People can be forgiven if the new crypto/Bitcoin craze doesn’t evoke instant memories of the housing bubble.  And to be fair, the differences are vast and relevant.  For starters, there is little systemic risk spawning out of this crypto-madness that has seen the price of a Bitcoin digital coin surge from $800 to $20,000 over the last year.  The nation’s banking system is un-invested in the outcome, whereas it was “all in” during the housing hysteria that marked last decade.  And to be sure, the number of people affected by the financial crisis in 2008 was exponentially higher than those with exposure to Bitcoin, making the contagion differences categorically different.

And yet, in the most relevant category of them all, Bitcoin mania is nearly identical to that mania which created the housing crisis.

Much of the financial media coverage of the recent Bitcoin craze has understandably focused on some of the more sinister financial insanity.  Reports of people maxing out credit cards to buy the crypto air have made for good click-bait, as have stories of iced-tea companies moving into blockchain and seeing their stock fly (do you really think I could make this stuff up?).  But is the real societal story these various acts of financial stupidity, or is there a moral theme underneath all of this that feels like déjà vu?

The sociology surrounding each economic mania has different characteristics to it – different aesthetics, different cultural taboos and norms.  Bitcoin is said to be more social, more millennial more anarchistic, and more ideological.  Perhaps.  But none of those factors, all of which are more laughable than they are descriptive, actually speak to what had driven Bitcoin’s price increase, or the appetite for its ownership.  In this sense, the terminally unique sociology (coolness) is rather dramatically de-prioritized for the actual fundamental factor driving prices higher:

Rank speculation rooted in an earnest desire to make an easy buck, and be rid of the bondage of honest and productive labor.

Now does that sound familiar?

The financial crisis narrative is one of greedy Wall Street bankers leveraging up synthetic mortgage investments, which is a rather complex way of saying that Wall Street bet the wrong way on people’s ability and willingness to make a house payment.  The right’s contribution to the narrative is either that easy accommodative policy from an irresponsible Federal Reserve created a slush of easy money which brought us to crisis (more common from Fed critics and in various Libertarian circles), or that reckless government policy and Fannie/Freddie mandates led us to the brink.  All of these narratives are compelling in that they all hold substantial kernels of truth, and yet all lack the actual missing ingredient necessary for the crisis we really suffered:

Rank speculation rooted in an earnest desire to make an easy buck, and be rid of the bondage of honest and productive labor.

That the greed, envy, and covetous speculation of Wall Street had more zeroes involved in the numerical expression does not change the fact that it was greed, envy, and covetous speculation that drove both Main Street and Wall Street.  The society-wide epidemic of “Keep up with the Joneses” was met with a complete shift in social stigma about abandoning a house payment obligation.  Namely, that while it had previously been unthinkable for your community to find out you were stiffing your lender, in 2008 and thereafter it became a sort of bragging claim.  Bars were filled with tales of “strategic defaults,” a term used to replace what we used to call “walking away from an obligation.”

Bitcoin is not, as of yet, funded by “other people’s money.”  As long as those looking to speculate on something they know nothing about – with no intrinsic value, with no basis for economic advancement apart from the “greater fool theory” of someone else looking to buy it from you at a higher price – as long as they do this with their own money, Bitcoin’s demise will not prove to be an economically systemic event.

But the morally systemic implications are real.  Since the 17th century the aspiration for “free money” has been real.  Human nature is not likely to change any time soon.  A culture that prizes diligence, value-creation, hard work, and fundamental understandings of risk and reward has some degree of insultation against these hysterical bubbles.  But a culture driven by superficiality and envy is one devoid of the character necessary to stem off these hideous episodes.

In each mania or craze there has always been a justification.

“You just don’t get how the new economy will work,” said those justifying a $100 share price of Pets.com.

“There will never be new land,” said the bartender buying four Las Vegas condos with no equity.

“Crypto is the key to a brand new world,” says the bitcoin speculator jumping in with both feet.

Actually, nothing about this world feels brand new at all.

David L. Bahnsen is the author of Crisis of Responsibility: Our Cultural Addiction to Blame and How You Can Cure It (Post Hill Press), coming February 13, 2018.  He is the founder and Managing Partner of The Bahnsen Group, a bi-coastal wealth management firm managing over $1.25 billion of client capital.