The Bitcoin Paradox

Bitcoin may not be a financial bubble. But, when Bitcoiners reject inconvenient information, it is an epistemic bubble.

AccessTimeIconJan 27, 2021 at 5:22 p.m. UTC
Updated May 9, 2023 at 3:15 a.m. UTC
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“There's none so blind as those who will not listen." - Neil Gaiman, "American Gods"

In a recent piece for Coin Geek titled "The BTC bubble will pop soon," the journalist Patrick Thompson writes: “the digital currency market bubble is coming to an end; some believe that the markets have one pump left before a major decline, but regardless, the end is near.”

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  • J. Mac Ghlionn is a performance specialist currently based in Asia. He is obsessed with all things crypto, from amnesia to currencies.

    You heard it here, folks. The end is near.

    But wait, haven’t we heard this all before? Yes, hundreds of times. In fact, as I have written elsewhere, Satoshi’s brainchild has died some 400 times since its inception. Jesus supposedly rose from the dead once, but the man from Nazareth has got nothing on bitcoin.

    You see, bitcoin is not a bubble, it’s a pin. It’s the answer to the question of how we, the people, combat financial mismanagement and fiduciary negligence.

    Then again, it is a bubble. I call this the Bitcoin Paradox. Let me explain.

    2020 was the year bitcoin went institutional. In November, for example, Ruffer, the British-based juggernaut, declared that it had invested more than $700 million in bitcoin. The move, according to a Ruffer statement, was a “protective” one, a hedge against monetary inflation. 

    Inhabitants of epistemic bubbles are only interested in accessing information that reinforces already existing beliefs.

    More recently, BlackRock, the world’s largest asset manager, joined the world of crypto, authorizing two of its most valued funds to invest in bitcoin futures. With more than $7.8 trillion under management, the BlackRock move may very well help elevate bitcoin to the next level. So, as you can see, 2021 is very different to 2017, when cries of "bubble" were more understandable.

    In 2021, cries of "bubble" are still reasonable. Not because bitcoin is a financial bubble but because it is an epistemic one. 

    Epistemic bubbles involve individuals accessing information in a heavily biased manner, greedily accepting what they want to hear, and ignoring anything distasteful, no matter how accurate the evidence may be. 

    In a nutshell, inhabitants of epistemic bubbles are only interested in accessing information that reinforces already existing beliefs. Once gas issues are resolved, Ethereum has the potential to displace Bitcoin. It’s younger, fresher and possesses huge potential, possibly more potential than Bitcoin can ever hope to possess. Some prominent Satoshi devotees, or Satoshees, refuse to accept this very fact. 

    As the author Haziq Ariffin warns: “Epistemic bubbles can be damaging. The people we surround ourselves with tend to be like-minded, so our world gets highly filtered and falsely appears to confirm everything we believe. This, in turn, causes us to raise our confidence in our beliefs each time others around us express agreement. … But it shouldn’t.”

    It’s easy to see why. After all, we are in the midst of bitcoin mania, a deeply psychological phenomenon. Symptoms may include unreasonable levels of euphoria, volatile moods (thus reflecting the crypto market), hyperactivity (again, reflecting the crypto market) and delusions (sometimes reflecting the crypto market).

    Jesus (yes, another Jesus reference) spoke about the dangers of false prophets. Though he never commented on crypto, one assumes he would warn against misplaced confidence. 

    A rational bitcoiner will remove herself from the bubble, at least temporarily, and examine the situation.

    Right now, bitcoin is in a real position of power, but power is intoxicating, and intoxication can impair judgement. If in doubt, just ask Mel Gibson.

    A king, no matter how powerful, must always be aware of one simple fact – others are always vying for his seat. As George R.R. Martin wrote, “The Iron Throne will go to the man who has the strength to seize it.”

    That “man” appears to be Ethereum. Of course, many a Satoshee will scoff at such a statement. However, contrary to popular opinion, ignorance is not bliss. Competition exists. A rational bitcoiner will remove herself from the bubble, at least temporarily, and examine the situation. 

    There is every possibility that Ethereum and Bitcoin can co-exist in a crypto-infused Shangri-La. Then again, there’s a chance – a slim one, but still a chance – that Ethereum will dethrone Bitcoin. Failure to accept this possibility could prove to be fatal. Epistemic ignorance never ends well.


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