‘Number go up’: bitcoin’s startling surge is
inexplicable as ever
Cryptocurrency and Cognitive Dissonance
https://www.milkenreview.org/articles/cryptocurrency-and-cognitive-dissonance
Edward Tenner:
In 1954, a group of social psychologists from the University of Minnesota studied the followers of a Chicago woman who foretold a catastrophic flood on a specific date and promised her followers rescue by flying saucers. When the fatal day passed uneventfully, some believers defected. But others interpreted the non-apocalypse as a sign of their leader’s powers to hold back the flood and reaffirmed their faith.
Like so much of social psychology, the study has been controversial for decades. But the concept of cognitive dissonance it introduced — that people look for evidence to reinforce their beliefs rather than change them in the light of strong evidence to the contrary — is still going strong.
The most obvious explanation for the paradox of soaring bitcoin prices is that the failure of FTX will stimulate effective regulation as well as new instruments like exchange-traded funds that will permit investors to benefit from crypto’s rise without taking some of the more notorious crypto risks — especially losing digital keys and thereby, their money.
But a more interesting (and perhaps convincing) explanation is the aforementioned cognitive dissonance.
https://www.milkenreview.org/articles/cryptocurrency-and-cognitive-dissonance
Edward Tenner:
In 1954, a group of social psychologists from the University of Minnesota studied the followers of a Chicago woman who foretold a catastrophic flood on a specific date and promised her followers rescue by flying saucers. When the fatal day passed uneventfully, some believers defected. But others interpreted the non-apocalypse as a sign of their leader’s powers to hold back the flood and reaffirmed their faith.
Like so much of social psychology, the study has been controversial for decades. But the concept of cognitive dissonance it introduced — that people look for evidence to reinforce their beliefs rather than change them in the light of strong evidence to the contrary — is still going strong.
The most obvious explanation for the paradox of soaring bitcoin prices is that the failure of FTX will stimulate effective regulation as well as new instruments like exchange-traded funds that will permit investors to benefit from crypto’s rise without taking some of the more notorious crypto risks — especially losing digital keys and thereby, their money.
But a more interesting (and perhaps convincing) explanation is the aforementioned cognitive dissonance.
https://www.wsj.com/science/environment/bitcoin-water-cryptocurrency-transactions-mining-607f46e9
https://www.wsj.com/finance/currencies/binance-guilty-plea-shows-what-cryptos-really-about-f84200a3
The two main use cases—fraud and crime—have been exposed in dramatic fashion, even if the price of bitcoin tells an entirely different story