Good afternoon everyone. As an owner of a website, and a person who does a lot of social commentary, people ask me about a number of issues. Some days, I get historical questions, and other times I get a question more along the lines of a political issue.
On my Polite on Society Facebook page last week, I shared a story about Bitcoin, writing above the story “fictitious capital?” Doing that, prompted a reader to ask me what I thought about the Bitcoin craze.
I’ll give my answer here. First, to be precise, let’s define fictitious capital. Fictitious capital is a Marxist term to describe capital that is invested on goods that are not actually produced. Its based on the expectation of growth, and not tied to actual production.
When a market is based on fictitious capital, it’s susceptible to a lot of speculation, and when it’s found that much of it is overvalued, it means that a correction is due. These corrections often come in the terms of crashes.
Bitcoin is a cryptocurrency that is decentralized. Keep in mind, that we’re coming up on the ten year anniversary of the 2008 financial downturn, and the traditional banks supposedly had restrictions on them. The dangerous thing about when bubbles burst, they are so intertwined with the real economy, that everything suffers.
The housing bubble burst destroyed a lot of people’s livelihoods, and for the most part, we’re still in that economy. At a time where wealth is consolidating, and the upper class is using the politicians to facilitate a transfer of wealth through tax cuts they don’t need, people should be suspicious of financial bubbles.
In particular, yet another aspect of the craze has provoked my suspicions. I see a number of people who promote financial literacy in the Black community encouraging us on the whole to buy into the Bitcoin craze. Some say that it will be the beginning of a solution to the racial wealth gap. I’m not sure about that. A decade ago, the banks pushed home ownership on the Black community, and when that bubble burst, so many of us were left holding an empty bag.
So, you’ll pardon me if I am a tad skeptical about all of this. So here’s my answer in full. What do you think of all of this my readers? Do you think that Bitcoin is worth all of the hype?
Your thoughts are welcome in the comments.