Kunstler: Bitcoin Is The High-Point Of Techno-Narcissism

Authored by James Howard Kunstler via Kunstler.com,

Shoeshine boys in airports ‘round the world must be whispering about Bitcoin as the crypto-currency coils upward to tickle the $10,000 line. Ethereum’s roaring up, too, along with most other cryptos, from Byteball Bytes to Tattoocoin (Limited Edition). Whatever else you think about it, this action is sending a message, perhaps several.

One would be Get Rich Quick, of course. Eight months ago, you could have copped Bitcoin for a mere $1000, and around Labor Day it touched $5000, which seemed, well, figment-ish. In the last two weeks it went all out hockey-stick, doubling. To a certain sort of mind this must seem irresistible. The result: a good old-fashioned mania. Digital tulip bulbs.

Another message probably goes something like duck-and cover. Some nervous nellies are seeking shelter in Bitcoin as they detect tremors in the more traditional markets creeping ever-higher to new records. To some degree, Bitcoin may be doing the job that gold used to do, providing the aura of a “safe haven” from a possible global financial mega-storm. The last time such an event came out nowhere (ha!) after the “permanent plateau” of 1929 collapsed, the government confiscated as much physical gold as it could get its paws on. So who wants to be there? (Echo answers….)

These days, the zeitgeist also points to new-and-improved government monkey business for shoving global populations into cashless monetary regimes where the authorities could monitor and control (and collect a vig on) all transactions — and there is the theory, at least, that Bitcoin’s block-chain computer math would be secure from any government’s clutches.

I’m not so sanguine about Bitcoin’s supposed impregnability, nor about many of its other appealing claims. The Mt. Gox affair of 2014 must be forgotten now, but back then some sharpie hacked 850,000 Bitcoins (valued over $450,000,000) out of the exchange, which was processing almost two-thirds of all the Bitcoin trades in the world. Mt. Gox went out of business. Bitcoin tanked and then traded sideways for three years until (coincidentally?) the Golden Golem of Greatness was elected Leader of the Free World. Hmmmm…..

Not many readers understand the first thing about block-chain math, your correspondent among them. But I am aware that the supposed safety of Bitcoin lies in its feature of being an algorithm distributed among a network of computers world-wide, so that it kind of exists everywhere-and-nowhere at the same time, a highly-valued ghost in the techno-industrial meta-machine.

However, the electric energy required for “mining” each Bitcoin - that is, the computations required for updating the block-chain network — is enough to boil almost 2000 liters of water. This is happening world-wide, and a lot of the Bitcoin “mining” is powered by coal-burning electric plants, making it the first Steampunk currency. If Bitcoin were to keep rising to $1,000,000 per unit, as many investors hope and pray, there wouldn’t be enough electric power in the world to keep it going.

Pardon me if I seem skeptical about the whole scheme. Even without Bitcoin bringing extra demand onto the scene, America’s electrical grid is already an aging rig of rags and tatters. There are a lot of ways that the service could be interrupted, perhaps for a long time in the case of an electric magnetic pulse (EMP). I’m not convinced that crypto-currencies are beyond the clutches of government, either. Around the world, in their campaign to digitize all money, there must be a deep interest in either hijiking existing block-chains, or creating official government Bit-monies to seal the deal of total control over financial transactions they seek.

Anyway, there are already over 1300 private cryptos and, apparently, a theoretically endless ability to create ever new ones - though the electricity required does seem to be a limiting factor. Maybe governments will shut them down for being energy-hogs.

My personal take on the phenomenon is that it represents the high point of techno-narcissism - the idea that technology is now so magical that it over-rides the laws of physics.

That, for me, would be the loudest “sell” signal. I’d just hate to be in that rush to the exits. And who knows what kind of rush to other exits it could inspire.

