Wednesday, March 5, 2014

New York Magazine: The Doomsday Cult of Bitcoin

By Kevin Roose

On December 21, 1954, a woman named Dorothy Martin thought the world was going to end. Martin, a Chicago housewife, claimed to have received a message from aliens, warning her of an impending flood that would kill everyone on earth except for true believers, who would be carried away to safety on a flying saucer. For months, Martin had been gathering a band of followers who called themselves the Seekers and quietly prepared for their alien abduction. The Seekers left behind family and friends, sold their possessions, and on December 20, they waited. When midnight came, they waited some more.
When they realized the flying saucer wasn't going to come, and that Martin's prophecy had been wrong, something odd happened: Rather than giving up, the Seekers began furiously calling up newspapers and trying to spread their message as widely as possible. In order to overcome the cognitive dissonance of their situation and convince themselves their sacrifices had been worthwhile, they needed to proselytize.
This is, we now know, a psychologically normal response for prophetic groups whose central predictions fail to come true. And today, you can see something similar going on with another group of failing zealots. I'm talking about the cult of Bitcoin.
For months now, Bitcoin soothsayers have proclaimed that the virtual currency is going to Change Everything. The mass adoption of Bitcoin, they told us, would utterly transform the way the world stores and exchanges value. Government-backed currency would become obsolete. Farmers in Kenya would use the same Bitcoin-based payment systems as caf├ęs in the Mission. With the future of money in the hands of Satoshi Nakamoto's brilliant protocol, inexact central planning would be replaced by algorithmic decentralization.


  1. cult of corruption....see fed.

    Fed Nominee Stanley Fischer Has a Citigroup Problem

    By Pam Martens: March 4, 2014

    There are surely some veteran lawyers at the Securities and Exchange Commission (SEC) hoping the nomination of Fischer has been scuttled. The thought that Stanley Fischer, a former Vice Chairman of the serially corrupt Citigroup, could become Vice Chairman of the Federal Reserve, a regulator of mega banks like Citigroup, is not a source of comfort. Fischer was nominated for the post by President Obama, whose devotion to failing up on Wall Street regularly sets new heights.

    As if as on cue, news broke just yesterday that Federal prosecutors have issued grand jury subpoenas to Citigroup in a money-laundering investigation, a topic with which the bank is intimately familiar.

    During Fischer’s stint at Citigroup, from February 2002 through April 2005, he “amassed a personal fortune of between $14.6 million and $56.3 million” according to Bloomberg News. During that same period, Citigroup was repeatedly charged with fraud and embarked on its own exotic financial shenanigans that would end up collapsing the firm in 2008.

  2. Dumb kids who don't know much about the investing culture. The "change the world" talk was the hype that drove the price up. This is a standard pump and dump scam. Someone creates crypto currency out of nothing. Market it to schmucks, drive up the price. Dump it, make easy money.

    1. JW logic: stupid people do stupid thing with a new technology, therefore said new technology must be stupid.

      I'm sure Wenzel takes great comfort knowing JW is on his team on this issue.

    2. " stupid people do stupid thing with a new technology, therefore said new technology must be stupid"

      I can't believe I'm defending JW, but I don't see how he said any of the above quote. In fact, what you typed is a compete mischaracterization.

  3. "In truth, the gold standard is already a barbarous relic."
    John Maynard Keynes - Monetary Reform (1924), p. 172

    I give the same weight to Roose's prognostications as I do to Keynes'. They are cut from the same cloth after all.