(Mostly) Believe The Bitcoin Hype

According to Mt. Gox Bitcoin hit a high of $900 in the past few hours, something that even the frothiest of supporters will agree is ludicrous. This is a bubble and it won’t be pretty when it pops. That said, I would argue that Bitcoin bullishness is fine but ignores the platform’s potential as a weath transfer medium. In short, what is happening now is indicative of a level of interest that will rocket the BTC out of the realm of cranks, goldbugs, and hobbyists and into something far more powerful.

Bitcoin, in short, is a money transfer platform. Call it a currency, call it the next stage of economic evolution, but in the end it’s a shared hallucination (like all currencies) that affords us the possibility of instantaneous, anonymous money transfer. This is massively important. The entrenched banks see it as a grave danger and governments clear understand the potential for, by their definition, abuse. But the average human on the planet – the kids sending money to their parents back home, the traders who can now perform instantanous transfers right at the marketplace, the small businesses who can avoid credit card charges – at the very least understands the power of a free, open platform for wealth transfer.

Why is China so excited about Bitcoin? Well, there is a certain madness of the crowds aspect to it – as Stan Stalnaker notes at CNN there was a similar run up in QQ, a virtual currency created by Tencent – but it also enables a certain amount of freedom and is poised to be a valuable instant value-transfer platform in commodities and small transactions. Swiping a credit card at the wheat market in a developing country is hard to do. Sending a text message connected to a Bitcoin transaction is easy.

This run up, however, is ridiculous. Without a stable, non-fluctuating price Bitcoin is worth no more than a tulip bulb in a Dutchman’s purse. There are endless Bitcoin defenders who will say that we’re seeing the currency finally coming into its own. They’re wrong. At this point we’re looking at pure speculation. There is value there, to be clear, but it’s not in the exuberance we’re currently seeing. It’s in the value of Bitcoin as a liberator, as a change agent, and as the world’s first open, international, and usable cryptocurrency with world-wide adoption.