We’ve all heard the buzz about bitcoin and the rise of cryptocurrencies and how cryptos are the money of the future. I’ve always been skeptical of that.
Last year when bitcoin hit $8,000 on the way up, I said in an interview that bitcoin “could go to $20,000” but it would crash after that. In fact, that’s exactly what happened in a matter of weeks after I gave the interview. Bitcoin went to $20,000 and has lost over 60% of its value since then. (By the way, my interview has almost 200,000 views on YouTube and over 1 million likes on Facebook — one of my most powerful and well-received forecasts yet).
Bitcoin is a technological dead end because of scalability and sustainability issues. But did you know there’s nothing new about new money? Folks have been inventing money forever.
During the Great Depression, there was such a shortage of money that small towns started using “wooden nickels,” or small wooden tokens as money. During recent fiscal crises in California and Illinois, those states started issuing “scrip” (state-printed IOUs) to pay their bills. The recipients could hold them until dollars were available or sell them at a discount in a secondary market for cash.
Written by the Nobel Prize winner Robert Shiller, this article describes the economic and social history of various kinds of new money invented by communities at particular times. All of these forms of money have died out, just as bitcoin will die out. There’s nothing new under the sun.
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