Things rarely unfold the way we expect them to, especially when people adopt a dramatically new technology. Henry Ford didn't foresee McDonald's or suburbs; the Wright brothers could not have anticipated jet engines' huge carbon footprint. Two items featuring prominently in this month's news both illustrate how expectations can fall so far wide of eventual reality.
First, the hopeful premise of the World Wide Web seemed obvious: give more people access to more information and people could be make better decisions, ask and answer more questions, and generally interact more easily with knowledge. Coming from my PhD fact-chasing background, it was this version of the Internet -- massive, instant, free research library -- with which I fell in love. The world of avatars, multiple identities, and cyberspace as a replacement for physical people never really interested me, but it was in many ways the latter version, as it evolved, that won out.
Fast forward to Brexit, to the Trump campaign, to politics in both democracies and other systems. The Internet’s access to more knowledge doesn't, in general, make people more inquisitive or better informed, it makes them more tribal. I'm struck by Clay Shirky's insight from more than ten years ago that extreme, antisocial online behavior isn't a bug, it's an essential feature of massive virtual social systems. Old forms of authority, whether teachers, Miss Manners, or political parties, no longer hold as much sway. Humanity's basest instincts too often win out over reasoned debate, and I have to give Donald Trump and/or his handlers credit for seeing the opening that shift provided.
Trolling, defined as "antagonizing others by deliberately posting inflammatory, irrelevant, or offensive content," shouted out reasoned debate, which had been assumed as the democratic ideal. The Economist, founded in 1843, stated as its mission "to take part in a severe contest between intelligence, which presses forward, and a timid, unworthy ignorance obstructing our progress." Rather than seek out facts and reasoned opinion, many now instead define reality as what they like, and Facebook in particular has been assiduous in giving it to them, often to the exclusion of anything outside an algorithmic bubble.
Thing 2: Bitcoin began life in 2008 as a distributed payment system. In the words of the Bitcoin Foundation’s website, “Bitcoin uses peer-to-peer technology to operate with no central authority or banks; managing transactions and the issuing of bitcoins is carried out collectively by the network. Bitcoin is open-source; its design is public, nobody owns or controls Bitcoin and everyone can take part. Through many of its unique properties, Bitcoin allows exciting uses that could not be covered by any previous payment system.”
In terms of "everybody taking part," that feels true. There's an old saying attributed to J.P. Morgan, John D. Rockefeller, or even Warren Buffet. None of these have been authenticated, but Joe Kennedy (John F.'s father) did apparently utter something close: "It is said that he knew it was time to get out of the market when he received stock tips from a shoe-shine boy." Today, waiters, cabbies, various people on airplanes -- everyone seems to have an opinion (and apparently a position) in cryptocurrency. In a year the price soared from about $900 to $18,000, at which point there was a 20% drop, but the price is currently still in the 15,000s. That is not the behavior of a distributed payment system.
On the other hand, what _is_ the price a reflection of? Nobody really knows; Bitcoin is apparently decoupled from the financial system so is not correlated (positively or negatively) with any asset class, financial indicator, or other anchor. This statement from Angela Walch, who studies blockchain at St. Mary’s University School of Law, struck me as extremely astute. “I think it’s a bubble, but I also think it’s very hard to tell what the value of Bitcoin should be,” she said on the POLITICO Money podcast. “It could be zero dollars, it could be five dollars, or it could be a million dollars.” Showing how much I know, I called the Bitcoin peak back in the summer, so far be it from me to say it can't go up any higher, bubble or no bubble.
Thus we are living through an extreme unexpected circumstance: Even six months ago, it was impossible to predict people taking out home equity loans, betting their houses on a cryptocurrency the likes of which nobody has ever seen. The lure of the easy win, whether from stocks in 1929, Internet startups in 2000, or residential real estate in 2008, appears to sing its siren song once again. In an unregulated market in uncharted territory, that people will put their life's savings or more (at 20% interest) at risk for the "sure thing" is another illustration of how even savvy, technically brilliant people operating with few preconceptions could still see their creation veer in completely unexpected directions.