Virtual currency Bitcoin is much-maligned, partly due to its shady history and its treatment as a trading commodity. However, with the dismantling of Silk Road and the collapse of Mt Gox, Bitcoin is no longer a mere play thing for drug dealers and fantasy gamers.
It has real potential as a means to conduct seamless and secure online transactions. Its role as a key player in our fintech future should be assured.
But in order to achieve this status, its price needs to stop fluctuating so wildly. The main cause of the Bitcoin roller-coaster has been speculation. Speculation has consequences.
In 1720, when the South Sea Company collapsed, Sir Isaac Newton famously quipped, “I can calculate the movement of the stars, but not the madness of men”. Newton was referring to the frenzied trade in South Sea Stock that had gripped England and her neighbours. The collapse of the South Sea Company was the first global financial crisis. When the bubble burst, Newton himself lost the equivalent of almost US$5 million.
In the months leading up to the scheme’s demise, Daniel Defoe published a pamphlet warning against too much speculation. What would these learned gentlemen make of our recent interest in Bitcoin? Newton