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.

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Why have men become so lonely – and how does it affect their health?

New findings show the consequences of having a lonely heart.

Go out and get some friends. No, seriously. Hop on the Tube and act faux-interested in the crap-looking book your fellow commuter is reading, even if it's on their Kindle. Chances are it's better than the one in your bag, and they're probably a decent human being and just as lonely, like you and me.

A new slate of facts and figures are showing just how widespread loneliness, is while simultaneously being amazingly terrible for your health.

Research led by Steven Cole from the medicine department at University of California, Los Angeles is showing the cellular mechanisms behind the long known pitfalls of loneliness. Perceived social isolation (PSI) – the scientific term for loneliness –increases the exposure to chronic diseases and even mortality for individuals across the world.

The authors examined the effects of loneliness on leukocytes, also known as white blood cells, which are produced from stem cells in the bone marrow and are critical to the immune system and defending the body against bacteria and viruses. The results showed loneliness increases signalling in the sympathetic nervous system, which is responsible for controlling our fight-or-flight responses, and also affects the production of white blood cells.

Recently, the Movember Foundation, which focuses on men's health and wellbeing, carried out a survey with the help of YouGov investigating friendship and loneliness amongst men. The results are alarming, with only 11 per cent of single men across the spectrum in their early 20s to late-middle age saying they had a friend to turn to in a time of crisis, the number rising to 15 per cent for married men.

Friendship has shown not only to be important to a person's overall wellbeing, but can even add to a person's earnings. A previous study involving 10,000 US citizens over 35 years showed people earned 2 per cent more for each friend they had.

The Movember Foundation survey comes soon after the Office for National Statistics (ONS) showed that men in Britain make up 58 per cent of the 2.47m people living alone between the ages of 45 and 64. The reasons behind this figure include marrying later in life and failed marriages, which usually result in children living with the mother. Women still make up the majority of the 7.7m single-occupant households across all ages in the country, at approximately 54 per cent.

Chronic loneliness seems to have slowly become a persistent problem for the country despite our hyper-connected world. It's an issue that has made even Jeremy Hunt say sensible things, such as "the busy, atomised lives we increasingly lead mean that too often we have become so distant from blood relatives" about this hidden crisis. He's previously called for British families to adopt the approach of many Asian families of having grandparents live under the same roof as children and grandchildren, and view care homes as a last, not first, option.

The number of single-person households has continued to increase over the years. While studies such as this add to the list of reasons why being alone is terrible for you, researchers are stumped as to how we can tackle this major social issue. Here's my suggestion: turn off whatever screen you're reading this from and strike up a conversation with someone who looks approachable. They could end up becoming your new best friend.