Bitcoin: the Kardashian of money
Why are the Kardashians famous? The answer is obvious. The Kardashians are famous because they are famous. As a group, they have no obvious talents other than being famous, acting famous, looking famous, and convincing unfamous non-Kardashians to buy Kardashian-branded products.
And so it is with bitcoin. Bitcoin is valuable because it’s valuable. While bitcoin is described by its proponents as a shared-ledger technology, it’s really a shared belief technology. We buy bitcoin because we believe that others will buy it in the future.
The Kardashians have been hugely successful in their chosen profession of being Kardashians, and by some estimates they now have a combined net worth around $3B. There’s nothing wrong with that; if people want to buy moisturizer from Kim or lip kits from Kylie, who am I to object? But, as with bitcoin, the basis of this wealth is a self-perpetuating set of beliefs, as opposed to an independently valuable economic function.
Anyone with eyes can quickly see that bitcoin is not money. There are not a lot of people at Starbucks paying with bitcoin. Similarly, the judges of Dancing with the Stars were able to quickly see that Kim Kardashian is not a skilled dancer. It’s not a close call.
El Salvador made bitcoin legal tender and gave each citizen $30 worth of bitcoin in an attempt to jump-start its adoption as money. The result was complete failure, as documented by Alvarez, Argente, and Van Patten (2023). Thus, even under ideal conditions, nobody wants to use bitcoin as money. As a payments technology, bitcoin is slow, cumbersome, and technically inept, much like Kim Kardashian’s ill-fated mambo on Dancing with the Stars.
When they first appeared, both Keeping Up with the Kardashians (KUWTK) and bitcoin were roundly condemned by elite critics. Variety’s 2007 review of KUWTK said “there’s not much of a show here, and no discernible premise,”[1] while The Washington Post in 2008 called it “real dumb.”[2] Economists, while initially intrigued, came out nearly universally against bitcoin as money, with Yermack (2013) concluding that “Bitcoin appears to behave more like a speculative investment than like a currency.”
Both the Kardashians and bitcoin were initially seen as destructive forces that should be banned. The Washington Times declared that “Kardashian culture is killing America,”[3] while a petition in 2011 urged that KUWTK be cancelled.[4] Similarly, Paul Krugman asserted in 2013 that “Bitcoin is evil”[5] while Joseph Stiglitz in 2017 said it should be outlawed.[6]
On multiple occasions, both the Kardashians and bitcoin were condemned as bubbles that were destined to burst. For the Kardashians, it was said that in 2012 that their “bubble is bursting,”[7] in 2014 that they were “running out of steam,”[8] and 2020 was supposedly “the year the Kardashian bubble burst.”[9] Bitcoin has been described as a bubble many times, including by Alan Greenspan in 2013. I myself gave a public lecture in 2018 titled “Bitcoin Bubble? Lessons from history,” although note the strategically placed question mark.
Despite these dire predictions, both the Kardashians and bitcoin have prospered. Let’s review possible explanations:
- Scarcity. Thanks to the bitcoin source code, the total number of bitcoins is capped at 21M. Thanks to the laws of biology, the total number of Kardashian siblings (defined as the children of Kris Jenner and Robert Kardashian) is capped at four (Kourtney, Kim, Khloé, and Rob). Even a broader definition of Kardashian, including various Jenners, children, spouses, ex-spouses, and hangers-on, would likely total to well under 21M individuals.
- First-mover advantage. Bitcoin remains the dominant cryptocurrency by market cap, overshadowing rivals such as Ethereum. Similarly, the Kardashians remain the dominant famous-because-they-are-famous celebrity family, with the Robertsons of Duck Dynasty far behind.
- Increasing institutional adoption. Bitcoin was initially dismissed by nearly all financial institutions, with Larry Fink of BlackRock calling it “an index of money laundering” in 2017.[10] With the notable exception of Vanguard, institutions now embrace bitcoin, with BlackRock running a successful bitcoin ETF. Similarly, the Kardashians are now firmly in the mainstream of fashion and media. The first Harvard Business School case covering the Kardashians appeared in 2023.
What will the future bring? Can both bitcoin and the Kardashians remain a permanent feature of the collective human psyche? I have no idea. Kim Kardashian is now a billionaire, and as she once tweeted, “Not bad for a girl with no talent.” The market cap of bitcoin is now approaching $2 trillion; not bad for money that’s not money.
Endnotes
[1] “Keeping Up With the Kardashians,” Variety, October 10, 2007.
[2] “Real dumb,” Washington Post, October 10, 2008
[3] “Kardashian culture is killing America,” The Washington Times, January 3, 2013.
[4] “Anti-Kardashian Petition Demands E! Cancel 'Keeping Up',” Reuters, November 15, 2011.
