resides. In early 2022, the Fed and other central banks finally signaled that rising inflation required much tighter monetary policy.

…

They have signaled renewed inclination to finance huge deficits by printing money instead of issuing debt. Besides quantitative easing and zero interest rates, policy makers seem to want to make debt monetization a permanent feature of central banking. Where will that approach lead? To bubbles everywhere ready to burst: stocks, cryptocurrencies, hedge funds going crazy on risk, uninformed investors taking on short sellers over GameStop, millions of Gen Z and Gen X day traders spending their meager savings and fiscal transfers to bet on stocks, private equity groups and corporations borrowing like never before and, to top it off, housing prices going through the roof.

Attack of the 50 Foot Blockchain: Bitcoin, Blockchain, Ethereum & Smart Contracts
by David Gerard
Published 23 Jul 2017

It turned out in practice to be a magnet for enthusiastic amateurs with stars in their eyes and con artists to prey upon them, with outcomes both hilarious and horrifying. Bitcoin and blockchains are not a technology story, but a psychology story: bubble economy thinking and the art of the steal. Despite the creators’ good intentions, the cryptocurrency field is replete with scams and scammers. The technology is used as an excuse to make outlandish near-magical claims. When phrases like “a whole new form of money” or “the old rules don’t apply any more” start going around, people get gullible and the ethically-challenged get creative.

…

Proponents of Austrian economics include the fringe economics blog Zero Hedge, which has confidently predicted two hundred of the last two recessions. Zero Hedge covers Bitcoin extensively, and Bitcoiners are fans in turn. Chapter 3: The incredible promises of Bitcoin! Nobody buys a toothbrush on the basis that the toothbrush market will go to the moon! (There hasn’t so far been a toothbrush asset bubble.) This is, however, the standard selling point for cryptocurrencies. As is claiming the selling point is anything other than hope that it will go to the moon. Advocates claim all manner of practical use cases for Bitcoin. A lot of the claims contradict each other, and indeed the actual software; others merely run aground on reality.

…

I’d have thought Ethereum would keep stumbling along, with no real application being found for smart contracts. I’d have forecast “Blockchain” slowly falling out of favour as a business buzzword as the returns failed to manifest. I would not have predicted a second bubble in Bitcoin, with tabloid newspaper finance sections enthusing about the fabulous potential of cryptocurrencies to normal people who have no business going within a mile of such horrifyingly risky investments. I would not have anticipated a matching bubble in Ethereum, and especially not in utterly substanceless ICO tokens, with no basis in anything whatsoever, being traded like hotcakes because they’re the exciting new item and for no other reason.

The Currency Cold War: Cash and Cryptography, Hash Rates and Hegemony
by David G. W. Birch
Published 14 Apr 2020

Cryptocurrencies as a whole have, in fact, been falling as I have been writing this book, while Bitcoin – the original cryptocurrency – has been bouncing up and down. The economist John Kay is unconvinced that what appears to be a speculative bubble will lead to anything (Kay 2018). He writes that ‘the underlying narrative of cryptocurrencies is, by the standards of historic bubbles, unusually weak; more akin to tulips than to ultimately transformational innovations such as railways or electricity’. He goes on to observe that the ‘power of the current narrative is that it brings together so many features which make for an attractive and infectious story’, which I think is in keeping with some observers’ view of Bitcoin as a protest movement rather than a financial revolution.

Kings of Crypto: One Startup's Quest to Take Cryptocurrency Out of Silicon Valley and Onto Wall Street
by Jeff John Roberts
Published 15 Dec 2020

And while the big-blockers and small-blockers of bitcoin traded death threats and invective during 2015, a sunny and unified community of Ethereum backers would share the new currency with the public. Ethereum also enjoyed a special advantage over bitcoin. It had an acknowledged leader in the form of its wunderkind creator who would become the most famous figure in cryptocurrency after Satoshi. PART TWO * * * From Boom to Bubble to Bust 7 Enter Ethereum Vitalik Buterin is soft-spoken, pale, and practically skeletal. He likes to wear “My Little Pony”–style T-shirts. A child of Russian émigrés, he grew up in the Toronto suburbs and, even as a tiny boy, knew he was different from other children.

