And these are mostly young people, mostly young men, in their 20's, who have little investment experience, want to get in "on the Next Big Thing!" and want to become fabulously wealthy with no work involved. These folks weren't even born during the dot-com bust of the 1990's or the real estate market meltdown of 1989. They were still in Junior High School during the recession of 2008. To them, the market has always gone up, up, up - a whole generation raised on a bull market. What could possibly go wrong with Bitcoin? Like I said, these bubbles seem to pop about every 20 years or so, perhaps as each new generation discovers that the marketplace is no place for patty-cake.
I fell out of my chair the other day when a young man posted online that he wanted to "sell his place in line" for the mythical "Elio Car" and "invest" it in Bitcoin. Fellow Elio "depositers" had to let him down gently and explain to him that there will never be an Elio car, and likely there was never a real plan to make one. Again, these are young people, who are full of energy and enthusiasm and naivete. One of the Elio "faithful" admitted he put all his summer job money into an "all-in" deposit on the car. This is the same sort of braintrust that is investing in "Crypto" - but again, you can't tell in an online forum if you are talking to a 14-year-old or a 40-year-old.
Of course, to actually buy anything, you need to convert Bitcoin (or any other crypto-currency) to local currency on an "exchange" - and we've heard all the horror stories about exchanges crashing, going bankrupt, or "coins" going missing. So the value of Bitcoin compared to the dollar is important - you can't spend Bitcoin anywhere.
(Let me pause here to note that any business has the right to accept payment in whatever form they want. They can say no to $100 bills. They can say no to pennies and nickels. They can say no to cash at all - requiring payment by credit card - or even bitcoin!. The "good for all debts, public and private" notation on our money does not obligate people to accept cash or certain denominations by law.)
And while some banks will recoup these losses as early as 2019 - such as Bank of America - other Banks such as Citibank main never recoup these losses. The Trump tax law turns out to have some negative consequences, ironically by lowering tax rates.
Now, some have noted that other "cryptos" have appeared to solve the problems of Bitcoin - their transaction fees are lower and they process faster. But still, few outlets are accepting these "coins" as they are volatile and it is generally a hassle to set up payment systems for so few users. Also, the idea of a payment system being based on a limited currency seems to be a fundamental flaw. The problem, as Bitcoin has illustrated, is that the currency, being limited, is not stable in value. No one can control "Big M" or the Money Supply of Bitcoin, to control inflation - or deflation. The actions of the Fed may be imprecise and dead wrong sometimes, but at least there is a switch for someone to be asleep at.
But even if we assume that this argument is correct, the problem is, if Bitcoin fails, it takes down the other cryptos with it, at least temporarily - much as we saw the market crash of 2008 take town nearly every sector. When people start losing money, they are often forced to sell other investments, causing a market-wide drop in prices. We are already seeing the opposite of this effect - where any company that mentions "Blockchain" is seeing its stock soar irrationally - for example, Kodak.
Now, throw into this heady mix a dash of real-estate bubble, particularly in selected markets. For spice, add the inevitable bankruptcy of Sears/K-Mart and a few other "brick and mortar" store chains that are slowly collapsing under the weight of their massive debt-loads. For extra zest, add a spike in oil prices and a sag in consumer confidence. Fold in record levels of corporate debt and personal debt - along with increasing default rates. Place in a 9 x 12 greased pan. Bake in a preheated over at 350 for 25 minutes.
You see where this is going. No one thing will cause the next recession, but a lot of little things just might. But the spectacular blowup of Bitcoin will be blamed - or at least be used to label the next meltdown.
UPDATE: Bitcoin and the Tide Pod Challenge. Has the world lost its collective fucking mind? I guess people will do anything for a thrill these days. This will not end well, let me tell you!