By Eric Peters, CIO of One River Asset Management
“The growth of the Internet will slow drastically, as the flaw in ‘Metcalfe’s law’ becomes apparent: most people have nothing to say to each other! By 2005, it will become clear that the Internet’s impact on the economy has been no greater than the fax machine,”
- Paul Krugman, slamming the internet in 1998
"Bitcoin Is Evil"
- Paul Krugman, NYT Op-Ed Dec 2013
“Bitcoin isn’t a new innovation; it’s been around since 2009, and in all that time nobody seems to have found any good legal use for it. It’s not a convenient medium of exchange; it’s not a stable store of value; it’s definitely not a unit of account”
- Paul Krugman tweeting to his 4.6 million internet followers (via Twitter), with bitcoin up 6,000% since 2013
“Technology based on the use of highly polluting fossil fuels needs to be replaced without delay. There is reason to hope that humanity at the dawn of the 21st century will be remembered for having generously shouldered its grave responsibilities,” tweeted Pope Francis, condemning Bitcoin and its heretical offspring, sparking another burst of panic selling.
Technology based on the use of highly polluting fossil fuels needs to be replaced without delay. There is reason to hope that humanity at the dawn of the 21st century will be remembered for having generously shouldered its grave responsibilities. #LaudatoSiWeek— Pope Francis (@Pontifex) May 19, 2021
Now, the Church has not exactly draped itself in glory when it comes to embracing the world’s most important scientific advances. Just ask Galileo who died in jail, then waited 300yrs for an apology from the Vatican.
But it wasn’t just the Pope. You see, Elon’s tweet that criticized bitcoin mining’s use of fossil fuel spurred every ageing Luddite who has been consistently wrong about bitcoin’s ascent to pen yet another scathing op-ed.
That’s natural, of course. Critics are always loudest in the hole. But this time they were crowded together with Fed officials, the IRS, US Treasury and the Chinese Communist Party. Beijing seemed to announce a new law to outlaw bitcoin mining every time the price staged an intra-day bounce.
In human history, no single asset has come under such coordinated assault by the very global institutions that perpetually inflate asset prices in the name of securing prosperity. And yet, through it all, digital asset trading carried on, obliterating the leveraged longs, wiping out the weak.
For the first time in decades, we saw the ferocious beauty of truly free markets operating at scale. Efficiently. Ruthlessly. These assets inhabit a world without a buyer of last resort to bail out its bankers. It was a remarkable display of antifragility.
To appreciate it fully, simply imagine how today’s equity, bond and credit markets would withstand a withdrawal of government support, let alone a full-frontal assault.
It is this independence and resiliency that underpins the longer-term attractiveness of digital assets. But like all powerful new technologies, their promise is poorly understood by most pundits.
And amongst the many benefits that such technologies will produce, one of the more ironic is that despite today’s outcry, they have already begun to spur and finance an accelerating global transition to renewable energy.