Understanding Bitcoin Part 2: An Evolutionary Monetary Response to Calvinball Finance

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Those who think that after the Bitcrash the crypto-currency is headed for zero are as mistaken as those who thought it could continue its meteoric ascent forever. The stunning run over the past few months was a bubble, few can deny now. That bubble has probably popped, and as I said in Part 1 yesterday, that would be a good thing for the currency itself.

Bubbles can sometimes end with the underlying asset going to zero, but most of the time they just crash back to earth, often overshooting to the downside before settling in a nice, long basing action that can go on for years, or even decades.

It will be better for Bitcoin and what it represents to get this bubble business out of the way sooner than later. This isn’t entirely unexpected and was discussed among the Bitcoin community years ago.

Things just don’t “go away” after a bubble pops. Gold certainly hasn’t, ever and it especially did not go to zero or become irrelevant on Jan 22, 1980. One could arguably make the case that the Internet itself didn’t get truly interesting or genuinely useful until after the Nasdaq crashed and cleared out a lot of the useless cruft. Similarly when the housing bubble popped living in houses did not become obsolete overnight.

So it is with Bitcoin, because contrary to what numerous mainstream pundits are pontificating, Bitcoin is not akin to a ponzi that will to zero, Bitcoin is a real, honest to God game changing response to what I have previously called “Calvinball Finance“.

The dots that people are failing to connect are the underlying drivers that launched Bitcoin into mainstream media prominence and parabolic price action over the last few weeks and can be summed up in one word:


The bankster bail-in revealed for all to see that sovereign governments and their cronyist bankers are insolvent, over leveraged and desperate to  keep the global finance game afoot. First the bail-in was a tax, when that didn’t fly it was suddenly deemed to be a capital restructuring, any facade of “rules” were thrown out the window and it became clear to all that the IMF, the ECB et all were simply making it up as they went along.

Depositors who were not politically connected enough to be allowed to spirit their money out of the country even during the banking holiday were gratuitously raped, and then the admissions were made that what had just happened, and stunned the world in horror, was actually a “template” of what would come in the future, next time it happens.

The template even shot across the ocean and showed up in the Canadian budget for next year – provisions that “certain liabilities” could be “rapidly converted” in the “unlikely event” that one of the Big Banks needs to be recapitalized. (In case you were wondering what “certain liabilities” are, be aware that your savings in the bank are most certainly “liabilities” to the bank.)

When you look at the hockey stick graph for the Bitcoin price this year, you’ll note that the Cyprus bail-in occurred right where the hockey-stick turns, and the revelation that this was a template for “the new normal” was when it quite literally blasted off:

We can also see via Google trends how searches on bitcoin crossed over searches on Cyprus as the horrific realization sunk in that “all bets were off” in terms of being able to expect the governments of any welfare state worldwide to play by what used to be “the rules”, and that new rules were simply being made up on-the-fly.

Golden Crossover: searches for Bitcoin vs Cyprus in the wake of the Bail-in and D-Boom “template” declarations.


In other words, the explosion in Bitcoin awareness and price was the market coming to understand that politicians and banksters were not operating to uphold any semblance of rule of law or contract obligations, but were simply doing whatever it took to save themselves, their cronies and decreeing any measures employed to be “legal”.

With Bitcoin, you can’t do that. Nobody can.

In part three I’ll explain why with Bitcoin it really is different this time (I’ll bet you can’t wait to hear that one)

Next: Understanding Bitcoin Part 3: Game-Changer. Why This Time It Really Is Different


One response to “Understanding Bitcoin Part 2: An Evolutionary Monetary Response to Calvinball Finance”

  1. […] is the third article in my introductory exploration of Bitcoin here on Wealth.net. Part 1 and Part 2 were written in the wake of the big Bitcrash and it is interesting to observe that rather than […]

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