Money Talks

Bitcoin’s recent 25% plunge illustrates why it will never be a true currency

An illustration of a conceptual Bitcoin placed behind clouds in the sky as a rainbow crosses the sky.
An illustration of a conceptual Bitcoin placed behind clouds in the sky as a rainbow crosses the sky.
Illustration: Delcan & Co.

On May 22, 2010, a Bitcoin developer named Laszlo Hanyecz bought what may have been the most expensive meal in human history when he paid someone 10,000 Bitcoins to pick up and deliver him two pizzas from Papa John’s. Given that one Bitcoin is now worth more than $30,000, those pizzas cost, in retrospect, somewhere north of $300 million.

Nowadays, of course, no one would think of shelling out Bitcoin for something as mundane as a pizza without thinking first about how much money they might be giving up in the future. In the years since Hanyecz’s splurge, Bitcoin has gone from being an interesting experiment in decentralized finance to being the best-performing asset of the decade, rising more than 10,000,000% since 2010 and jumping 220% last year alone. There’s a Bitcoin ticker on every finance website. Legendary investors like Paul Tudor-Jones, Stanley Druckenmiller, and Bill Miller speak approvingly of its prospects, and companies like Square and MicroStrategy have invested their corporate cash into Bitcoin. Despite being extraordinarily risky and volatile — as evidenced by the 25% drop it took between last Friday and Monday afternoon — Bitcoin has, in some sense, been admitted to the club and is now seen by many as a plausible competitor to assets like gold. …


Money Talks

Why we keep panic shopping even when the store shelves are stocked

An illustration of hundreds of toilet paper rolls stacked up in a single shopping cart.
An illustration of hundreds of toilet paper rolls stacked up in a single shopping cart.
Illustration: Pablo Delcan

Money Talks is a column that explores what happens when business, the economy, and culture collide.

Crises have a way of reshaping behavior in ways that endure long after the trouble has passed. The stock market crash of 1929 scared ordinary Americans out of the stock market for decades. The Great Depression that followed famously instilled habits of thriftiness and caution in an entire generation. 9/11 remade our expectations of what you had to do to get on an airplane or even walk into an office building.

Ever since the coronavirus hit in March, businesses and pundits and social scientists have been speculating about how the pandemic might permanently alter the economy and society more generally. There are some obvious big structural shifts that may endure: an acceleration of the demise of traditional retail, quicker growth for e-commerce, and more widespread use of remote work. But the pandemic also seems to be reshaping consumer psyches, and therefore consumer habits. …


Money Talks

A boom in blank-check IPOs is setting off alarms, but they solve a very real problem for some companies

A graph trending upwards with a giant bubble floating beneath the arrow and pushing it up
A graph trending upwards with a giant bubble floating beneath the arrow and pushing it up
Illustration: Pablo Delcan

Money Talks is a column that explores what happens when business, the economy, and culture collide.

In 1720, the English economy was gripped by a speculative mania known as the South Sea Bubble. The hysteria began with a steep rise in the stock price of a government-connected firm called the South Sea Company, but soon investors were happily bidding up stock prices across the board. In response, a host of new companies offering a wide array of unlikely products and services quickly incorporated and sold shares to hungry investors. One company described its business as trading in hair. …


Money Talks

The stock market swings after Pfizer’s vaccine announcement prove that the market isn’t as wildly exuberant as many believe

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Illustration: Pablo Delcan

Money Talks is a column that explores what happens when business, the economy, and culture collide.

If there’s been one cliché that has defined the stock market over the past eight months, it’s that “the market is disconnected from the real economy.” With stocks hitting all-time highs in the midst of the coronavirus pandemic — even though the U.S. economy was in recession and unemployment had risen sharply — it was easy to argue that stock prices had lost connection to economic reality. …


The short-lived billion-dollar backed startup got seduced by the fallacy of the visionary entrepreneur

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Quibi founder Jeffrey Katzenberg demonstrates Quibi at Sundance in January. Photo: Daniel Boczarski/Getty Images

By raising $1.75 billion and then shutting down just six months after it launched, mobile streaming service Quibi has now guaranteed itself a place on the list of business history’s great cautionary tales. Business-school professors will be teaching Quibi case studies for years to come, trying to explain in detail exactly how a high-profile startup backed by billions of dollars and experienced leaders like founder Jeffrey Katzenberg and CEO Meg Whitman went so wrong. …


Money Talks

It can be an arm of government or a profitable business — it can’t be both

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Illustration: Pablo Delcan

Money Talks is a column that explores what happens when business, the economy, and culture collide.

On April 13, 1957, America was rocked by a national crisis: The mail did not come. It was a Saturday, and Postmaster General Arthur Summerfield, facing a budget crisis, decided to cut off Saturday deliveries. The decision was sensible, economically speaking. But it was politically disastrous, provoking a huge outcry from Americans who found it intolerable to wait two days for a letter. …


Money Talks

Gyms, restaurants, and movie theaters are all reeling for the very same reason

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Illustration: Pablo Delcan

Money Talks is a column that explores what happens when business, the economy, and culture collide.

On July 11, the American economy hit a key milestone in its recovery from the coronavirus: the Magic Kingdom at Walt Disney World reopened. The world’s most popular theme park had been shuttered since March 16, and the expectation was that Disney lovers from across the U.S., frustrated after months indoors, would flock to Orlando. And in the weeks leading up to the reopening, Disney had more than enough reservations to fill the park to its new, limited capacity. But as reopening day approached, the number of Covid-19 cases in Florida began to rise, and in response people started doing something Disney visitors almost never do: cancelling their reservations. In the three months that have followed, customer traffic has stayed well below where Disney hoped it would be. The portion of visitors who are from out-of-state, who are the park’s most lucrative customers, has dropped below 50%. …


Money Talks

The massive deal for Bethesda exposes the fallacy of ownership and the anxiety of a giant

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Illustration: Delcan & Co. and Chanyu Chen

Money Talks is a column that explores what happens when business, the economy, and culture collide.

What’s $7.5 billion between friends? That’s been the general reaction of the gaming and business press to the news last week that Microsoft will be spending that sum to acquire ZeniMax Media, the parent company of, among others, powerhouse video-game studio Bethesda Game Studios, maker of Fallout 4, Doom, and Skyrim. …

About

James Surowiecki

I’m the author of The Wisdom of Crowds. I’ve been a business columnist for Slate and The New Yorker and written for a wide range of other publications.

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