Is This Why The Status Quo Disdains Bitcoin? - The "Wrong People Are Getting Rich"

Authored by Charles Hugh Smith via OfTwoMinds blog,

The wrong people--rebels, outsiders, nerds and techies-- got on the cryptocurrency boat while their insider/rentier "betters" blew it and are now raging bitterly onshore.

The psychology of money, wealth and speculative manias is endlessly fascinating. Most of what's written on these subjects focus on the process of building wealth as if it were a quasi-science rather than a psychologically driven process. Only speculative manias attract a psychology-based analysis, usually characterized as some variant of the madness of the herd running off the cliff en masse.

But money and wealth are nothing but more sedate reflections of the same dynamics that drive speculative manias. Much has been written about cognitive biases and thinking fast and slow, but these explorations do not exhaust the psychology underpinning money, wealth and speculative manias.

Few things have unleashed the Monster Id of wealth and money quite like bitcoin and the cryptocurrencies. Compare the speculative manias of the dot-com era (1995 - 2000) and the housing bubble (2002 - 2007) with the crypto-mania: in the first two manias, the status quo embraced the mania as rational and justified: the Internet would continue growing for decades, housing never goes down, etc.

But the status quo has not embraced cryptocurrencies with the same ardor--why? Instead of endless justifications for valuations, the status quo is filled with reports that 97% of all economists view bitcoin as a bubble, and endless articles decrying the bitcoin bubble as a fools game that will deservedly burst, and soon.

Why did the status quo embrace irrationally exuberant bubbles in the 1990s and 2000s, but views the exuberance of cryptocurrencies with disdain? I think this is a fruitful topic to explore, largely because nobody seems to be asking this question.

Here are my suppositions:

1. The status quo reviles cryptocurrencies because the wrong people are getting rich.

2. The status quo reviles cryptocurrencies because the usual insiders (Wall Street and its politico leeches) didn't get on board early, and they're deeply offended that they missed the boat.

3. Until the advent of bitcoin futures trading, the usual insiders had no means to skim profits from the exuberance.

To me, these dynamics go a long way in explaining the 97% of the status quo's visible loathing of bitcoin and the cryptocurrencies.

In other words: why embrace some manias but not all manias? Answer: some manias make the usual insiders filthy rich, others don't. The dot-com mania generated billions of dollars in profits for Wall Street and the rest of the financier-politico leeches (i.e. the rentier class) via IPOs (initial public offerings), insider deals and vast fees generated by trading the mania with other peoples' money.

The housing bubble generated billions of dollars in profits for Wall Street via the issuance of mortgage-backed securities (MBS), CDOs and other exotic financial instruments based on mortgages and related securities, and realtors (and the rest of the housing industry) banked billions in commissions, fees and other skims.

In both cases, Average Joe and Jane reckoned the manias were their ticket to untold wealth. A relative few Average Joes and Janes did strike it rich, usually by being early employees of companies that went public, and a few others managed the impossible, i.e. buying low and selling high and then exiting the casino with their winnings.

But the vast majority of the Average Joes and Janes were fodder for the chipping machines of Wall Street and the FIRE (finance, insurance, real estate) insiders and elites. Far more people lost money in the period between 1997 and 2003 than won big and kept their winnings. Millions of people gambled on the housing bubble expanding forever and lost everything.

Now compare that to the cryptocurrency mania: Wall Street and the rest of the financier-politico leeches (the rentier class) have virtually no insider skims in the cryptocurrencies--is it any wonder they hate bitcoin with a passion that correlates to their inability to rake in billions of low-risk fees from the mania?

The psychology of FOMO (fear of missing out) is well known; the indignation of those who didn't get on board before the ship sailed is less well noted. The financier/rentier class has a very high opinion of its own moxie and intelligence, and the fact that they missed the boat entirely on bitcoin et al. is like a knife of wounded pride plunged directly into their greedy hearts.

Those who can see past their own wounded pride are busy investing in blockchain applications and cryptocurrency funds, while those who cannot let go of their wounded pride are raging daily against the bitcoin bubble, and praying nightly to their evil gods for its collapse, to prove themselves right after all.

Every day that bitcoin doesn't crash to zero is a day of pain for those whose pride was wounded by missing the cryptocurrency boat.

Even worse--if that's possible for those whose greed is insatiable--the wrong people have gotten rich--techies, nerds, outsiders, rebels, etc.

