The cyclical progression that the cyberhornets have plotted and visualized for more than a decade is playing out in real-time, grabbing the imagination of the masses and the headlines of the mainstream:
All such headlines are nice and dandy — it’s inevitably gratifiying to see. Though none of them really matter. None of them will go down in history in any significant fashion. There is only one headline I keep harking back to when I think of Bitcoin:
At the time of writing, 3rd of January 2021, it’s Bitcoin’s 12th birthday. It all started this day, never to be halted again with the genesis block:
In its purest form, the Bitcoin chain itself, nothing changed. It keeps on being mined and hashed as a global truth machine. Every 10 minutes the cyber-heart beats again without a single hiccup ever. The narrative around it though, has evolved significantly. It was a peculiar experiment within a cypherpunk mailing list, then a fringe currency on the dark web — now, it’s an ark in the cyberspace to avoid drowning in a massive currency flood.
How did that come to be? Why are millions, especially in the Global South like myself, are seeking refuge in this hive of cyberhornets?:
I guess we could break it down to four reasons that correspond pretty neatly with a well known storyline which led to the tragedy of the Titanic: greed, hubris, privilege and scarcity.
1) Greed: Increasing acceleration before the crash — February peak to March dip
Going into February 2020, markets were in euphoria despite the growing noises from East Asia that a weird virus was flaming its way through entire cities in China. Dow Jones, S&P 500 and Nasdaq, the three key indices were flashing green candle after another, printing new all-time-highs every other day:
Then the iceberg struck.
Covid-19 was declared a pandemic and the markets began a full-throttle price discovery — towards the deep end.
Those of you watched the movie will remember the hubris which the captain and his ‘boss’ had. Let’s reach New York a day earlier, the headlines would be amazing. Higher ticket prices on the way back!
Captain Smith: No, I don’t see the need. We are making excellent time.
Ismay: The press knows the size of Titanic. Now I want them to marvel at her speed. We must give them something new to print! This maiden voyage of Titanic must make headlines!
Captain Smith:Mr. Ismay, I would prefer not to push the engines until they’ve been properly run in.
Ismay: Of course, I’m just a passenger. I leave it to your good officers to decide what’s best. But what a glorious end to your final crossing if we were to get to New York on Tuesday night and surprise them all! Make the morning papers. Retire with a bang, eh E.J.? Good man.
2) Hubris: “This ship cannot sink” — a la Janet “No more crisis” Yellen
I’m the last person to call for a gloom and doom for the markets. Indeed I often find myself arguing the opposite. Markets really do mostly go up. Bring out any ratio you like about mismatched P&Ls and historical anomalies of averages. There is too much liquidity in the system looking for yield for any money manager to care about any ‘rationale’:
We live in the world of negative interest rates. Time flows backwards if you leave your energy in cash. Markets thus, are now more store-of-value than a platform of pure price discovery. The nuance here is “mostly” — not always. We will always have crashes. The bubbly tops will always correct. The hubris here though, is to assume this is not possible:
Such an approach will always see money printing as the cure to any problem. Housing crisis? Print a couple trillion. Covid? Print more.
3) Privilege: Global K-shaped recovery — 3rd class drowns while 1st class Zooms
2020 was a pretty good year if you held any type of financial asset. Buoyed with more than $10 trillion of new liquidity, everything went up. Markets didn’t even correct as a V. It was more like a checkmark, with a historical high reached for each major asset class even compared to their early 2020 levels:
Sure, there was no monetary crisis for the ones who Zoomed-out of this year’s chaos. The issue here is that most people in the world do not own assets like the average salaryman in the Global North. Billions of people do not have exposure to Tesla, Amazon or Etsy stock, all of which multiplied their value due to their positioning in the ‘new normal’. For billions around the world, there is still an existential issue of being able to plug into the financial markets to conserve their energy (keep their purchasing power intact) — simply due to their geographic location and local currency. Wall St’s current pompous recovery is a Hollywood-story half-a-planet away for the Southern populace. Americans may rightfully complain about a 7% slide in their currency vis-a-vis the Euro & the Yen, but I would offer some perspective:
This is not a new phenomenon. The average Turk or Argentinian have come to accept working more to earn less in the last decades. But they shouldn’t. Hyperinflation is not ok. There is an alternative. There are cybernetic life rafts available.
4) Scarcity: Too little life rafts for too many people — only 21 million bitcoin
While walking on the deck on a pleasant sunny day along with her ‘first-class’ entourage, Rose notices that there aren’t enough liferafts for everyone on board the Titanic. That worry is quickly dismissed as being unnecessary by the ship’s directors, as it is the unsinkable ship — who would ever need those useless precautions. Life is good, just soak in the sun.
Similarly, cyberhornets for years have been educating our peers about the absolute scarcity of Bitcoin and how that offers a way out of centralised systems’ existential risks in times of crises. For many that enjoy a ‘first-class’ status within the global financial realm, it was easy to dismiss this incredible invention as a ‘pet rock’ — who would ever need access to those useless digital keys in a virtual wallet somewhere across a decentralised cyberhive. Life is good, just keep your savings in the bank. Reality however, had already caught up with many others over the last decade:
The money you have in the bank is not yours. It’s just an amount owed to you. It may or may not be paid back. Many have realised this custodial risk in a very unfortunate manner. Bitcoin is the only asset with a store-of-value function in the world besides physical gold, that has no counter-party risk. Your private keys give access to your coins, no matter the time of day, day of the week. No matter what the political situation is or the central banks’ whims are. No trust involved in being able to access your own money. Indeed, people of the Global South has always valued this particular function of gold — no wonder it is way more popular in Turkey, India, Iran, Thailand and China than in Canada or Norway. Gold cannot be debased, nationalised and cannot be confiscated without brute force.
Bitcoin is digital gold. Indeed it’s a million times better than gold. It’s more portable (try escaping a regime with a gold bar in your luggage), less inflationary (you cannot produce more once the price bubbles up) and anti-fragile. It adapts to adversity and gains from chaos. It gets stronger and smarter every day. As opposed to a stable molecule, it is a decentralised living organism like mycelium. Hence its profound ability to capture the imagination and monetary energy of many around the world. Sure, it’s USD price is volatile on a day-to-day basis (just like life in Global South) but a closer look lets you see a incessant adoption story:
There will only be 21 million cybernetic liferafts. There will only ever be 100 million seats on each. Hundreds of millions of seats are already taken:
The average Cypriot or Lebanese may throw in the towel and succumb to a collapsing monetary regime — or they may simply save their life energy in satoshis and dampen their anxiety.
As this message reaches further and wider, access to financial markets will be fairer, global currency collapses will be less painful and the K-shaped recoveries of the future will be mitigated.
For that, Bitcoin is hope.
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