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3  <id>tag:econgoat.com,2014:/feed</id>
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6  <title>Heather R Morgan</title>
7  <updated>2014-04-14T07:00:41-07:00</updated>
8  <author>
9    <name>Heather R Morgan</name>
10    <uri>http://econgoat.com</uri>
11    <email>[email protected]</email>
12  </author>
13  <generator>Svbtle.com</generator>
14  <entry>
15    <id>tag:econgoat.com,2014:Post/how-failure-loss-can-make-you-a-better-entrepreneur</id>
16    <published>2014-04-14T07:00:41-07:00</published>
17    <updated>2014-04-14T07:00:41-07:00</updated>
18    <link rel="alternate" type="text/html" href="http://econgoat.com/how-failure-loss-can-make-you-a-better-entrepreneur"/>
19    <title>Let's All Fail More to Become a Better Entrepreneurs</title>
20    <content type="html">&lt;p&gt;In the last five years Iâve made more reckless mistakes and had more mishaps than most people inflict on themselves in a lifetime. Iâve almost killed myself in the Middle East a dozen times, smuggling myself in and out of Sinai amidst bombings to go to the beach, and hitchhiking in Eastern Turkey in search of my ancestral homelands. Iâve also screwed up by blowing $50,000 on a marketing campaign that targeted a segment of customers that didnât monetize well.&lt;br&gt;
21&lt;a href="https://svbtleusercontent.com/tj4m5q6wb2mmna.jpg"&gt;&lt;img src="https://svbtleusercontent.com/tj4m5q6wb2mmna_small.jpg" alt="camels.jpg"&gt;&lt;/a&gt;&lt;/p&gt;
22
23&lt;p&gt;Even with all blunders and errors, some of which Iâm less proud of than others, I have no regrets for any of my actions. While my risk-loving behavior may have brought me more chaos than most people could handle mixed with some failures, it also led me to my biggest wins. &lt;/p&gt;
24
25&lt;p&gt;For each of my failures I have learned more valuable lessons than college, grad school, books, lectures, and seminars could ever have taught me. (Not to discount education or readingâI read every day!) &lt;/p&gt;
26
27&lt;p&gt;&lt;b&gt;Why is Failure so Valuable?&lt;/b&gt;&lt;/p&gt;
28
29&lt;ol&gt;
30&lt;li&gt;&lt;b&gt;The thing about failure is you learn fast and deeply. &lt;/b&gt;Failureâs an expensive and painful lesson, but itâs priceless and those experiences where you fail miserably are irreplaceable. My most meaningful lessons in marketing and copywriting came from screwing up campaigns when I was younger.  A misprint of an ad for the âPersian Gulfâ with a less politically accepted term used in Arabia brought me threatening angry email letters and almost cost me my job. I learned about fact checking, peer editing, and slowing down so I did things less haphazardly.
31&lt;/li&gt;
32&lt;br&gt;
33&lt;li&gt;&lt;b&gt;You canât really understand winning until you fail.&lt;/b&gt;The contrast of failing helps you appreciate your wins more and also gives you a deeper look into the causes for your success.You might not actually be winning for the reasons you think you are. Being really smart or âlucky,â isnât enough to keep winning over time. Avoiding the kind of risks that might make you take a small loss in the short run will set you up for bigger failures in the long run as things get more challenging.  It was not until my first international business  failed that I learned what I had gotten right in the past.&lt;/li&gt;
34&lt;br&gt;
35&lt;li&gt;&lt;b&gt;Failing teaches you agility, preparing you for âBlack Swan events,â&lt;/b&gt; as described by Nassim Taleb in his bookâs namesake. Black Swans are those 1 in a million events where an outlier obliterates all your predictions and models for being successful. Black Swans like the 1997 East Asian Financial Crisis or 2008 subprime mortgage crisis have crushed inflexible companies incapable of coping with failure. Those who have failed more develop a resilience that helps them cope with rougher times better than those who have gone a smoother path.  If youâve already dealt with failures, itâs easier for you to see the light at the end of the tunnel and remind yourself that the world isnât really over. 
