One of the earliest chapters in my Panic, Prosperity, and Progress book is about the South Sea Bubble. I know I’m not the first chap to compare the insane Bitcoin bubble (which is rapidly deflating) with South Sea, but I am truly struck by the similarities. Here’s what happened with South Sea, four centuries ago………(the notations about Newton relate to Sir Isaac Newton’s own investing losses with this “security”:). I’ve put an arrow approximating where I think we are right now with respect to the Bitcoin analog………
And here, in the modern age, since we’ve all learned so much, is Bitcoin:
So the virtual currency is now down about 60%. I’m sure many of you remember when Bitcoin reached parity with gold. Ummm, I daresay those holding on to gold are more content with their shiny little coins than those who have shiny little binary digits floating aroud in cyberspace (that is, unless they get Mt. Gox’d).