…

Gox, 57 Casares, Wences, 182–183, 216 Casey, Michael, 23 celebrity endorsements, 144–145 Chainalysis, 196 Charles Schwab, 207–208 China, 81–83, 207 Choi, Emilie, 175, 191, 209 Circle, 55, 105 circuit breakers, 140 Clayton, Jay, 169 CNBC, 146 Coinbase, 173 acquisitions by, 186–187, 197, 209 agency trading model at, 174 Apple Store and, 40, 63 Balaji at, 185–187 Binance and, 179–181, 187–190 Bluxome Street office, 37–38, 66–67 capacity issues at, 151 Chicago and, 192 cold storage at, 43–44 competition for, 54–55, 178–181 the crypto winter and, 172–175 culture at, 39, 49–51, 67–68, 189–190 currencies added to, 96–97, 181–182, 187–190, 196 customer acquisition at, 47, 139, 154, 156–157 customer service at, 159, 173–175 diversification at, 64, 209 engineering strategy at, 187–188 Ethereum and, 93–95 Facebook and, 205–206 first hires at, 24–30 flash crash and, 139–141 funding rounds for, 33–37, 51, 64–65, 154–155, 173 future of, 216, 219–220, 225–226 hacking attacks on, 40–43, 143, 157 hiring at, 29, 37–41, 45–47, 49–51 Hirji at, 157–158 hot wallet attack on, 40–43 infrastructure issues at, 155–159, 209–210 IRS and, 121–126 JP Morgan and, 213 layoffs at, 74 leadership team at, 157, 175 Market Street office, 67 Moon Launch, 65 opposition to, 27 origins of, 3–15 in other countries, 65 private keys and, 9 profits at, 154–155 regulation and, 118, 121–131 reputation of, 42–43, 68, 71–72, 124, 125 running through brick walls at, 33–52, 63–64 security systems at, 79–80 Silicon Valley Bank and, 69–70, 72–73 staff departures from, 117–118, 193–195 super voting shares at, 112–113 threats against, 149–151 Wall Street and, 104 coinbase, in bitcoin, 21 CoinDesk, 145, 182 Commodity Futures Trading Commission (CFTC), 126 Conscious Leadership, 68 Consensus, 167 ConsenSys, 94 Covid-19 pandemic, 221–223 The Creamery, 37–38 creative destruction, 214 criminal activity, 18, 224 Dread Pirate Roberts and, 31, 59 money laundering, 45, 58 Mt. Gox and, 56–58 Ponzi schemes, 141–142 swindles, 141–145 threats of, 149–151 cryptocurrencies academic research on, 218–219 altcoins/shitcoins, 138 Binance and, 179–181 bubble around, 133–139 bubble in, 138–145, 149–155 bull run in, 201–203 celebrity endorsements of, 144–145 code for, 188–189 crash in, 160–161, 165–175 exchanges of, 127, 215–216 Libra, 205–207 as property versus currency, 122–126 swindles using, 141–145 See also individual currencies crypto winter, 170–175, 198, 201 Custody, 209 cypherpunks, 23, 99–100 CZ.

The Cryptopians: Idealism, Greed, Lies, and the Making of the First Big Cryptocurrency Craze
by Laura Shin
Published 22 Feb 2022

It has a healthy satellite industry that provides products and services based around it, and it has its own business and advocacy organizations, but there is no central Gold Corporation.”13 When the first printed edition arrived, he saw it featured twelve articles on topics such as the personality of anonymous Bitcoin creator Satoshi Nakamoto, the history of previous attempts at cryptocurrency, and the Bitcoin bubble of 2011. (The price had barely budged from Christmastime and was now about $5.) Scanning the magazine’s sixty-nine pages, Vitalik realized that nine of the twelve articles were by him. Concluding they must have had a hard time finding other writers, he was grateful for the opportunity.