It's as if the crypto-rabble rebels just blew up the Financial Empire's Death Star and got away with it.

Interestingly, few balk when privileged insiders mint fortunes for doing essentially nothing but exploiting their privileges. The corporate media heaps fatuous praise on insiders who reap billions of dollars from others' labor and ideas via IPOs, leveraged buyouts, etc. because of course these rentiers are our bosses and overlords.

It's dangerous for a mere peasant in the Corporate-State Feudal System (i.e. the status quo) to speak truth to power against the Financial Aristocracy that issues the paychecks.

You can bet that if a Wall Street insider had bought bitcoin in size for $100 each, said insider would be justifying today's valuations and arguing for higher valuations ahead, just as he/she did in the dot-com and housing manias.

So it all boils down to this: the wrong people--rebels, outsiders, nerds and techies-- got on the cryptocurrency boat while their insider/rentier "betters" blew it and are now raging bitterly onshore, not just resentful but indignant that this mania didn't enrich insiders like it should have.

So sorry about your Death Star. I guess this doesn't bode well for your bonus and promotion in the Imperial hierarchy.

*  *  *

I'm offering my new book Money and Work Unchained at a 10% discount ($8.95 for the Kindle ebook and $18 for the print edition) through December, after which the price goes up to retail ($9.95 and $20). Read the first section for free in PDF format. If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

Comments

idontcare Dec 27, 2017 11:22 PM Permalink

"So it all boils down to this: the wrong people--rebels, outsiders, nerds and techies-- got on the cryptocurrency boat while their insider/rentier "betters" blew it and are now raging bitterly onshore, not just resentful but indignant that this mania didn't enrich insiders like it should have."

He's not wrong. I'm old enough to remember when Apple came on the scene in the late 70's. All the old, esconced "abacus set" were waxing on and on that the "personal computer" would be used as a doorstop in short order. When Apple went public in 1980, we "kids" were the ones buying shares hand over fist while our parents & grandparents were telling us we were going to lose our shirts & that we should purchase good Dow companies instead. We kids who bought 50 shares at the IPO are sitting pretty today.

Likewise, Berkshire Hathaway @ $25. If you'd purchased 50 shares in 1964, you'd be worth just under $15M today. Yes, today BRK is a coveted scion of WS, but there was a while in the mid-90's where you'd hear the pundits eschew Joe & Jane America who attended the Buffet "pep rallies" for the company calling them "suckers" & predicting that the $ trajectory of BRK-A was most assuredly coming "back to Earth" (meaning waaaay down) in the long term.

So, now we have BTC. The oldest (& wealthiest) geezers on WS barely understand how to turn on their obsolete computers let alone use any other modern data device. Those around my age (let's say 40-55) know their tech, but have been so entrenched in the existing financial system that most didn't even realize that blockchain technology existed let alone understand its uses. Then there were the "kids", the oldest in '09 still within memory of college, more tech saavy than those who came before them and very aware of the BS of "the modern financial system" since their families had for the most part all been affected in some way by the bubbles bursting in equity/debt markets, housing, etc. This group for the most part was most receptive to "something new" & at the time BTC started making the rounds, most were buying it as a "fuck you" to the system never expecting it to be more than a novelty black market currency with enough value so as it could be used outside the mainstream monetary system to make regular daily (small) purchases (though a few in the beginning were espousing that BTC would go to the moon & would eventually become the standard model for the future of money). Now these early adopters along with adopters of a multitude of other crypto currencies are amassing real wealth and those that missed the boat can't stand it because not only is it really expensive to jump on board some of the crypto ships at this point (limiting the possibility of quick astronomical returns for newbies), but worse yet, the wealthiest geezers out there are begining to realize that the blockchain could disrupt & restructure the entire financial architecture in such a way where all those invested in the "old" system (that of secondary pieces of paper representing equity stakes or debt obligations of a company & all the derivatives thereon, fiat currencies, etc, for which value is ascribed through markets "managed"/regulated by governments which work in the best interests of the elites of society) might be left holding a big bag of nothing over time wherein young Joe Sixpack Jr. (and probably Joe's older family members who liked the idea of a "fuck you" play between '11 ish and '16 after having had their financial asses kicked in '08 & maybe even 2x b4 that in conventional assets) is now the one buying Lambos on a whim and will be the one in the near future not lending the former elite a hand when their house of worthless pieces of paper falls into its own footprint at freefall speed.

