I think it was Baron Nathan Rothschild who used to answer the question “how did you get rich?” with “I always sell too soon”. That may not apply to Bitcoin early adopters, who are the subject of a fascinating piece by Brian Doherty. Doherty has long been a most passionate and capable historian of the libertarian movement (read his Radicals for Capitalism) and here he is writing perhaps a new chapter.


We will see with time how what has been hailed as Bitcoin’s institutionalisation, the fact that now you can trade futures on Bitcoin, will impact the prize. So far, a Doherty writes, the impression is that “you will always regret using Bitcoin”. The price has been and is quite volatile but you just have to think about this year’s performance (basically, it grew twenty times) to understand the reasons for regret.

Will it go on? Is there a genuine demand for Bitcoin, as millennials–and, indeed, the rest of us–will grow more and more impatient with a financial system that seems difficult if not arcane compared with the heftiness of the Amazons and Ubers of this world? Or is it just a mania? Libertarians and nerds tend to go for the first, members of the financial establishment for the second. This is indeed one of those cases in which all actors seem to follow their script meticulously.

Doherty’s piece has reminded me of Michael Lewis’s The Big Short. Lewis wanted to tell the story of odd people who, being somehow outsiders to the financial system, understood the housing bubble ahead of anybody else (see Arnold Kling on the point). I think that this gets a bit lost in the movie adaptation, but it struck me when I read the book. “The Big Short” is a plea to diversity, diversity of backgrounds, of methods, of views, which is essential for the process of price discovery to happen. Cryptocurrencies were a product of this diversity, well before the financial sector awoke to them. They were conceived, and used, and promoted by outsiders who knew more math than economics and whose economics, when they had one, seemed to be of the Austrian blend.

In the last few months, I have asked myself a number of times why in the world I didn’t buy Bitcoins when they were launched: I should have been enthusiastic about the idea, and I knew people who dealt in that trade. But I didn’t. Doherty’s piece healed my wounds by telling me I was hardly alone.

The article is instructive and well written. Read the whole thing.