Comments

Number 9 Bes Mon, 11/27/2017 - 14:13 Permalink

jit inventory ..poof.. food supply..poof.you wont be crying about lost bitcoins when the biggest problem is 3 days with no food.please..this has to be the dumbest argument against crypto out there..unless you think your gold and silver is going to buy ammo and clean water..g l w t

In reply to by Bes

HillaryOdor Number 9 Mon, 11/27/2017 - 14:15 Permalink

I got in bitcoin at $400.  I no longer have much faith in it.  Yes I missed a bunch of this last leg up, but the whole thing has just gone absurd.  There is no way they should be trading at $10k.  No it will not be a widely adopted global currency.  There are a whole lot of issues just with the protocol itself.  I'm out, and I'm not looking back.   Even something like *gasp* ripple looks much more promising at this stage.  People do not actually want a decentralized currency.  They want centralization and control.  I don't care what they claim.  How else do you explain the modern world?  This is just human nature.  If mass adoption ever occurs it will be in a real company like Ripple, not some open source money run by a small group of hackers and miners.It's just ridiculous.I still have a little bit but sold most of it.  

In reply to by Number 9

USisCorrupt Shitonya Serfs Mon, 11/27/2017 - 14:57 Permalink

Why are so many so CLUELESS as to Bitcoin?An EMP it would need to be worldwide, not going to happen. But it could destroy the currency of one or two countries.A $100 USD purchase of Bitcoin in 2009 would be worth over 1 Billion, 150 Million USD today. LET that SINK IN !A $1000 purchase of Bitcoin in Jan/2017 would be worth over $11,500 USD Today. LET that SINK IN !And just today the Market Cap of ALL CRYPTOS hit a high of 305 Billion USD an increase of 25 Billion in the last 24 hours. Now compare that to ALL the FIAT TRASH floating around out there in this Make Believe World. LET that SINK IN !Buying Bitcoin TODAY is like buying Apple Cumputer as a thought in Steve Job's HEAD just now making its way to the garage. LET that SINK IN !? Why are so many people so Uneducated? Because the Education System was set up to make people STUPID !THE ONLY THING BITCOIN and the CRYPTOS are SCREAMING RIGHT NOW is the DEATH of the FIAT Money SYSTEM and a Big FUCK YOU to the Bankers ! The Crypto Currencieis are the PEOPLE's Currency EMBRACE IT for it will give YOU FREEDOM ! Use your BRAIN for a change and THINK ! You can do it if YOU try real hard !

In reply to by Shitonya Serfs

JimmyJones USisCorrupt Mon, 11/27/2017 - 14:59 Permalink

He also doesn't put together that the valuation of Bitcoin and the mining ability of it aren't really linked the way he see it, its reversed.  The Value of bitcoin is what drives the miners to mine it but if they are too successful the mining of bitcoin would depreciate the value of it by increasing the supply so less people would mine it.  Also if people all started mining bitcoin the cost of electricity would go up and that would raise the cost of the mining and would make less people mine it because it wouldn't be profitable.  Its basic free market theory.

In reply to by USisCorrupt

King of Ruperts Land JimmyJones Mon, 11/27/2017 - 18:33 Permalink

The method for securing the network and offering rewards for participation while diss-incentivizing too big of mining ranches to avoid decentralization is important.

So far Bitcoin is "The Biggie" in terms of network and security.

It is possible annother algorith could come along that is better.

If Bitcoin doesn't reach $500,000 to $1,000,000 then a "Dow Jones average" of crypto coins will, absent some event I cannot forsee.

In reply to by JimmyJones

King of Ruperts Land 83_vf_1100_c Mon, 11/27/2017 - 18:24 Permalink

The bitcoin penny, the "Satoshi", is worth $US 0.0001. That is not very high.

The old copper penny of about 3g runs 333,333 to the Tonne. Cu is $7,000 / T. So the copper penny is worth $US 0.0210

If the Sitoshi was worth a copper penny then Bitcoin would be $2,000,000

Bitcoin is also just 2-3% of the Market cap of Gold. Flight capital alone could take it much higher.

If Bitcoin's market cap reached the market cap of gold then 1BTC would be worth a 400 ounce bar of gold.

I don't think it is ready to fall over under its own weight yet.

I am not saying that it wont fall over. Just that a arbitrary number like a $10k price isn't enough of a reason for it to fall over. Come up with a better reason.