The Future of Money: How the Digital Revolution Is Transforming Currencies and Finance
by Eswar S. Prasad
Published 27 Sep 2021

The advent of Bitcoin and the Proof of Work protocol it is built upon together constitute an environmental calamity. Why Isn’t the Price of Bitcoin Zero? At a conference held in Scotland in March 2018, then Bank of England governor Mark Carney observed that “the prices of many cryptocurrencies have exhibited the classic hallmarks of bubbles including new paradigm justifications, broadening retail enthusiasm and extrapolative price expectations reliant in part on finding the greater fool.” The last phrase in his statement was an allusion to the period of seemingly ever-rising real estate prices during the US housing boom of the early to mid-2000s.

Arguing With Zombies: Economics, Politics, and the Fight for a Better Future
by Paul Krugman
Published 28 Jan 2020

Clearly, cryptocurrencies are in effect competing for some of the same business: very few people are using Bitcoin to pay their bills, but some people are using it to buy drugs, subvert elections, and so on. And the examples of both gold and large-denomination banknotes suggest that this kind of demand could support a lot of asset value. So does this mean that crypto, even if it isn’t the transformative technology its backers claim, may not be a bubble? Well, this is where tethering—or, more precisely, its absence for cryptocurrencies—comes in. In normal life, people don’t worry about where the value of green pieces of paper bearing portraits of dead presidents comes from: we accept dollar notes because other people will accept dollar notes. Yet the value of a dollar doesn’t come entirely from self-fulfilling expectations: ultimately, it’s backstopped by the fact that the U.S. government will accept dollars as payment of tax liabilities—liabilities it’s able to enforce because it’s a government.

Easy Money: Cryptocurrency, Casino Capitalism, and the Golden Age of Fraud
by Ben McKenzie and Jacob Silverman
Published 17 Jul 2023

From Texas to Florida, El Salvador to Washington, D.C., and even into the wilds of Manhattan, we will give you an inside look at one of the greatest frauds in history, bigger than Madoff by an order of magnitude. As a longtime TV actor with a decades-old degree in economics, I might seem like an unlikely casting choice as the author of a book about crypto-currency. But however strange, my background actually positions me well to pierce the hallucinatory bubble powered by fantasy money. At its core, this is a tale of money and lying. What I know of money I learned in a classroom more than twenty years ago (and from making a little bit of it in Hollywood). What I know of lying I learned from two decades spent in show business.

Radical Uncertainty: Decision-Making for an Unknowable Future
by Mervyn King and John Kay
Published 5 Mar 2020

And in all these cases investors lost very large amounts of money as greater realism finally set in. The collapse of a narrative is a more rapid process than its transmission. And as we write, the financial press is full of perhaps the thinnest story since tulips to give rise to a bubble – the imagined future takeover of the world monetary system by crypto-currencies. Like other popular fictions, the Bitcoin phenomenon combines several perennial narratives – in this case, a libertarian vision of a world free of state intervention, the power of a magic technology, and the mystery of ‘money creation’. Round-up at Jackson Hole In the 1980s, bond markets, once staid backwaters of the financial system, became the focus of an exciting new narrative based on securitisation.

Bitcoin: The Future of Money?
by Dominic Frisby
Published 1 Nov 2014

If Bitcoin holdings went to 5% of that, the price would be $17,000 per coin – a 3,400% gain. Current global money supply stands at $250 trillion. If Bitcoin made up just 1% of that, the price would be $119,000 per coin – a 24,000% gain from the current price of $500. Assuming widespread adoption of cryptocurrencies, the lesser-known altcoins, if they take off, will rise by a greater magnitude. When a bubble gets really big, it grows to the size of the US stock market. At the end of the 1970s bull market in gold, the value of global gold holdings exceeded the market cap of the entire US stock market. At the climax of the Japanese bull market of the 1980s, the Japanese stock market matched the US stock market for size.