Like everyone who has a stake in the bitcoin, I contemplated this question long and hard. I assume people who doesn’t have a stake in the bitcoin wouldn’t be so effortful in thinking about this. Perhaps this already answer part of the question.
If it still didn’t convince you, allow me then, to make a business pitch to you, my esteemed reader. Here it goes:
We are a company that does nothing but growing grass. We are based in northern China and we expand by soliciting farmers to partner with us in growing this grass. This particular grass we are growing has nothing special to it, as its only use is to be used as feeds for the urm… pigs. (pigs don’t eat grass? I didn’t know that, but it’s not important. Please read on.)
The program is lucrative because it’s partly government sponsored (I won’t provide a proof). The market demand is high, and we are expanding at a unprecedented pace. That’s why we are soliciting investors to invest in our company. We are guaranteeing an annual 20% return quarterly. We can guarantee that because the grass grows very fast, they can be harvested each quarter. Because of the popularity of this program, we are limiting the investment of each person to $100,000 (psst, so you can bring friends). Won’t you’d like to participate?
I am absolutely certain you won’t. As no one in their right mind will believe such a crap.
But usually this pitch is not made by a stranger, but by a pretty close friend of yours, who’ve already participated the program and made their first or second quarterly gains (and reinvested them).
This pitch has been used and re-used in China, and never failed to collect millions of dollars from ‘innocent’ investors. Such pitches, along with other ridiculous business stories never failed to reach to willing ears with deep pockets. I have personally been solicited many times and observed my friends in China (especially older ages) to jump into this crazy schemes.
As you, my intelligent reader, may have already predicted, many people don’t get their money back. But this is not the end, as soon as another pitch comes up, these willing ears and deep pockets (albeit much shallower than before) again jumped into the fray.
I am utterly puzzled, as many of these friends by no means are stupid. They are successful business people who spent their entire lives building a honest and profitable business. So I interviewed with them to understand what made them do so.
They generally fall into one of the below two categories:
1. Housing prices, despite grew in many parts of China, have not gone up so much in cities other than the well-known metropolitans of Shanghai and Beijing. Most of these houses were collateralized to the bank and the owners of these houses wants to find a quick way to repay the debt.
2. A more compelling reason, they just can’t stand to see their friends making more money than they do, the peer pressure is too hard to stand.
That is why, investment scams has proliferated in China.
Not to equate bitcoin with the investment scams, but bitcoin does offer a chance to get rich overnight. This is also why the coins and its other smaller cousins have found its most fertile ground in China for its growth in value.
Now, back to the question in the topic. One can analyze bitcoin however they want, by doing the math of dividing the total wealth of the world by the number of coins, or argue that bitcoin is the new gold. The true reason, in my opinion, for bitcoin to shoot up to $16,000 was because nobody wants to be left out. It’s like everyone in your office bought the lottery and you didn’t participate, and you too want to join even you are supremely rationale human-being and once reasoned that lottery is a tax to the stupid people.
However, better than the lottery, bitcoin does offer a glimpse into the future. Perhaps it can be the new gold, perhaps everyone will include a portion of it in their portfolio. But so far, the price is telling us that only the people who are holding onto it now believes there might be such chances. Many of them are wavering. The people who don’t have a stake, are not too worried about it.
The only way for the bitcoin to shoot up to $16,000 again, is for people to start worrying about missing the train again. And the only way for the train to depart is for people to stake in more. A chicken and egg problem, unless a trigger of some sort occur. A trigger resembles what we had on the innovation of ICOs and forking, but must be of a whole new idea, and paints a bright future to all the classes of cryptocurrency. Such trigger is beyond my ability to imagine, and since I can’t imagine, I find its possibility to be grim. But as I’m still clenching my lottery ticket in my sweaty palm, I do take the guilty pleasure of letting my imagination run wild sometimes.