Jo six pack can still buy $10, $100 or $1000 of it and hope for it to double in a few months.

Then there is the demand to use it to transact. You cannot transact in it if you don't have it. The price really doesn't matter for transactions as it is just a short term store of value in that case. Usually substituting for other money that cannot be sent over the internet.

In reply to by 83_vf_1100_c

Hal n back USisCorrupt Mon, 11/27/2017 - 15:21 Permalink

a 100 investment when bitcoin was at $2 in 2009 would be worth a cool 480,000 now.nothing to sneeze at.in 2009 gold and silver were in middle of running to 1900 and 49.75-some folks were watching that with no reason to buy BTC.The question is if suddenly selling starts and we see no or few buyers, can BTC drop a few thousand in a few minutes. and then pick up steam.Wise move for those that sold at lest enuf to make sure they walk away with a profit.

In reply to by USisCorrupt

moobra USisCorrupt Mon, 11/27/2017 - 19:08 Permalink

I love it when nerds state that cryptos will overthrow the fiat system of endless funding for wars and the arms industry, welfare, endemic political corruption etc.Yep, we fund assassination teams to take out people we don't like and those who get in the way of the real money. We invade countries like Iraq who wanted to abandon the ptero dollar and gave the bird to dad (George H.W). We arm "freedom fighters" and monitor the bowel movements of people who anatagonise us.And to be honest we don't even come close to the real level of horror perpetrated by the average mexican drug cartel where sending mom her son's head is common.But when the entire banking system is under threat by a crypto upstart, apparently the magic of encryption would stop us from extracting the information needed to destroy it.  It seems, people are very tough then their penis is in an acid bath.This is all true because I'm downloading a pirated movie via a VPN through India.  

In reply to by USisCorrupt

QueeroHedge 38BWD22 Mon, 11/27/2017 - 14:38 Permalink

(((Cuntsler))) the flop who was telling anyone who would listen in 2010 that oil would be too expensive to use in a couple years..... subrubs will be non existent..... crypto is digital tulips bullish for crypto, cuntsler might not have tp pay to have his brainfarts published on zerohedge if he was not completely wrong and embarrassingly behind the times all the time.

In reply to by 38BWD22

nope-1004 QueeroHedge Mon, 11/27/2017 - 14:43 Permalink

It's easy for someone who speculated at $100 or $1000 to chime in now, but wait a while.  Just like everyone got on the PM bandwagon proclaiming the USD would die, buying silver at $4 and barking about it as it passed $40, it too corrected by virtue of the government strong arm.To think cryptos, which are a direct threat to global USD dominance, will continue this trend shows ones' blindness by gambling.And the repetitive nature of the human mind is intriguing, as when silver was on a run, we all heard how it wasn't silver that was going up, but the USD going down.  Can anyone look in the mirror and honestly say that bigcoin is not going up today, but that the USD is going down?lol

In reply to by QueeroHedge

adr nope-1004 Mon, 11/27/2017 - 15:21 Permalink

Just about everyone that mined early Bitcoin, other than a few of the Bitcoin originators, got out a long time ago. I talked to people who mined Bitcoin back in 2009 with GPUs who sold them for less than a quarter. At the time they seemed rather worthless.Whatever Bitcoin was supposed to be has been lost a long time ago. It has become a pure speculative asset which puts it in the extreme risk category.

