What Twitter and Bitcoin Have in Common
The comments below are an edited and abridged synopsis of an article by Rick Ackerman
Twitter and Bitcoin: Both companies came about by a virtual medium capable of monetizing nothing if there is discoverable demand for it.
Bitcoin is fueled by excesses of speculative money and greed. Its sensational rise was based on a sexy story invented by, for all we know, a Hollywood flack: Bitcoin came about via an algorithm written by a mysterious person known as Satoshi Nakamoto. The secret sauce was scarcity: There will never be more than 21 million Bitcoin in circulation. It’s ironic that satoshi coinage inspired more than 2,000 cryptocurrency knockoffs, nearly all of them rendered worthless by Bitcoin’s nearly 80% plunge.
When the Bitcoin craze broke, it was on its way to becoming the tulip mania of this era, albeit on a global scale. The folks who run our banking system cautiously signed on (even if Warren Buffett suspiciously did not), warming up the press et al with speeches that lent Bitcoin a veneer of respectability. No one seems to have noticed or cared that the banks themselves had little or no skin in the game. Their huckstering was meant to get Bitcoin off the launch pad and to solidify it in the firmament of Ponzis and shingles-and-siding hustles.
Alas, Bitcoin’s pitchmen will have to start almost from scratch now that the second-largest Bitcoin exchange, FTX, has gone belly up in a scandal that is certain to widen. FTX’s founder, Sam Bankman-Fried, has gone from patron saint and second-largest Democrat donor to schmuck in less than two weeks. You can bet that he will resurface a few years from now, claiming to have solved the nation’s energy problems with cold fusion. By that time, Bitcoin will have gone to zero, where all speculative manias eventually come to rest.