Yep, the wealthy are pissed off, but even more so, THEY ARE SCARED.

Jay Dec 27, 2017 11:11 PM Permalink

Young people especially feel disaffected by the status quo. They may not be able to put their finger on the exact problem but they blame Wall St. and the system for not being able to find good jobs in the broken economy. They see crypto as reversing the system. They are going to be the new 1% in the new crypto monetary system. 

aloha_snakbar Dec 27, 2017 9:09 PM Permalink

Is This Why The Status Quo Disdains Bitcoin? - The "Wrong People Are Getting Rich" Says the guy whose business model involves writing cheesey doom porn and BitCon articles on places like ZH... when he is not panhandling for loose change on Patreon. Its like "Cryptos for Dummies"...

Atlas Crapped Dec 27, 2017 8:55 PM Permalink

Whatever Charles. One week you can sell your shit to botcoin lovers and the next week you can sell to botcoin haters. In the end, you have no position other than what sells.

ItsAllBollocks Dec 27, 2017 8:51 PM Permalink

Fear not! Now they (Wall St) have created Bitcoin Futures (and soon to be Bitcoin ETF) they have taken control into their own hands. The peasants will now lose (as they do) and the scum at the top take all.

Linda Hand Dec 27, 2017 8:42 PM Permalink

Every Bitcoin article brings out the never-coiners...the very ones the article mentions as raging from the shoreline and shaking their fists at anyone who makes good

I'll send you a postcard...some day

rphb Dec 27, 2017 8:03 PM Permalink

Yes it is the "wrong" people that are getting rich from Bitcoin, and by wrong, we of course mean "stupid". Because in every mania like this one, idiots gets rich by simply buying and holding. But because they are idiots, they never sell while it is going up and never realise that it is simply dumb luck that they got wealthy not any inherent skills that they poses, so they never get out in time, and stays in until it inevitably collapses at which point they are poor again.

rphb ItsAllBollocks Dec 28, 2017 6:50 AM Permalink

I don't know any of these people, but please bear in mind that Bittards* are not the only ones that owns bitcoin.

There are also the trend investers that knows it is a scam, but understand enogh about sentiment to make money on it, and most prominently we have the Bitcoin conmen** that runs the scam. Of course these men gets rich. But they get rich on others expense. Because Bitcoin is a zero sum game. Because no cashflow can be generated and there are no production or product related to it, the only way people can make money in Bitcoin is if somebody else loses money. Compare that to the stock market where stocks beyond appreciation also pays dividents, which are profit from the company paid to its owners.

 
 

*Bittard is a contraction of Bitcoin and Retard and refers to people that believe that Bitcoin is the greatest thing since sliced bread. They hold insane ideas such as that Bitcoin is going to become a new reserve currency, completly ignoring the fact that it is not even a currency nor have the potential to be one.

** Remember Bitcoin is a confidence game. Without confidence it does not exist, compare that to any commodity, like milk that exist regardless of our faith in it.

In reply to by ItsAllBollocks

CoinBug21 Dec 27, 2017 7:57 PM Permalink

The Elites will defeat BTC by means of an alternate crypto. My money is on LiteCoin. There is huge upside there. BTC holders would be wise to roll some of the wealth they are “HODL”ing into LTC. I could see LTC at $1000 in the very near future.

east of eden Dec 27, 2017 7:39 PM Permalink

Don't tell me that the fucking Hasbara slime are not trying to buy bitcoin. They have thousands of orders placed in exchanges all across Europe to sell 1.5 grams of gold for bitcoin, because they realize the big sellers are NOT selling.I've just spent the last hour, and 1K US cleaning out the 'buy orders' that were plugging up the proper functioning of the Vaultoro queues. Vaultoro (a.k.a. The Rothschilds gold exchange) is an absolute fucking scam.They need to be burned, burned fucking alive.

PrivetHedge Dec 27, 2017 7:01 PM Permalink

The wrong people? Lets look at the facts:1. Early nerds put their money in.2. Late nerds put their money in (and still do)the early nerds who sell out become rich. As far as I can see the wealth transfer is within the same level, except onw a few vultures are moving in to pull some nerd money out too.Today we have a volatile difficult to access market so we can all lose and make money  - it's purely wealth TRANSFERENCE - no money is made or lost except the exchanges will only make it unless they get hacked.Pyramid = transference to the earlies = pyramid. Pyramids are not all bad but many stand to be crushed, just make sure you can afford to lose it if the worst happens.

east of eden Dec 27, 2017 7:00 PM Permalink

Interesting. I have never trusted a site called Vaultoro. THey are based in England (need I say more). Today, I thought I would buy some gold, but have changed my mind now, after reading this article.But guess what. I look at their order 'book' and they have dozens and dozens and dozens of 'buy' orders for gold, but only for 1.4745 grams of gold. And there are hundreds of those 'buy' order on the books. So, someone is cooking their system. It is very obvious.The next time some god damned fucker tells you that 'gold' is the place to be, take a fucking hammer, and smash them right in the fucking mouth. If they are jew, keep smashing.

aloha_snakbar Dec 27, 2017 6:56 PM Permalink

Is This Why The Status Quo Disdains Bitcoin No, it is because when guys like Michael "Opinion for Rent" Snyder, and CHS start gushing about it, it is time to run screaming in the other direction...

aloha_snakbar bshirley1968 Dec 27, 2017 8:59 PM Permalink

If you are reading my comments, then surely you realize that I pesonally do not give a rats ass about those who speculate in cryptos, or cryptos themselves. What I DO give a rats ass about is the fact that there is a freight train bearing down on us all, called the CryptoExpress, piloted by .gov, that one day sooner than later will make us long for the 'old days'. Crypto fans dont see it; all they see are their piles of fiat. They have the laughably hilarious impression that a bunch of basement dwellers (who did not discover the idea/tech in the first place, .gov did) are somehow smarter than the criminal enterprise known as Uncle Scam, who has had THREE HUNDRED YEARS of experience, not to mention the internet itself, that cryptos live on, was developed by DARPA, and .gov owns, or has control over all of the pipes where the internet lives. I would agree that there is a big set of problems, but cryptos are NOT the answer, not while the beast known as .gov still breathes. We are just walking, all starry eyed with the promise of free money, right into their trap...

In reply to by bshirley1968

adr Dec 27, 2017 6:50 PM Permalink

Anyone that does not labor for their wealth is the wrong person getting rich.You bought Dodge Coin and became a millionaire?Sorry but you bought a lottery ticket and won. You didn't do anything smart or special. There is no gain in any crypto other than what someone else is willing to pay because they believe they will make even more when someone else buys it from them.There is zero use case. Why would I force my business to transact through a system that will always cost me more the more I use it? I'm supposed to make a basement dwelling dweeb rich because he bought 10 million tokens for $100 and someone claims they are now worth $100 each?Real business will reject the blockchain because it will not add greater value to their service.

Miggy adr Dec 27, 2017 7:05 PM Permalink

Maybe but business is at the behest of the money changers, just ask the cannibas businesses out west. Unfortunately cash be may on it's way out I am sure you have read the articles and quotes. Blockchain and crypto may be the future I really do not know. All I know is it is all the rage right now for a reason as the media is surely controlled so you have to ask yourself why. 

In reply to by adr

Tugg McFancy Dec 27, 2017 6:50 PM Permalink

Guy who wrote this is a fucking idiot. How many people are getting rich? An infintecimal amount and completely at odds with the hyperbolic media coverage. Does he really think the 'status quo' are sitting around worrying about a handful of new millionaires?Oh yeah and buy my book. It's dumb, late to the party retail being sucked in now to blow this higher before they get caught holding the bag. I know this because it's the guys I know who were into the poker boom and love betting on sports who have gone bitcoin mad over the past few months.

JibjeResearch Dec 27, 2017 6:42 PM Permalink

I don't have BTC.. only because it's too much for me to get in quantity; however, I value BTC very much because it's a store of wealth of the future.BCH and BTG are also the store of future wealth.BTG is cheap, you guys need to get some.BCH is a little expensive, but get a few.BTC, BCH, BTG, and Ethereum (A store of wealth Corporation) will only increase in value.  I'll not spill the detail, go do your own research :)Pick a collection of top 10 coins, you can't go wrong!See you all in the future with all your richness :) Ohh Yeah... I forgot, I like being the wrong people Bwhahhaha hahahahahahahahah