In reply to by nope-1004

HopefulCynical adr Mon, 11/27/2017 - 15:59 Permalink

On one hand, I'm inclined to find it funny (curious, not 'haha') that so many people fail to see these points. OTOH, it's really not surprising at all. Human nature has not fundamentally changed since the tulip mania, much less since 1929, much LESS since 2000 or 2007. I remember first hearing about BTC in mid 2012 and thinking, "Hmmm. Maybe I ought to buy one." They were like $150ish. Then they shot up to, I seem to remember a bit north of $200? (I don't feel like looking it up; I'm close enough.) Then they collapsed, as all hockey stick moves tend to do. I decided, "Nah. This is a gamble on a coin toss." Of course, with 20/20 hindsight, having bought a few at the sub-$100 price would come in real handy right now; $20 - 50K, even after taxes, dropped into my checking account right now, would be really sweet. My monthly expenses are pretty minimal, and it would buy me time to work on a few ideas I've got. But - C'est La Vie. It Is What It is.One only need look at the AVALANCHE of down-votes on this thread, many of which will now be flung at this post as well, to understand that there is a concerted, orchestrated pro-Bitcoin shilling effort being marshaled across the Internet. And before anyone says, "No, it's just individual BTC investors speaking up," let me point out this post, from above:

38BWD22 Nov 27, 2017 2:30 PM I personally only know two people who bought any Bitcoin on their own.  TWO! 

So which is it? Is almost nobody, statistically speaking, invested in BTC, which makes the blather in every ZH thread on a BTC story an obvious troll/shill raid? If so, who is funding this troll army? Laugh at Kunstler all you like, but we've seen countless stories here on ZH about various .govs investigating "going blockchain." Could one or more of them be trying to engineer a blowoff/crash, to scare everyone back into "approved, safe" .gov cyber-shekels? Also, on that subject, the idea that Soros, Rothschild et al have been accumulating BTC on the down-low, and are the ones preparing to orchestrate the blowoff/crash simply to shear the sheeple once again is in no way farfetched or unlikely. The banksters own and operate proxies of proxies of proxies of proxies of untraceable financial entities. Anyone who doesn't understand this is only here on ZH because some troll farm is paying them.So are cyptocurrencies really a vast, new undiscovered financial territory, and thus the wave of the future, as the post I quoted implies? Or are "cryptos" very widely held, which makes this whole mess Tulip 2.0, waiting to collapse in on itself, crushing everyone who doesn't get to the sidelines well in advance of the final blowoff top? You do realize, if you go to 4chan's /biz/ board, it is NOTHING but thread after thread of people discussing the dozens (hundreds) of widely traded cryptos, including anons posting screen caps from their phones of their "wallets," so they can brag about their profits.It's one of those two. It's an unknown financial promised land, or it's an overcrowded momo trade without even a colored slip of linen paper to back any of it up, much less a slip of pretty metal.Which is it?

In reply to by adr

Creative_Destruct HopefulCynical Tue, 11/28/2017 - 05:07 Permalink

Not only has human nature not fundamentally chaged since Tulip Mania, it has almost certainly not chamged in the last 10,000 years at least, and likely has not changed as far back as 25,000 years or more.We repeat the same GENERAL patterns.These financial changes typically follow a boom-bust-recovery pattern. Bitcoin and other blockchain currencies will likely follow the same pattern, with the big bust yet to come, and the recovery coming provided governments do not declare them illegal and marshall their forces against them. In that case, black markets will no doubt still pop up and come and go. More likely, governments will simply take over the party and issue electronics themselves in the future.So, my guess is it's BOTH: a promised land of differing possible forms in the future (potentially) AND a currently overcrowed momentum trade. 

In reply to by HopefulCynical

venturen 38BWD22 Mon, 11/27/2017 - 14:39 Permalink

every bit coin should be a billion why not...plenty of digits to go! Zimcoins....  Really the most absurd thing I have seen in my life....followed by the Central Bank Rescue of the richest. Really not going to end well....   Lets just hand everyone in the world a Billion Bitcoins...why not...they aren't WORTH ANYTHING!

In reply to by 38BWD22

ShorTed 38BWD22 Mon, 11/27/2017 - 14:41 Permalink

I agree 100%.   Most bubbles pop when everyone is "all in".  There are 16 people on the desk i work on, and 2 of us have bought crypto, I have BTC, ETH and LTC, the other guy has 1 whole BTC that he bought at $2500, jsut to see how it works.I'll listen to bubble talk  when all my neighbors and coworkers are "in" like the tech 2000 or the housing '08 fiasco!

