Noah Smith, Columnist

Crypto Cynics Stand to Profit the Most

Bubbles look like a uniquely predatory financial phenomenon.

February 8, 2018 at 1:00 PM UTC

Noah Smith is a former Bloomberg Opinion columnist. He was an assistant professor of finance at Stony Brook University, and he blogs at Noahpinion.

Are they really believers?
Photographer: Christopher Goodney/Bloomberg

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Welcome, dear average American, to the lovely world of unregulated retail finance. Perhaps you’re young enough that you missed the tech-stock housing bubbles. Perhaps you didn’t have enough cash to “flip that house” back in 2006. Well, thanks to the invention of cryptocurrency, there’s a whole new way for you to lose your life’s savings.

Plunges in the value of cryptocurrencies like Bitcoin and Ethereum have sent about $400 billion of paper wealth vanishing into thin air. Since its peak, Bitcoin has lost about $200 billion in market capitalization, and Ethereum about $67 billion: