Bitcoin and Blockchain: “That’s OK.  I Didn’t Really Understand It At First Either”

Bitcoin and Blockchain: “That’s OK. I Didn’t Really Understand It At First Either”

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I am old enough to have lived through 1999 and 2000. Actually, I am old enough to say that it is part of my adult experience. I worked in the internet and telecom sector then. We were building real things and the world was being transformed by the internet and the new opportunities it was creating. Was’s stock worth what it at then? Or AOL? Or Akamai? Or Cisco? We learned later in 2000 and 2001 that these companies didn’t have the value that the markets ascribed. But, in many cases there was cash flow and these companies were transformational; they were changing our world.

In 2007 and 2008, the market again became dramatically overheated, largely due to over-lending on the part of the financial institutions. I personally was fortunate and managed to sidestep the financial damage that many suffered. I respect those who miscalculated though. There was cash flow and the prospect of moving our country from one of 62% home ownership to one of 75% home ownership seemed transformational.

Fast forward to today. With Bitcoin at $17,000 and all sorts “coins” and stocks geared to blockchain spiking in value, there is very little that appears transformational. There seems to be a whole lot of commotion and a whole lot of opportunity to move money around outside of governmental oversight (with perhaps Russian and North Korean involvement).

But, Bitcoin has brought back out all of the people whom I know and who created late stage businesses in 1999 and 2007, companies that had little economic merit but were designed to piggy-back off of what became a frenzy. They have again reappeared on CNBC, and by connecting with me on LinkedIn. This time they aren’t talking about cash flows and economic transformation. They are talking about Etherium and blockchain and the only thing they are saying is: “That’s OK. I didn’t really understand it at first either.”

I am not going to get into the credibility or motives of these people. They may manage to drive Bitcoin and all of its ancillaries a lot higher. But, I don’t buy it; I do not believe nor understand adequately the hype or the foundational elements underlying the Bitcoin phenomenon. And, I am not alone. Consider it safe to say that I am not going to be trying to make my fortune on Bitcoin.

Ari Socolow
Ari Socolow: Ari Socolow is the Chief Economist and Editor-in-Chief at BestCashCow. He is particularly interested in issues relating to bank transparency and the climate crisis. Since co-founding BestCashCow in 2005, Ari has been frequently cited in the media as an expert on local and national savings accounts, CD products, mortgage and loan products and credit card rewards products.

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