In reply to by 38BWD22

Stackers HillaryOdor Mon, 11/27/2017 - 14:28 Permalink

H.O., yes it has gone bubbleish, but I think you're missing the forest through the trees. It's not that bitcoins price action is absurd, but the envirnoment it currently exist in is absurd. The amount of money sloshing around the system looking for someplace to go is the absurd part. Bitcoin is just a giant sponge at this point. It didnt cause the flood, it's just taking advantage of soaking it up.

In reply to by HillaryOdor

HillaryOdor Stackers Mon, 11/27/2017 - 14:43 Permalink

Yes that's part of it.  Part.But for years there have been these bitcoin utopians claiming it will be a one world currency and doing a price extrapolation from there.  From this point of view it is still cheap, and that is the only reason people are buying (and holding) it IMO.  They really think it will be $1m, $10m, whatever eventually.  I don't see that at all.  Governments would never let that happen.  Eventually these kinds of people are going to be all in.  And when the profit taking really begins in earnest, or there's some volatility and the liquidity dries up, or if there's just some loss of faith in the utopianism, look out below.  There is no guarantee it will keep recovering and going up forever.  That is wishful thinking from the get rich quick crowd who have produced nothing but think they will be a new class of billionaires just because of the digital gold race.   I would be absolutely shocked if bitcoin did not go to 0 in my lifetime, assuming I don't die soon. Just because it was first is no reason to assume it will always have value.  MySpace was also first.  Actually that's not true.  MySpace was not first.  I just used it as an example because people have actually heard of it.  Nobody even knows the names of the first social networking sites.  Nobody cares.  Get my point? 

In reply to by Stackers

nuubee HillaryOdor Mon, 11/27/2017 - 14:44 Permalink

Comparing a distributed network payment system with the complexity of human desires on a social network is comparing apples to oranges.

Bitcoin is still here because it does 1 thing very well, it accurately and securely transmits payments outside of the banking system.

Sure, it cannot handle the volume load that VISA/MC handle. That's a problem for another day.

Sure, its exchanges are low volume operations compared to fiat markets. That's a problem for another day.

Bitcoin does 1 thing, and 1 thing only very well, and that's good enough to soak up tons of worthless fiat that were pumped into the system after 2007.

In reply to by HillaryOdor

adr nuubee Mon, 11/27/2017 - 15:24 Permalink

But that's not what the vast majority of Bitcoin buyers are using it for. Bitcoin as a utility to transfer cash from one type to another does not require a $10,000 Bitcoin.The major problem is that trying to keep the final transaction outside the banking system is nearly impossible unless you have a ton of money in the first place.I'd like to see a guy who had $5000 to his name and put it all in Bitcoin try to open an account somewhere to transfer a few million dollars of Bitcoin gains into it.

In reply to by nuubee

nuubee adr Mon, 11/27/2017 - 15:37 Permalink

That depends on who is trying to get into Bitcoin, doesn't it?

If very wealthy people suddenly realize they can protect cash value outside of the banking system, and the supply of BTC is low, the price goes up in relation to what the fiat-worshippers-with-large-cash-accounts are willing to pay... doesn't it?

I've cashed out large amounts of bitcoin back into fiat to pay off stuff, other than restrictions laid on Coinbase due to banking regulations that forces Coinbase to require different levels of intrusion into your personal life, there was no issue.

Most people who have retirement-levels of Bitcoin aren't doing that though, they're moving to different countries and cashing out monthly-expense levels of coins at a time.

In reply to by adr

Ham Sandwich nuubee Mon, 11/27/2017 - 17:55 Permalink

This is the #1 question I have had regarding btc for the last few years: If .gov around the world suddenly decides to regulate/criminalize the exchanges how will owners of btc be able to convert their coin back to fiat? I've never bought into the arguments that btc is not secure, just a fad, bunch of electric zeros and ones, etc etc but what I want to know is how do you interact with the exchanges if gov criminalizes such transactions?In this particular scenario I can even see .gov criminalizing merchant/transactional use of btc. Pls don't say that people can just move to a different country because that may not be feasible under my scenario. I would just like someone who understands Bitcoin to directly respond to my concern.

In reply to by nuubee