In the free market, failure is always an option.The United States has one of the world’s most vibrant entrepreneurial cultures, where millions of people start small businesses, create new products and invent new technology.Part of the startup culture is the idea of failing fast, failing cheap and failing towards success by learning the lessons taught by failure.Cultures that punish even minor failure in business with shame, exclusion and stigma are far less likely to foster entrepreneurs because they prevent experimentation by making it too risky.Recently, the US has been infected by the “failure is not an option” mantra, a toxic hubristic fallacy, disguised as a truism, which promotes the idea that risk can be removed from life; that 100% security and 100% control are possible, even desirable.Those who attempt to remove the possibility of failure, to de-risk financial systems, end up creating the probability of spectacular failure.By removing the option to fail cheap and fail fast, they instead concentrate risk and ensure we will fail hard, fail expensively, fail across the board.

In the 1970s the US developed a policy of forestry that espoused 100% prevention of forest fires; let’s call it “fire is not an option”.This policy resulted in the systemic suppression of small fires and eventually into very unbalanced forest ecosystems where fire is now not just an option, but a certainty of disaster.We now know that fire is a natural part of a forest’s life-cycle.Without fire, the forest floor gets overgrown, making it a source for bigger and hotter fires.When fires break out in a “managed” forest where fires have been suppressed for years, they burn so hot they turn the ground to glass.Fires that were survivable by trees are now so destructive that they denude hills and wipe out the entire ecosystem.Our financial system has become much like a poorly managed forest, harboring within it the increasing probability of a systemic and destructive conflagration.Capitalism and entrepreneurial innovation require risk, as it is a fundamental component of business evolution.

When companies are allowed to fail, their resources get reallocated in the market, just like a fire that converts sparse undergrowth into fertilizer for the next generation of trees.If instead, the failed companies are prevented from failing but are propped up to maintain the illusion of solvency, they fester and consume more and more resources while creating greater and greater risk.Eventually, bail-outs must be followed by even greater bail-outs and then bail-ins.Finally, the systemic risk of too-big-to-fail becomes too-big-to-bail and the economy suffers a conflagration of defaults.De-risking increases the risk of failure and turns localized risk into a systemic risk.If you stop the small fires, you get a fire so big it turns the ground to glass.Last week, the long-festering bitcoin exchange Mt.Gox failed.It is too early to tell exactly what happened and what will happen next, but I have some predictions: Gox will not be bailed out.Gox’s competitors will not be forced to tax their customers to support Gox’s investors or customers.

The bitcoin currency will not be inflated to provide quantitative-easing to keep Gox alive.Gox will not receive 0% loans for half a decade, perverting the incentives of the entire market.Other bitcoin exchanges will not find it more profitable to seek these 0% loans instead of innovating.Gox will not be allowed to acquire smaller companies to fatten their balance sheet to hide losses, nor will Gox be acquired by a larger exchange with loan guarantees from bitcoin miners to hide Gox’s insolvency.bitcoin gratis verdienenGox executives will not be rewarded with bonuses paid by bitcoin inflation and taxation.bitcoin rebuildGox will not receive a deferred prosecution because they are too big to jail.bitcoin logo svgGox will not be even bigger and even less solvent in a few years.elite dangerous bitcoin

Most likely, some people involved in the Gox failure will end up in prison.Gox’s executives will not be invited to Davos to pal-around with the leaders of government.No, those are all things that happen in the “real” economy where de-risking is the toxic fad of the decade and too-big-to-fail is too-big-to-jail.Gox will simply fail.It will fail in an isolated way so that it won’t cause greater systemic failures.As we must lament the losses and tragic consequences for the customers of Gox, let’s not lament the failure of Gox itself.bitcoin fcaThis is not a failure of the bitcoin currency or a failure of capitalism.coinbase limitThis is how capitalism should work.tips trik bitcoinThe fact that such failure appears strange and uncomfortable only shows how far from true competition and capitalism we have been led by promises of de-risking.bitcoin kaufen in österreich

In bitcoin, at least, failure is an option.Allowing Gox to fail is a good thing and it will only make bitcoin stronger.It’s much scarier to have your eyes wide open, but it’s less dangerous than keeping them firmly shut and basking in the delusional comfort of de-risked capitalism.With failure comes risk but also innovation and fertile ground for re-invention and new growth.Welcome back to the free market, where failure is always an option.Bitcoin just crashed 50% today, on news that the Chinese government has banned local exchanges from accepting deposits in Yuan.bitcoin etf secBtC was trading over $1000 yesterday; now it's down to $500 and still falling.I want Bitcoin to die in a fire: this is a start, but it's not sufficient.Let me give you a round-up below the cut.Like all currency systems, Bitcoin comes with an implicit political agenda attached.Decisions we take about how to manage money, taxation, and the economy have consequences: by its consequences you may judge a finance system.

Our current global system is pretty crap, but I submit that Bitcoin is worst.For starters, BtC is inherently deflationary.There is an upper limit on the number of bitcoins that can ever be created ('mined', in the jargon: new bitcoins are created by carrying out mathematical operations which become progressively harder as the bitcoin space is explored—like calculating ever-larger prime numbers, they get further apart).This means the the cost of generating new Bitcoins rises over time, so that the value of Bitcoins rise relative to the available goods and services in the market.Less money chasing stuff; less cash for everybody to spend (as the supply of stuff out-grows the supply of money).Hint: Deflation and Inflation are two very different things; in particular, deflation is not the opposite of inflation (although you can't have both deflation and inflation simultaneously—you get one disease or the other).Bitcoin is designed to be verifiable (forgery-resistant) but pretty much untraceable, and very easy to hide.

Easier than a bunch of gold coins, anyway.And easier to ship to the opposite side of the planet at the push of a button.Libertarians love it because it pushes the same buttons as their gold fetish and it doesn't look like a "Fiat currency".You can visualize it as some kind of scarce precious data resource, sort of a digital equivalent of gold.Nation-states don't control the supply of it, so it promises to bypass central banks.But there are a number of huge down-sides.Here's a link-farm to the high points: Mining BtC has a carbon footprint from hell (as they get more computationally expensive to generate, electricity consumption soars).This essay has some questionable numbers, but the underlying principle is sound.Bitcoin mining software is now being distributed as malware because using someone else's computer to mine BitCoins is easier than buying a farm of your own mining hardware.Bitcoin violates Gresham's law: Stolen electricity will drive out honest mining.(So the greatest benefits accrue to the most ruthless criminals.)

Bitcoin's utter lack of regulation permits really hideous markets to emerge, in commodities like assassination (and drugs and child pornography).It's also inherently damaging to the fabric of civil society.You think our wonderful investment bankers aren't paying their fair share of taxes?Bitcoin is pretty much designed for tax evasion.Moreover, The Gini coefficient of the Bitcoin economy is ghastly, and getting worse, to an extent that makes a sub-Saharan African kleptocracy look like a socialist utopia, and the "if this goes on" linear extrapolations imply that BtC will badly damage stable governance, not to mention redistributive taxation systems and social security/pension nets if its value continues to soar (as it seems designed to do due to its deflationary properties).To editorialize briefly, BitCoin looks like it was designed as a weapon intended to damage central banking and money issuing banks, with a Libertarian political agenda in mind—to damage states ability to collect tax and monitor their citizens financial transactions.