Bitcoin (BTC) moved back above 60,000 against the US dollar (USD) yesterday and looks set to challenge the all-time high of just under 70,000 over the next few days. In 2014, I wrote positive articles about the OG cryptocurrency, and back then, the question was whether or not bitcoin could hold above $500, a level that seemed to be a ridiculously high valuation for many people.
The vehement critics of bitcoin included, and still include, some very smart people, so what did they get wrong? How could people whose opinions were sought on many subjects and who had histories of making good investment and business decisions were talking about Ponzi schemes and tulip bulbs for a decade as BTC gained around 12,000%? More importantly, could they get the last laugh? Could it be that bitcoin is in a bubble, even if it is one that has been inflating for a decade or so?
Looking back, it now seems that the most common reason for getting bitcoin so wrong was a lack of imagination. It takes some mental gymnastics to get your head around the idea of a “currency” not issued by a national government and that has no physical form, let alone one that stands the principles of an inflationary economy on its head. It is quite possible to be “smart” but narrow minded, particularly when the new things you are considering represent a threat to your livelihood. Maybe that is why most big bank CEOs exhibited a blind spot when it came to bitcoin back then and have stuck to their evidently incorrect views, even as the institutions they run have, somewhat hypocritically, set up crypto trading desks to make money off of this thing that is doomed to fail.
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