“Rock & Roll? It will be gone by June” — Variety Magazine, 1955

Why Bitcoin is far from dead and why we suck at predicting the future

Photo by Joseph Pearson is licensed under CC BY 2.0

Tell anyone in 1983 that the two-pound behemoth you just bought called a “cell phone” would one day revolutionize the way we communicate and you’d probably get laughed out of the room. But at least then you’d be able to go outside and make a call — at the time, cell phones didn’t even work indoors.

Little did they know.

Hindsight is 20/20.

In retrospect, everything seems obvious. Of course in due time the tech will advance to mitigate most of its early shortcomings while mass manufacturing brings the price down twentyfold. So why are even, like, really smart people terrible at making predictions?

The unsatisfying answer is that it’s almost impossible to tell where trends are moving. And even if you’re able to see a few years into the future, that tells you almost nothing about what will happen in a decade or two. Almost 25 years went by between Motorola releasing the world’s first commercially available cell phone and the first gen iPhone coming out in 2007 — long enough for Lunchables to be invented, the era of grunge music to come and (thankfully) go, and for Hulk Hogan to stay exactly the same.

To complicate matters even more, almost every popular, innovative product in the world today has a story about how at one point or another it almost went bust. Like how in the late 90s Apple was a few short months away from bankruptcy or the fact that FedEx only survived because its founder took the company’s last $5,000 and quadrupled it playing blackjack in Vegas.

Don’t listen to the naysayers.

Now fast forward to last November: you’re sitting at your family’s Thanksgiving table, depressed you didn’t invest all the money you made selling lemonade as a kid into Apple stock and your uncle is going on about something called Bitcoin. People have already made millions investing in it and its price continues to grow exponentially.

But you weren’t born yesterday and it all sounds a little too good to be true. After all, no one knows who invented it, it’s not backed by anything real and quite frankly, it kind of sounds like a scam. So you don’t invest. You wait a couple months, Bitcoin’s price plunges and all your fears seem to be confirmed.

This scene played out in one form or another with millions of people all over the world. Bitcoin and cryptocurrencies in general went from relative obscurity to being in the center of the public arena in less than a year. By the end of crypto’s historic bull run in January, popular publications were running front page stories about cryptocurrencies and they even made a cameo on The Big Bang Theory. And then, as quickly as they launched into the pop culture stratosphere, they came crashing back down and have remained quiet ever since. But just because you don’t hear much about cryptocurrencies on CNN anymore does not mean they’re dead — in fact, they’re more alive than ever.

Photo by Freddie Collins is licensed under CC BY 2.0

Crypto markets are subject to the same fundamental laws of supply and demand as every market in history. If you think about it like a seesaw, with demand on one side and price on the other, as more people get on the demand side the price gets higher and higher. But when everyone suddenly jumps off, the price shoots back towards the ground.

But the point here is that a market crash does not mean cryptocurrencies are dead.

Just because people don’t want to buy them right now does not mean they’re not valuable. To adapt a metaphor from Benjamin Graham: If you own a bakery that sells your grandmas delicious chocolate chip cookies and one day no one comes in to buy them, the value of the cookies hasn’t changed. They’re still the same delicious, perfectly baked slices of your childhood they’ve always been.

Likewise, cryptocurrencies don’t lose value just because the price fell or just because some guy on Facebook with a Lynyrd Skynyrd t-shirt and a trucker hat says so. In fact, they’re picking up momentum almost daily. The popular investing app Robinhood recently launched its long awaited crypto trading app while NASDAQ is talking about becoming a cryptocurrency exchange of their own. Individual coins are also seeing massive success partnering with giant companies like Volkswagen for future projects.

Bitcoin is far and away the most popular coin out there and represents the lion’s share of crypto’s total market cap; it’s probably the only one your mom has heard of. It was first released in January 2009 and opened the floodgates to the thousands of coins out today. But even for being the first cryptocurrency ever, it’s only been out for a measly 9 years, 8 of which were incredibly niche. While technology moves fast, adoption moves slowly. Slowly, but it moves. I can’t tell you to cash out your 401k to buy Bitcoin or when it’ll be a success (if ever), but don’t underestimate a good comeback story or be surprised when it happens. Oh, and ask your grandma to bake you some more cookies.