Bitcoin isn't the bubble — the global financial system is

Bitcoin isn't the bubble — the global financial system is
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Pretty much every article you read about bitcoin in the mainstream press ends up in the same place. You may not hear it until the seventh or eighth paragraph, but eventually you’ll be told that the whole thing is nothing more than a modern day "tulip bubble." The more creative types will also throw around the South Sea or Mississippi Bubble. You get the point. The consensus among the very smart experts is unanimous: bitcoin is clearly and indisputably a gigantic bubble that’s set to burst. I’ve been hearing this since the early days of getting involved in the space back in 2012. But I’m not convinced.

For one thing, bubbles don’t do what bitcoin has done since its inception in 2009. During my 10-year tenure on Wall Street, I saw several bubbles grow and then burst, and one thing you learn is that an actual bubble rises like crazy and then totally pops. It doesn’t come right back a couple of years later and soar again to a new price 10 times greater than the previous bubble's high, which is what bitcoin has done after each one of its three or four previous “bubbles” burst.

That’s not a bubble, but something else entirely.





Therein lies the crux of the issue. Bitcoin and the crypto asset ecosystem it spawned seem to be a logical reaction to our zombified financial system, which itself is built upon the shaky foundations of a gigantic debt bubble. The rise of bitcoin foreshadows the emergence of something potent and new in the realm of money and finance, which also happens to be something the world desperately needs.

Central Banks might be able to keep interest rates artificially low if they continue to aggressively buy government debt, but they can’t stop innovation or prevent millions of people across the world from moving into a different paradigm. The longer the zombie financial system is kept afloat, the more people will want to opt out of it and into a voluntary, decentralized alternative that’s far more ethical, transparent and permissionless. This desire for something distinct has been the driving force behind Bitcoin adoption since the very beginning.

That’s not to say there isn’t bubble behavior going on in the broader crypto asset space at the moment, there certainly seems to be. Rather, it’s to say that reflexively calling Bitcoin a bubble because you don’t like it, or don’t understand it, is missing the much bigger picture.

The real bubble is larger and far more dangerous, and it lies at the heart of the global financial system. If anything, bitcoin and other crypto assets are merely providing an escape hatch from this legacy system, while simultaneously offering an opportunity for a better and more decentralized future.

Michael Krieger (@LibertyBlitz) is a former commodities analyst for Sanford C. Bernstein and former oil analyst in the Equity Research Department at Lehman Brothers. He completed a degree in economics from Duke University.