The latest bubble invites comparisons with past financial manias
“BE MORE BRENDA,” said the ads for CoinCorner, a cryptocurrency exchange. They appeared on London’s Underground last summer, featuring a cheery pensioner who had, apparently, bought some Bitcoins in just ten minutes. It was bad advice. Six months earlier a single Bitcoin cost just under $20,000. By the time the ads appeared, its value had fallen to $7,000. These days, it is just $4,025 .
Consider the overstatement of activity, first. Ten years after their invention, using cryptocurrencies to pay for goods and services remains a niche pastime. Bitcoin is the original cryptocurrency and still the most popular. In January Satoshi Capital Research, a cryptocurrency firm, declared that Bitcoin transactions in 2018 totalled $3.3trn, more than six times the volume handled by PayPal.
The second problem is that the technology is too clunky to operate at scale. Cryptocurrencies are unlikely ever to achieve mass adoption, says Nicholas Weaver, a computer scientist at the University of California, Berkeley. Unlike Alipay or WeChat Pay, cryptocurrencies are intended as new financial systems rather than extensions to the current one. But they have serious design flaws.
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