Bitcoin, which has turned everyone upside down, will be recorded in financial history

As the year draws to a close, if we were to select the asset with the largest increase in value in 2017, Bitcoin would definitely be on the list. It has risen 13 times from less than $1,000 at the beginning of the year to more than $14,000 at present, and even once hit the $20,000 mark.

Since its birth, people's views on Bitcoin have been extremely polarized: on one side are fanatical believers, and on the other side are people who keep issuing warnings but fail again and again. Bitcoin has continued to rise amid warnings, and its market value has expanded to the current $240 billion. If it is ranked together with the market value of US listed companies, it can be ranked ahead of Oracle, Citigroup, and Intel.

Why is Bitcoin so fascinating? Does it really have great value? In my opinion, there is no doubt that Bitcoin is worth zero, but why are some people who think that the Bitcoin bubble will burst soon, such as Jamie Dimon, CEO of JPMorgan Chase, ruthlessly slapped in the face by market reality? Of course, some people were skeptical about Bitcoin at first, but in the face of the rising market, they began to believe that Bitcoin has a bright future in the real world.

It is indeed a bit incredible that something as worthless as Bitcoin continues to be wildly sought after. To understand this problem, in my opinion, we can only start from behavioral psychology and put it in the dimension of financial history to see it more clearly. 170 years ago, an American named Charles McKee wrote a book called "The Great Madness: Extraordinary Popular Delusions and the Madness of Masses". This book collects more than a dozen extraordinary mass madness events in history, including financial events such as the tulip bubble, the South Sea bubble, and the Mississippi scam, as well as mass events related to religion such as the worship of holy objects and the Crusades, and even mass madness based on some inexplicable rumors.

These incidents have a common feature, that is, they involve a large number of people and last for a very long time, several years or even decades. Although there were voices of doubt at the time of the incident, they could not resist the momentum of the development of things. In addition, these cases have another common feature, that is, the causes of the incidents have distinct characteristics of the times and seem to be very creative.

Bitcoin is worthless. I have argued this many times and I don’t want to repeat it here. The reason why this worthless thing has fascinated people and made millions of people crazy is undoubtedly due to people’s herd mentality. This herd mentality is formed because Bitcoin has the common characteristics of the above cases: it is very creative, distinctive in the times, and directly points to the pain point of our time - the serious decline in the credibility of government currency. However, pointing out the problems of our time does not mean finding the answer to the solution, but in any case, hitting the pain point of the times has laid a broad mass foundation for it.

From historical cases, we can see that something that hits the pain points of the times, has a broad foundation, and is full of cool colors will never recede in an instant. It may last for years or even decades. Therefore, people who know something about history know that Bitcoin is worthless and will not easily predict when this mass madness will end. In fact, in terms of the importance of the subject matter and the fantasy of the appearance, Bitcoin is just better than the cases listed in the book "Mass Madness". Therefore, if someone wants to publish a supplement to "Great Madness: Extraordinary Popular Fantasy and Mass Madness" in the future, Bitcoin is fully qualified to be included as a representative case of the first 30 years of the 21st century.

(Editors: Chen Jian, Lai Yue)