I made the comparison of BitCoin and South Sea Company stock recently. I did so because both are pseudo-monies that began with the serious purpose of evading monopoly restrictions on the movement of official currencies. From the very beginning the usefulness of BitCoin as an alternate currency was unquestionable if you lived in China. It was and, so I am told, still is the easiest way to defeat the PBOC’s restrictions on swapping China’s currency for other national monies. (Again, from what I am told, people in China do not simply trade yuan for BitCoins and hold the BitCoins; they make a second trade and sell BitCoins for Euros et. al. and deposit those in online accounts with foreign securities brokers.)

I thought BitCoin would be a “failed currency swap” because there would come a time when a current Chinese Ministry would no longer allow even relatively small transactions in a pseudo-money to appear to undermine the PBOC’ s control of the conversion price of its IOUs - i.e the official price of foreign exchange. I am not saying that BitCoin would actually have much of an effect; I am saying that “cracking down” on BitCoin would be an easy rattle of the sabers for the people who govern China.

There is also, I am told, the appearance of a technical parallel between the behaviors of BitCoin’s dollar price and the history of the South Sea Company’s share price when it bubbled.

This link is to a chart of Isaac Newton’s speculations in the stock of the South Sea Company. I leave it to the traders to find out if there is any proper comparison; about matters of trading, technical and otherwise, I remain a perfect dunce.





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