36 &lt;/li&gt;
37Success comes from being able to face failure and be smart enough to learn from it and resilient enough to keep going. 
38&lt;br&gt;
39&lt;li&gt;&lt;b&gt;No risk, no reward.&lt;/b&gt; The only certain way to avoid failure is never putting yourself out there and trying, but thatâs also the only sure way to never succeed. Youâll never know when youâre going to fail until you do. Successful people take risks, and those risks donât always pay off. While people only talk about the positive moments of successful people, there are 10,000 moments when they failed. Famous inventor and entrepreneur Edison said,  âI have not failed. Iâve just found 10,000 ways that donât work.â &lt;/li&gt;
40
41If you want to be successful you have to take risks, and you canât be afraid of failure because itâs going to happen a lot along your journey. About 80% of even Y Combinatorâs startups will fail. 
42&lt;br&gt;
43&lt;br&gt;
44&lt;li&gt;&lt;b&gt;Life is unpredictable and nonlinear.&lt;/b&gt; More often than not failure will bring you closer to your path of success by coincidence. Almost every startup will pivot at least once. Nearly every entrepreneur fails before they win. The success of Apple and many others, the idea of constant-iteration, is built on process of trial-and-error. &lt;/li&gt;
45The poet Rumi says, âDonât grieve. Anything you lose comes round in another form.â We canât fear doors closing, as many new doors will open where old ones have closed. You never know when your failed experiment might become the next âvelcroâ or âpost-it-notes.â 
46&lt;/ol&gt;
47
48&lt;p&gt;&lt;b&gt;Embrace Failure to Win in the Long Run&lt;/b&gt;&lt;br&gt;
49&lt;br&gt;&lt;br&gt;
50Take risks. Put yourself out there. Yeah, you might fail, but donât be afraidâembrace failure as taking you one step closer to winning. As long as you strive for improvement and are conscious of what kind of mistakes you have made, your failures can pave your road to success. Pay close attention to your failures and the failures of others if you want to learn how to be successful.&lt;br&gt;
51&lt;br&gt;&lt;br&gt;
52Creative destruction thrives where people are reckless and risk-taking. That same creative destruction has brought small startups and entrepreneurs to

52shakeup centuries old giant companies in the media, computer, and software industries, bringing them to their feet. &lt;/p&gt;
53</content>
54  </entry>
55  <entry>
56    <id>tag:econgoat.com,2014:Post/blocking-turks-only-makes-them-stronger-more-stubborn</id>
57    <published>2014-03-25T16:50:30-07:00</published>
58    <updated>2014-03-25T16:50:30-07:00</updated>
59    <link rel="alternate" type="text/html" href="http://econgoat.com/blocking-turks-only-makes-them-stronger-more-stubborn"/>
60    <title>Blocking Turks Only Makes Them Stronger &amp;amp; More Stubborn</title>
61    <content type="html">&lt;p&gt;With the latest Turkish twitter ban, Turks are questioning whether Erdogan fears tweets leaking sex tapes from AK party officials, his own dirty secrets, or is just using this as a distraction from his other political fails. &lt;/p&gt;
62
63&lt;p&gt;Erdoganâs Twitter ban seems like a modern-day book burning to the world, but this isnât Turkeyâs first time blocking social media. While the censorship of Twitter shows blatant disregard for democracy and freedom of speech, the Turkish government has never been able to stop its people when they are most determined.  Whether Turks are completely disregarding the few traffic laws that Turkey does have, or avoiding taxation with black market cash transactions, Turks are naturals at finding ways around laws and red tape. &lt;/p&gt;
