From the early days, crowd psychology has always been part of our society's modus operandi. We worshiped idols drawn on the cave walls, we obeyed the shamans, we crucified and burned people at the stake. Mass hysteria then took more civilized forms when
we bought and sold various forms of "snake oil" - from tulips in the 1630s to Boo in
the 1990s.
The madness of crowds is now spreading to Bitcoin. Not a day goes by without another announcement heralding some
Bitcoin-related venture.
What is it that draws various players and investors to Bitcoin?
In very simple terms, it's a limited supply "commodity". Unlike with gold or diamonds, that limit is confirmed - only 21 million Bitcoins can ever be "mined". However, since every Bitcoin is divisible down to eight decimal places, the total Bitcoin supply
is over 2 quadrillion units (2,099,999,997,690,000 to be precise). That doesn't sound like a "limited supply"...
There are other perceived "advantages" of Bitcoin, such as lack of the central issuing authority. Well, gold is in the same category too, as is any naturally mined or grown commodity - we are all free to grow oranges in the kitchen and then flog them to
our neighbours.
Bitcoin offers anonymity. If your child gets kidnapped and the ransom is demanded in Bitcoins, how would you feel about the anonymity in that case?..
If you are a legitimate business, why would you want to be paid in Bitcoins rather than in dollars, euros or pounds?..
Would you base your retirement plan on Bitcoins?.. Why not?..
The list can go on, but the message is clear.
The only parties who would derive tangible value from Bitcoins are the early smart VCs who could skillfully hype up their investments in Bitcoin startups before selling them on to the late dumb investors. Kudos to the former? Well, they could have applied
their skills and money to more valuable - for the society - areas (White Space in Africa
is one of them; or EMV infrastructure in the USA), but it's their money after all, and they are free to do whatever they want with it.