The Prophets of Cryptocurrency Survey the Boom and Bust

But very few people are holding onto USD bills with the expectation that they'll go up in value, or suddenly have some new use.

Yes but that’s not really news. I think the article’s elucidation is that Cryptocurrency, like money, is comprised of humans and thus has all the same baggage (as opposed to being a non-human solution that avoids issues of trust or governance).

For USD, I think the commandments would be the invariants of the monetary policy, as opposed to the entire constitution: "inflation shall average 2%", "grow the money supply to prevent deflation", and "shrink the money supply to reduce inflation". The religious part is made apparent by it being so difficult to explain why 2008 didn't lead to significant inflation - whereas inflation appears a direct result if the reasoning of these policies is accurate - yet we still follow the policy and just pray it will carry us through anyway.

"In God We Trust" has only been the nation's motto since 1956 and appeared on paper money the following year[1].

The dollar is of course much older.

[1]https://en.wikipedia.org/wiki/In_God_We_Trust

It's all about manufacturing shared realities.

For example, a corporation doesn't really exist independently outside of human minds, but we often act as if it does.

> I think most national currencies are based on religious-like beliefs and mass delusions to some extent.

Lol, no. Four points:

a) Money isn't value, money is a standard measuring yardstick for value.

b) Since it's just a standard way to measure stuff, pretty much anything can be money.

c) Modern fiat money like USD are IOU's from the government. They became a standard form of money because the government requires taxes to be nominated in these IOU's and because the government pays welfare and wages in them.

d) Inflation is no big deal. It just means that your standard measuring yardstick becomes shorter over time. A logistical pain in the ass, but ultimately nothing that can't be dealt with.

Most people still ignore crypto.

Indeed but how about now?

Down-voted for admitting you read the market wrong? HN is just weird these days.

There are private individuals, a.k.a. 'whales', that have millions of dollars worth of Bitcoin to sell. These people can't sell on the exchanges we hear about because these exchanges do not have buyers on them wanting to buy huge quantities of Bitcoin.

You can't just go along to an online exchange and sell millions of dollars worth of Bitcoin, not only is there the problem of finding a buyer but there is also the problem of price. You could find people only wanting to pay a hugely discounted price with the 'market price' falling due to the surplus availability. This is not in the interest of a 'whale' as a big sale could render the rest of the portfolio to be worthless.

Instead of trading 'over the counter' these people are 'serviced' by an entirely different breed of traders that attempt to match buyers and sellers. These intermediaries try to get their percentage, however, as soon as buyer meets seller the need for the middle man and his cut is eliminated. These sales also take a long time to organise, so it is more like trying to sell a house than buying some candy at a convenience store. In this sales environment the price is different to the headline price and not as volatile. Much like house sales though there is a huge likelihood that a given sale will not go through.

Your stereotypical Bitcoin bore only really dreams of getting the 'Lambo to the moon'. In the bigger scheme of things a fancy sports car isn't really that expensive, it is just a bit of bent tin with a fancy paint job. These greedy dreamers are not currently trading their little coin things, they are in the same boat as the 'whales' that can't sell, they are just 'Holding On for Deal Life', a.k.a. 'HODLing'. They might as well be praying for rain.

The price is 'stable' not only due to the problems of large and small 'investors'. There is always the hope that some regulatory approval will come along to make it so that institutions and funds will enter the market. As things currently stand Bitcoin is a 'commodity' whereas every s4itcoin is a 'unregulated security'. So it could be Bitcoin that is undervalued and, when the institutional investors come along, the 'asset' will reach its true value of '50K'. That is the dream and the hope that keeps small time Bitcoin bores HODLing on to their imaginary stores of 'wealth'. This time next year they will obviously be able to pay the deposit on that second hand 'Lambo' proving them to be wealthy.

We are sharing this planet with a cargo-cult group of Bitcoin believers that will not let their dreams be shattered. They no longer talk of 'ICO' blockchain things, they have also kind of given up on the general population becoming the 'greater fools' that will buy their imaginary coin things at a huge premium from them. There really is just this belief in Bitcoin getting to be magically approved by financial authorities and them being able to see a return when mythical institutions buy big shortly thereafter.

That is absurd. It's working Internet Money that you can use.

Selecting Fitzgerald was his first mistake.

> He investigates it and reports back, as a proxy for the reader.

And that's enormously valuable.

People are often dismissive of The Economist, since many of the writers in its anonymous collective are young Philosophy, politics and economics (PPE) graduates from Oxford, and what do they know. But they're smart, and by virtue of their association with The Economist and its network have access to world class experts, and they can talk to them on and off the record, and synthesise the gist of some development or controversy in an excellent short article.