[5] “Bitcoin is evil,” The New York Times, December 28, 2013.
[6] “Bitcoin ‘Ought to Be Outlawed,’ Nobel Prize Winner Stiglitz Says,” Bloomberg, November 29, 2017.
[7] “"The Kardashian bubble is bursting," New York Magazine, January 13, 2012.
[8] “The Kardashians Can't Keep Up,” Vanity Fair, January 27, 2014.
[9] “The year the Kardashian bubble burst, amid a string of public scandals,” The NZ Herald, December 31, 2020.
[10] "BlackRock CEO Larry Fink calls bitcoin an index of money laundering’," CNBC, October 13, 2017.
References
Alvarez, Fernando, David Argente, and Diana Van Patten. "Are cryptocurrencies currencies? Bitcoin as legal tender in El Salvador." Science 382, no. 6677 (2023).
Yermack, David. "Is Bitcoin a Real Currency?." (2013).
Legal Disclaimer
These materials provided herein may contain material, non-public information within the meaning of the United States Federal Securities Laws with respect to Acadian Asset Management LLC, Acadian Asset Management Inc. and/or their respective subsidiaries and affiliated entities. The recipient of these materials agrees that it will not use any confidential information that may be contained herein to execute or recommend transactions in securities. The recipient further acknowledges that it is aware that United States Federal and State securities laws prohibit any person or entity who has material, non-public information about a publicly-traded company from purchasing or selling securities of such company, or from communicating such information to any other person or entity under circumstances in which it is reasonably foreseeable that such person or entity is likely to sell or purchase such securities.
Acadian provides this material as a general overview of the firm, our processes and our investment capabilities. It has been provided for informational purposes only. It does not constitute or form part of any offer to issue or sell, or any solicitation of any offer to subscribe or to purchase, shares, units or other interests in investments that may be referred to herein and must not be construed as investment or financial product advice. Acadian has not considered any reader's financial situation, objective or needs in providing the relevant information.
The value of investments may fall as well as rise and you may not get back your original investment. Past performance is not necessarily a guide to future performance or returns. Acadian has taken all reasonable care to ensure that the information contained in this material is accurate at the time of its distribution, no representation or warranty, express or implied, is made as to the accuracy, reliability or completeness of such information.
This material contains privileged and confidential information and is intended only for the recipient/s. Any distribution, reproduction or other use of this presentation by recipients is strictly prohibited. If you are not the intended recipient and this presentation has been sent or passed on to you in error, please contact us immediately. Confidentiality and privilege are not lost by this presentation having been sent or passed on to you in error.
Acadian’s quantitative investment process is supported by extensive proprietary computer code. Acadian’s researchers, software developers, and IT teams follow a structured design, development, testing, change control, and review processes during the development of its systems and the implementation within our investment process. These controls and their effectiveness are subject to regular internal reviews, at least annual independent review by our SOC1 auditor. However, despite these extensive controls it is possible that errors may occur in coding and within the investment process, as is the case with any complex software or data-driven model, and no guarantee or warranty can be provided that any quantitative investment model is completely free of errors. Any such errors could have a negative impact on investment results. We have in place control systems and processes which are intended to identify in a timely manner any such errors which would have a material impact on the investment process.
Acadian Asset Management LLC has wholly owned affiliates located in London, Singapore, and Sydney. Pursuant to the terms of service level agreements with each affiliate, employees of Acadian Asset Management LLC may provide certain services on behalf of each affiliate and employees of each affiliate may provide certain administrative services, including marketing and client service, on behalf of Acadian Asset Management LLC.
Acadian Asset Management LLC is registered as an investment adviser with the U.S. Securities and Exchange Commission. Registration of an investment adviser does not imply any level of skill or training.
Acadian Asset Management (Singapore) Pte Ltd, (Registration Number: 199902125D) is licensed by the Monetary Authority of Singapore. It is also registered as an investment adviser with the U.S. Securities and Exchange Commission.
Acadian Asset Management (Australia) Limited (ABN 41 114 200 127) is the holder of Australian financial services license number 291872 ("AFSL"). It is also registered as an investment adviser with the U.S. Securities and Exchange Commission. Under the terms of its AFSL, Acadian Asset Management (Australia) Limited is limited to providing the financial services under its license to wholesale clients only. This marketing material is not to be provided to retail clients.
Acadian Asset Management (UK) Limited is authorized and regulated by the Financial Conduct Authority ('the FCA') and is a limited liability company incorporated in England and Wales with company number 05644066. Acadian Asset Management (UK) Limited will only make this material available to Professional Clients and Eligible Counterparties as defined by the FCA under the Markets in Financial Instruments Directive, or to Qualified Investors in Switzerland as defined in the Collective Investment Schemes Act, as applicable.
About the Author
