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On the money

Crypto’s collapse will leave nothing but pain behind

The Tulip Folly by Jean-Léon Gérôme, 1882

“Investment bubbles get a bad rap,” says Merryn Somerset Webb in Bloomberg. Yes, investors lose a ton of money, which sucks for them. But everyone else gets to benefit from advances in whatever the bubble was in. The “bicycle bubble of 1896” literally paved the way for automobiles because it led to a massive improvement in road quality, making cars a viable mode of transport. The railway bubble in the 1840s gave us a network of train tracks; the dotcom bubble yielded “the infrastructure for the modern internet”. Even the “much-maligned” 1630s tulip bubble in the Netherlands focused artistic attention on floral displays, leading to some “rather fabulous paintings”.

Alas, the crypto bubble appears to be an outlier: one that, when it bursts, “leaves nothing but pain behind”. Try to imagine a world “without Bitcoin, Ethereum, Ripple, Litecoin” and the like. It’s pretty easy. Digital currency isn’t embedded in our lives: we don’t use it to buy our groceries; it’s not in our pension; there’s no obvious problem in life that it solves. Crypto true believers insist it’s a hedge against inflation – but UK consumer prices are up 11.1% this year and Bitcoin is down 62%. Some hedge. If, or when, the whole thing comes crashing down, there’ll be nothing left but burnt investors. “No bulbs, no bikes.” Not even a pretty painting.