We know that if you voted for Trump, you are more likely to be less intelligent, less educated, poorer and more rural. I will argue that this leads to a further feature — distrust of experts — which is required to be a supported of either Trump or Bitcoin. This suggests that the Bitcoin Crash will kill the Trump demographic.
Note that I said “more likely to be …” We are talking about two curves here. It is not certain that you are less intelligent and poorer etc. It would not be an objection here to say “I have a PhD and I am rich and I voted for Trump.” To say that would be to commit the Anecdotal Fallacy, which I argued yesterday is also a major feature of the Bitcoin bubble.
Only Amateurs Do Not Expect a Bitcoin Crash
One of the notable points about Bitcoin is that there are no professional, experienced or institutional investors who have invested in Bitcoin. If that changes, we should all become seriously concerned.
Everyone who holds Bitcoin is an inexperienced amateur. I put this to a Bitcoin enthusiast, and received the following reply.
Mark Cuban invested big into Unikorn. Peter Thiel invested into bitpay which is a wallet company. Mike Novogratz (former president of fortress investments and partner at Goldman Sachs) runs Galaxy Investments (almost exclusively crypto). Tim Draper bought 30,000 btc in 2014. And Bill Gates: there are no definitive articles on how much BTC he holds but he has plenty of quotes talking about how it’s the future
I will now show why none of that works.
Mark Cuban and Unikorn
The first point to make here is that it is odd to cite Cuban here since he is on record as saying that Bitcoin is a bubble. The other problem is that Unikoin, the token involved in this ICO, is not Bitcoin. (I also believe that almost all of the other ICOs are fraudulent, but I would need a lot more space and time to show that.) Finally, Unikoin will apparently permit sports betting, so while I do not recommend that, it at least has a theoretical source of value. Bitcoin does not.
Novogratz and Galaxy Investment Partners have invested into the huge and under the radar Worldwide Asset eXchange (WAX). This is like selling shovels to miners in the Klondike gold rush. (Reportedly, Trump’s grandfather ran a Klondike brothel.) Selling shovels is a great business to be in, irrespective of how many of the miners or Bitcoin holders go bust. So this again is not an example of a major investor holding Bitcoin.
Tim Draper and 30,000 btc
This is the only one of the examples which approaches being serious. We must take it seriously because Draper reportedly invested serious money: $18m. And he is actually holding Bitcoin as opposed to backing exchanges. The caveats though are manifold. First, he lost 40,000 Bitcoin in the Mt Gox fraud, and the fact that this did not give him pause makes me think he is an esoteric thinker. Secondly, a lot of his remarks concern enthusiasm “for the technology”. It is very important to keep a clear distinction between Bitcoin — a Ponzi scheme — and the block chain — a very interesting technology. Thirdly, this is one man against every investment bank, hedge fund, regulator and all the other expert investors in the world.
Discrediting Experts as Diagnostic
I have in fact been told that my 20 year experience of successful investing is a disadvantage, because it means I am unable to understand the “glorious opportunity” allegedly represented by Bitcoin. There are in fact some advantages to disadvantages, as I argue in my new book:
— but that isn’t one of them.
Bill Gates and the Bitcoin Crash
This is an excellent example of muddled analysis and poor understanding of the importance of precision and sourcing one’s quotes from reputable sources. (It is no coincidence that Bitcoin supporters and Trump voters alike disparage proper news sources like the New York Times and prefer websites with manufactured quotes.) We are not actually given a quote from Gates which is the first problem.
But secondly, it is highly likely that even if Gates thinks the blockchain is the (part of) the future, he is not holding any sizeable numbers of Bitcoin. Why would he? He does not need to to look at blockchain technologies and he knows that a Bitcoin crash is inevitable.
A distributed transparent ledger, which is what the blockchain is, is indeed a highly interesting piece of technology which would have many very useful applications. As just one example, imagine replacing property registers with blockchain. Myriad opportunities for money laundering and corruption would disappear, and be replaced with an efficient technology. The fact that Bitcoin is also built on the blockchain is irrelevant.
Conclusions: Bitcoin Crash Will Kill The Trump Demographic
So none of the arguments described above succeed. They do nothing to deny that the Bitcoin Crash will kill the Trump demographic.
People in this country have had enough of experts
This is actually a quotation from a pro-Brexit politician, but we see the same pattern across the Brexit “debate,” in Trump vs Clinton, in global warming and in MMR Vaccine/autism. In each case, you need to believe that you are right and anyone educated or with specialist knowledge is wrong. You also need to believe that those people are lying to you — for no obvious reason.
The quality of the arguments raised by Bitcoin proponents can be seen to be extremely poor.
So now you can decide. If you invest in Bitcoin, you are lining up with the people who mistrust experts. If you voted Trump, you did the same thing, because you are probably a climate change denier. So I think there is a very strong likelihood that many Trump voters are also holding Bitcoin.
And they are going to pay a heavy price for both decisions. The only thing that will save them somewhat is they are poor. So they won’t lose that much in absolute terms. But it might still be a lot for them.