#Optimism

Of all human characteristics, optimism has to be one of our best. In optimism there is hope, ideas, innovation, experimentation, failure, learning, confusion, mystery, and all kinds of other cool stuff.

Optimism lies deep in the core of our human operating system. It’s part of our initial boot-up routine. We are curious, initially accepting, trusting and eager to add to and improve our surroundings. We are, as they say in the military, standing tall and leaning forward. Who would want it any other way?

This isn’t to suggest that optimism alone guarantees a positive results. Karl Marx had an idea which, even though terribly thought out, created considerable optimism among followers, leading to horrific disasters. We do need to be careful when applying optimism. We have to be truthful, candid, thoughtful, self-critical and above all, we must insist that our conclusions are right. When we are wrong in our beliefs people get hurt, so we need to be tactful yet at times brutally honest.

Because optimism is so cool we are inclined to get over our skis a bit. That is, we allow our optimism to lead us into conclusions which are not supported by the evidence of reality. We may get over-extended and make foolish decisions. Unchecked optimism can lead us beyond what is effective or safe, into the domain where learning happens. The good news is that such learning is meaningful and recoverable. We make new decisions, adjustments and modifications to where eventually things tend to work out OK.

Optimism is the high-octane fuel that propels technology. We have to be optimistic that people will use technology, otherwise why bother? Occasionally we can get caught up in the inertia of what we believe along with others, into a place beyond where markets are capable of absorbing. It is in here where what we call “bubbles” emerge. Bubbles are scary, painful, embarrassing, complicated, educational and wonderful.

#Bubbles

The image of a bubble in economics is pejoratively misleading. The term “bubble” suggests a thin, translucent membrane around a pocket of air, which when popped disappears without a trace. The bubble was created and disappeared as if nothing happened at all. There was no benefit, no outcome, no beauty, no enjoyment, just nothing. But we know this is not the case when applied to financial commodities, currency, real estate, and bitcoin. Here, when bubbles emerge and pop, we still have the item around which the bubble developed. Additionally we have a lot of new learning, greater understanding, and more attention. Bubbles are blown into existence by the wind of optimism, and that’s OK. This is not to minimize the pain they might cause, but that that pain is not without benefit.

One challenge we can wrestle with is, can we acquire the learning we need without the bubble? I don’t think we can. Just think about how hard it is for people to get your attention and for you to get the attention of others. We’re busy and bubbles require a lot of thinking on either how to avoid them, or how to benefit by them. It’s just not going to happen that we can learn what we need to learn without some effort and pain, and it’s the pain that gets our attention to learn.

#Bear #Markets

The world on the other side of Bubbles are called Bear Markets. This too is misleading. We cannot help ourselves but to apply value attributes to these terms or conditions. That is, Bull Markets are good and Bear Markets are bad. In reality, the attribute of good or bad when applied to markets is more a function of one’s subjective time horizon and what you plan on doing. The issue of good or bad as applied to any market condition is derived individually, and collectively based on what we plan on doing, out side of that, it has no material meaning.

A good side of bear markets is what it tends to do to our thinking, that is, we finally do some. Bear markets change our focus, it’s a breather, a time to look more broadly into what is going on. Bear markets introduce the most powerful tool available to humans, humility. When financial bubbles pop, its first casualty is arrogance and that is a GREAT thing.

#Bitcoin

It’s difficult to add to the bitcoin story something that hasn’t been said before, and perhaps this is no exception. Still, what matters here is that the reader think about it a little first.

Bitcoin is unique among a hand full of innovations in anyone’s lifetime in its ability to reward the curious over the well-connected. Bitcoin insists upon your attention and demands your concentration and your patience. There is one thing for certain, BITCOIN IS A BIG DEAL, for reasons that are simple and personal.

Imagine you lived in Venezuela all your life. You went to school there, developed advanced skills and were able to make sufficient money for you and your family. Imagine still that by way and personal sacrifice, you were also able to save, and to your delight you were able to save 2,600,000 million Bolivars. Recently as 2008, this would have been equal to $1,220,000.00 in U.S. dollars. You are grateful and happy indeed. You now think you can help your entire family, including grandkids, extended family, all is good. So where would you be today?

In a matter of a few years, a lifetime of work and savings has been erased. Notice that the Bolivar is still there, all 2.6 million of them, but their value has been stolen. The value of your hard work has been stolen, and no one even fired a shot.

This is how governments who promise more than they can deliver and are able to tax you without your permission, and often without your awareness.

This isn’t conspiracy stuff. We’ve seen this movie before. We know all too well how it plays out. In addition, this movie will play again and again as long as people are forced to use currencies controlled by the governments in which we live. Now there’s Turkey, perhaps next, Italy, Spain or Greece.

The broader story here is not what Bitcoin is, but rather what Bitcoin does, and here is where things get interesting.
Bitcoin means that options exist where previously there where few. It means that choices exist for anyone willing to invest a little time. It means we have an opportunity to protect the value of our labor which we have not had for a very long time.

Bubbles arise from our optimism, Bear Markets, like a long summer storm gives you permission to stay home, think and read. So in the end for Bitcoin we are right where we need to be, just buckle in.