# The awkward mathematics of booms and bubbles

When short and long aren't opposites.

One of the most common responses in the many, many comments to my pieces on Bitcoin over the last couple of weeks has been to ask me why, if I'm so sure it's a bubble, I don't short it.

The simplest answer is that journalism isn't a career which leaves a huge amount of money left over after the bills are paid with which to gamble, and that I'm not entirely sure it's ethical anyway. There's also the fact that the two main Bitcoin meta-exchanges aren't particularly liquid, which leaves me doubtful that I'd get the best value for money on any shorting contract,

Then there's the problem that being pretty certain the bubble is going to pop doesn't leave me any surer about when it's going to pop – something which most methods of shorting require you to know.

Shorting usually involves borrowing the thing you want to short for a fixed amount of time, selling it straight away, and then buying it back just before your loan is up. Ideally, the commodity has dropped in value, and so you make a profit by you pocketing the difference.

In a normal commodity, going short and going long – buying the commodity to sell at a higher price – are roughly symmetrical. If a share in Apple goes up \$1, the people who are long make a dollar a share; if it goes down, the people who are short do.

But that symmetry breaks down when you're dealing with a commodity on the sort of parabolic trend that Bitcoin is shooting along now.

If I spend £100 on Bitcoin, then the most I can lose is £100. Conversely, if the trend continues, I could have £1000 in a month. And the maximum possible payoff is basically uncapped. Suppose I'm catastrophically wrong, and Bitcoin becomes the world currency by the end of the year – anyone who'd bought in to it, even at today's inflated prices, would be a millionaire.

But what if I short it, by borrowing £100 of Bitcoin? Well, then the most I can earn is £100, if the price drops to zero. But the amount I could lose is potentially uncapped, for the exact same reasons that make buying in to it so appealing.

That lack of symmetry – which is an innate feature of, well, maths – serves only to goose the bubble higher and higher. And at the other side, when the down swing comes, it will be vicious; with no shorters ready to step in and buy the coins of people trying to cash out, the volatility will have nothing dampening it.

So that's why I'm keeping my money where it is. But don't think I'm not pretty damn confident when I say that if I had any extra, it still wouldn't be in Bitcoin.

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

PewDiePie
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# "Death to all Jews": Why Disney dropped YouTube's biggest star PewDiePie

The Minecraft vlogger turned internet celebrity's taste for shock comedy was too much for the family-focused corporation.

Disney has cut ties with YouTube’s most-subscribed star after he paid two Sri Lankan men five dollars to hold up a sign that read “DEATH TO ALL JEWS”.

Feel free to read that sentence again, it’s not going anywhere.

A still from PewDiePie's video, via YouTube

PewDiePie, real name Felix Kjellberg, has over 53 million subscribers on YouTube, where his videos about gaming earned him over \$15m last year. The 27-year-old, whose content is popular with children, came under fire this month after the Wall Street Journal investigated anti-Semitic comments in his videos. In one video, a man dressed as Jesus says “Hitler did absolutely nothing wrong”, while in another Kjellberg used freelance marketplace Fiverr to pay two men to hold up the offensive sign. The videos have since been deleted.

Jumpcut.

The Walt Disney Company became affiliated with PewDiePie after they bought Maker Studios, a network of YouTube stars, for nearly \$1bn in 2014. Following the WSJ’s investigation, Maker dropped the star, stating: “Although Felix has created a following by being provocative and irreverent, he clearly went too far in this case and the resulting videos are inappropriate. Maker Studios has made the decision to end our affiliation with him going forward.”

When you sack a YouTube Star, makes no difference who they are.

Via Wall Street Journal

But why should the story stop there? Neo-nazi website The Daily Stormer are now defending PewDiePie, while the notoriously politically-incorrect 4Chan forum /pol/ have called him “our guy”.

In his defence, Kjellberg wrote a blog post denying an affiliation with anti-Semitic groups and explained his actions, writing: “I was trying to show how crazy the modern world is, specifically some of the services available online.” In a video last December the star also said: "It's extremely annoying how I can't make jokes on my channel without anyone quoting it as actual facts, like something I actually said", before dressing as a soldier and listening to one of Hitler's speeches while smiling.

Pause.

(If all of this sounds familiar, recall when disgraced YouTuber Sam Pepper claimed a video in which he groped unsuspecting females was a “social experiment”).

Play.

And yet the story still isn’t over. Disney have learned a hard lesson about assuming that YouTubers are the squeaky clean fairy-tale princes and princesses they often appear to be. Shay Butler, one of the original founders of Maker Studios, yesterday quit the internet after it was alleged he sent sexual messages to a cam girl via Twitter.

Butler is one of the original "family vloggers", and has spent nine years uploading daily videos of his five children to YouTube. A practicing Mormon, Butler has become emblematic of family values on the site. “My heart is sick,” he wrote on Twitter, neither confirming nor denying the allegations of his infidelity, “I have struggled with alcoholism for years… My purpose is to rehab.”

The result is a very dark day for YouTube, which has now dropped Kjellberg from its premier advertising network, Google Preferred, and cancelled the second series of the star's reality show, Scare PewDiePie

Amelia Tait is a technology and digital culture writer at the New Statesman.