Jan 16, 2018
Cryptocurency: Thoughts on a “Korea Krash”
Posted by Philip Raymond in categories: bitcoin, cryptocurrencies, economics
If you are reading this on January 16, 2018, then you are aware that Bitcoin (and the exchange rate of most other coins) fell by 20% today. Whenever I encounter a panic sell-off, the first thing that I do is try to ascertain if the fear that sparked the drop is rational.
But what is rational fear? How can you tell if this is the beginning of the end, or simply a transient dip? In my book, rational fears are fundamental facts like these:
- A new technical flaw is discovered in the math or mining
- A very major hack or theft has undermined confidence
- The potential for applications that are fast, fluid and ubiquitous
has dropped, based on new information*
Conspicuously missing from this list is “government bans” or any regulation that is unenforceable, because it fails to account for the design of what it attempts to regulate. Taxes, accounting guidelines, reporting regulations are all fine! These can be enforced. But banning something that cannot be banned is not a valid reason for instilling fear in those who have a stake in a new product, process, or technology.
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