Bitcoin, Bitcoin, Bitcoin, is all that I keep hearing about, but for a good reason. It is a phenomenon that has no parallel unless you journey back to the Seventeenth Century and examine the Tulip Market crash in the Netherlands. At this time capitalism was in its infancy and very erratic. The craze that consumed Western Europe came from the uniqueness of the flower as well as its continued price increase. Many were trading and making fortunes and never even saw a single bulb, then it collapsed. This capitalistic insanity is very similar to the Bitcoin craze. It is entirely digital, and the purchaser will never hold a coin in his or her hand. The coin which was meant to be a currency that would span the globe and avoid exchange rates and fees has now almost become relatively useless for its intended purpose. At currently around $15,000.00 per coin and consisting of extreme volatility it is relatively undesired by merchants as it has become impractical and risky. If someone were to take payment on a thirty thousand dollar car (requiring two Bitcoins in payment) and then Bitcoin plummeted to ten thousand dollars then the seller of the vehicle would immediately lose out on ten thousand dollars.
However, those who invest in it like a commodity or stock can potentially make a lot of money. It is an odd scenario in that its only value is based entirely on investors and no real-world productivity. But that leads to the question about the economy and the real stock market. The stock market has been growing to record numbers ever since the fall of 2016. However, nothing has fundamentally changed with many businesses. Thus, capitalism and its economy seems to be based more on perception and attitude rather than tangible product or actual results. Look at Apple who is the most profitable company in the world, and it is at only around 10% worth the stock of Amazon. My Economics professor stressed that the economy is based on people’s feelings, not necessarily the GDP or any other figures. Everything could be fine fiscally and then something scares investors and all of a sudden the stock market crashes, and people begin to slow down spending their money. So what is the future of something that has absolutely no tangible value? Can Bitcoin make millionaires out of paupers? There are other coins that you can invest in, and you can find them on coinbase.com. These others have been less volatile and cost less money than Bitcoin so it might be something you want to look into investing your hard earned money or maybe not! For more on the wild beginnings of capitalism read Vermeer’s Hat!