Bitcoin…does the South Sea story repeat itself?

A headlong increase in demand for Bitcoin makes us think about what will be if… A positive result is surely not excluded, but the history of finances knows a different outcome, too. So far the cryptocurrency has been acting by the script, which once worked for the South Sea bubble. Let’s see what these two historical moments have in common and how much longer we will be able to safely exchange dollars to “coins” without worrying about the next day…

The South Sea bubble (England) had been growing in size for 9 long years before it popped and destroyed grandiose plans of over a hundred of companies speculating on the London Stock Exchange. Although many people would anticipate something to occur later, hardly anyone (except direct speculators) could consider a sudden and sad end as that “something”. Bitcoin needed much less time to add its story to this script.

The pushing dynamics of Bitcoin (the blue curve) and the South Sea stock (the red curve) prior to the today’s peak are as follows:

Then let’s look at the growth speed of the speculation wave concerning BTC and SS stocks at an equal 8-month distance. In this period, a noticeable increase in activity is recorded on both cases. Bitcoin leaves its prototype far behind…

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…Now we can observe the most interesting thing. Speculations with Bitcoin are at high pitch (only today its price has exceeded $800 again) while companies operating on the stock exchange by the SS principle collapse. If the story repeats itself, few people (of those, who bought bitcoins at the peak) will win:

One way or another, the history can repeat itself in some points, it’s a fact. But after each symbolic event has been taken place (in particular, after the economic crisis), nothing can follow just the same way as before. Everything starts with the realization of the past and the acceptance of the present. Our present reality is that paper and coin money is slowly substituted with “the currency of modernity”. So, Bitcoin is to exist!

I’d like to draw thematic conclusions of today’s arguments with excerpts from the most exciting novel called Galapagos (1985) by “later” Kurt Vonnegut:

The thing was, though: When James Wait got there, a worldwide financial crisis, a sudden revision of human opinions as to the value of money and stocks and bonds and mortgages and so on, bits of paper, had ruined the tourist business not only in Ecuador, but practically everywhere…

Ecuador, after all, like the Galapagos Islands, was mostly lava and ash, and so could not begin to feed its nine million people. It was bankrupt, and so could no longer buy food from countries with plenty of topsoil, so the seaport of Guayaquil was idle, and the people were beginning to starve to death…

Neighboring Peru and Columbia were bankrupt, too…Mexico and Chile and Brazil and Argentina were likewise bankrupt – and Indonesia and the Philippines and Pakistan and India and Thailand and and Italy and Ireland and Belgium and Turkey. Whole nations were suddenly in the same situation as the San Mateo, unable to buy with their paper money and coins, or their written promises to pay later, even the barest essentials…They were suddenly saying to people with nothing but paper representations of wealth, “Wake up, you idiots! Whatever made you think paper was so valuable?”

The financial crisis, was simply the latest in a series of murderous twentieth century catastrophes which had originated entirely in human brains. From the violence people were doing to themselves and each other, and to all other living things, for that matter, a visitor from another planet might have assumed that the environment had gone haywire, and that people were in such a frenzy because Nature was about to kill them all.

But the planet a million years ago was as moist and nourishing as it is today – and unique, in that respect, in the entire Milky Way. All that had changed was people’s opinion of the place.

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