Last week, bitcoin’s price dropped below $300. Still, for some in the community the crash appears to be good news.
Thus, one of the most popular posts on Reddit on Monday, stated: “The good old days are back! Massive walls, manipulation and a true financial wild west – I love it.” The site’s Bitcoin discussion board includes over 140,000 people.
Another user wrote: “Who else is enjoying the firesale?”. Besides, he was expected to be “picking up tons of cheap bit coin.”
But how explain such behaviour? Meir Statman, a professor at Santa Clara University, a specialist in behavioral finance, describes it as a “confirmation bias”. “What you hear, really, is what you want to hear; what is easy for you to believe: That bitcoin is going to take over and banks are a thing of the past,” he says. Bitcoin fans are echo chambers of optimism, what makes others in the community to believe digital currency has high value.
He adds: “And when you have people who reinforce it, people are not looking for the truth, they are looking for views that are going to support their prior beliefs driven by ideology and self interest and so-on.”
Researchers at the University of Illinois have recently conducted a study of cryptocurrency users. According to the results, the users who are members of various bitcoin communities, are more optimistic about the future of digital currency than other bitcoin users. Thus, when asked about the long term price of bitcoin, those who participate in discussions on digital currency, gave 68% higher estimates than those who do not.
Statman adds there is another reason for such optimistic view on the future of crytocurrency. People invest in bitcoin because it complies with their ideology and broader outlook. . “It is fair to say that lots of the people who invest in gold invest in a view of the world: That the United States is going down, bad things are going to happen, inflation is going to rise,” Statman says.
Statman advises those, who want to invest in digital currency, to speak to people with different points of view and perspectives. He expresses his perspective: “I think it’s a scam.”
CNN has recently posted a number of articles on bitcoin, stating that the bitcoin price crash is good news as it demonstrates people are entering the first stage of bitcoin economy development.
Blogger and venture capitalist Fred Wilson notes: “I continue to believe that the thing to watch is not the price chart, the volume chart, or any chart. The thing to look at is Github, Hackathons, Accelerators, and everywhere else that entrepreneurs and developers showcase their work. That’s where the future of Bitcoin and its promise will be determined. And right now, based on what I’m seeing, it’s future is very bright.”
Bitcoin is also expanding outside the US. Peter Surda, an economist in Vienna, uses it each week to make purchases. “Spending Bitcoin did indeed become easier, because more merchants accept it,” he said.
BitPay founder, Tony Gallipi, said the use of electronic currency to buy goods and services is even more popular in Europe than in the US. “The adoption of the euro is a really good parallel to the adoption of Bitcoin. It’s fresh in their mind,” he says. “Adding a new currency for them is a very easy task.”