Fear, Uncertainty and Doubt

The Wall Street Journal ran a story this morning about the fact that bitcoin is having its worst month in three years. The price has fallen 50% in USD since its peak in December and the FUD is everywhere. This is the Journal"s list:

1) SEC halts $600 million ICO.

2) Facebook bans bitcoin and ICO ads.

3) Threat of South Korean legislation.

4) The hacking of Coincheck and theft of $500 million in cryptocurrencies.

5) Tether (a cryptocurrency issued by a company of the same name) and Bitfinex were issued a subpoena in December.

Yep, that all looks bad. Do you want to know something? It always looks bad for bitcoin, and somehow bitcoin rebounds from every problem and it emerges stronger because of the battle testing it has gone through. In the words of Nassim Nicholas Taleb, bitcoin is antifragile.

The history of bitcoin is littered with crises, none bigger than the scandals that followed the arrest of the operator of the Silk Road website and the collapse of Mt. Gox, the bitcoin exchange that was responsible for 70% of the trading volume of bitcoin. Here is a prescient comment from an article titled Don't Panic issued by a prominent bitcoin backer in 2014 as the Mt. Gox storm swirled around bitcoin:

Every month or two, a new crisis emerges. Mt Gox dies and it’s going to destroy Bitcoin. China bans Bitcoin and it’s going to destroy Bitcoin. A mining pool gets too much hashing power and it’s going to destroy Bitcoin! Every so often a new supervillain jumps up from under a rock. Not long ago, Mike Hearn was going to destroy Bitcoin. with redlists and Then there was the legion of evil behind CoinValidation, who wants to track all Bitcoin users. Recently Ben Lawsky has emerged as the latest moustache-twirler out to destroy Bitcoin with his bitlicense superweapon.

The idea that anyone could ban Bitcoin is a joke.....

You know what’s going to destroy Bitcoin? Nothing, that’s what. Maybe a nuclear war or a giant meteor could do it, but not much else. The problem with Bitcoiners is that they think Bitcoin is fragile when it is really antifragile. It is no coincidence that Bitcoin keeps surviving every crisis. It survives because it is immortal.

Daniel Krawisz (2014)

Disclaimer: This is not investment advice.