Bitcoin’s record-setting August bull run has initiated a new round of assertions that the bitcoin price is a rapidly-inflating bubble that will soon burst; bitcoin, they say, will never recover from the crash. Just this week, BBC technology correspondent Rory Cellan-Jones compared the rising bitcoin price to Tulipmania in 17th-century Holland. Computer security pioneer John McAfee says such claims are “absurd.”
In an op-ed for Business Insider, McAfee compares the invention of the blockchain to humanity’s adoption of agriculture. He says that even the most insightful pre-agrarian philosopher would have struggled to comprehend the paradigm shift that took place when tribes no longer had to structure their lives around a constantly-moving village.
I believe that the blockchain is, even now, ushering in a new economic and social paradigm that will rival, if not exceed, the impact that agriculture had in human society.
At present, Coinbase lists the bitcoin price at $4,362–a single-year increase of 659%. McAfee has predicted the bitcoin price will reach $500,000 by 2020. However, he alleges that it is ultimately pointless to compare cryptocurrency values to fiat currencies, since–he predicts–cryptocurrency will ultimately make fiat currency obsolete.
Likewise, what people see as a bitcoin “bubble,” from the perspective of the new paradigm, is merely the predictable and systematic devaluation of fiat currencies that will continue, with obvious ups and downs, until all fiat currencies reach the zero point.
Consequently, he says conventional financial terminology does not make sense in the cryptocurrency paradigm, any more than a discussion of how to move one’s village more efficiently would fit into a city council meeting in a modern metropolitan city.
Those who understand this tool see immediately the absurdity of words like “bubble,” “investment,” etc. when applied to cryptocurrencies.
He says that bitcoin critics will point to temporary bitcoin price declines as “proof of their understanding,” but “it won’t matter” in the end. The blockchain revolution will not be stopped. “Those who understand” the revolutionary potential of cryptocurrency, he says “will be the leaders of this new world.”
Featured image from Wikimedia.