64
65&lt;p&gt;&lt;a href="https://svbtleusercontent.com/esxbw6xjm6sysw.jpeg"&gt;&lt;img src="https://svbtleusercontent.com/esxbw6xjm6sysw_small.jpeg" alt="twitter turk.jpeg"&gt;&lt;/a&gt;&lt;/p&gt;
66
67&lt;p&gt;&lt;b&gt;Internet Censorship: Not a New Game for Turkey&lt;/b&gt;&lt;br&gt;
68Turkeyâs not the only country to censor the Internet, but this isnât their first go with censorship either. After moving to Turkey in 2010 I discovered Youtube was blocked, along with some other Google sites.  &lt;/p&gt;
69
70&lt;p&gt;While Turkish communications minsters accused the Internet of conspiring against Turkey and dodging taxes, anti-Ataturk videos made by Greeks and Armenians bashing Ataturk led to the censorship of Youtube. Because statements against Ataturk (Turkish version of George Washington) are a criminal offense in Turkey, the Turkish government sued them for âinsulting Turkishness.â Turkey insisted Youtube take the videos down, but Youtube wouldnât comply, so they were blocked.&lt;/p&gt;
71
72&lt;p&gt;&lt;a href="https://svbtleusercontent.com/gpbmytx3xawsw.jpeg"&gt;&lt;img src="https://svbtleusercontent.com/gpbmytx3xawsw_small.jpeg" alt="apace dance.jpeg"&gt;&lt;/a&gt;&lt;/p&gt;
73
74&lt;p&gt;&lt;b&gt;Learning Proxies While Living in Turkey &lt;/b&gt;&lt;br&gt;
75When I first learned Youtube was banned I was annoyed, but after talking to a few Turkish university students I learned to use proxies like everyone else.  &lt;/p&gt;
76
77&lt;p&gt;From hip young Turks to housewives and grandmas in villages, everyone in Turkey had their favorite proxies in 2010; even Erdogan himself. He even told a journalist, âI know how to get around the ban,â and suggested everyone follow suit and use proxies too. &lt;/p&gt;
78
79&lt;p&gt;Itâs not surprising Turkey has many of the number one proxy services in the world. The Twitter ban just taught the nation how to change DNS settings.  Weâll see what new tech startups are born from this censorship. &lt;/p&gt;
80
81&lt;p&gt;&lt;a href="https://svbtleusercontent.com/awqqsoeqtsge6g.jpg"&gt;&lt;img src="https://svbtleusercontent.com/awqqsoeqtsge6g_small.jpg" alt="turkish tablets.jpg"&gt;&lt;/a&gt;&lt;/p&gt;
82
83&lt;p&gt;&lt;b&gt;âStubborn as a Turkâ&lt;/b&gt;&lt;br&gt;
84Like prohibition in the US, blocking Youtube and trying to limit smoking in Turkey has a reverse effect with Turks. Even when they increased the smoking tax, people were smoking even more out of spite. As myself

84coming from Turkish descent, to say that Turks are stubborn is an understatement. &lt;/p&gt;
85
86&lt;p&gt;Within days of blocking Twitter, Turkish Twitter usage increased by about 25%.  Even President Abdullah Gul was seen circumventing the censorship, as he continued to tweet from his Twitter account.  &lt;/p&gt;
87
88&lt;p&gt;Tech savvy Turks just changed their DNS settings manually to work around the government block, and even famous economist Dani Rodrik tweets âMy 84-year old mother was back on twitter 30 minutes after access was blocked. No sweat.â &lt;/p&gt;
89
90&lt;p&gt;&lt;a href="https://svbtleusercontent.com/m65zcl2chzbvg.jpeg"&gt;&lt;img src="https://svbtleusercontent.com/m65zcl2chzbvg_small.jpeg" alt="turkish grandma.jpeg"&gt;&lt;/a&gt;&lt;/p&gt;
91
92&lt;p&gt;&lt;b&gt;Why the Turkish Government Regularly Does Ridiculous Things&lt;/b&gt;&lt;br&gt;
93Like other politicians, Turkish politicians need domestic distractions from their own shortcomings. With the Turkish lira and national economics on the decline, and talks about the AK Partyâs corruption circling just before the election, Erdogan needed the biggest distraction he could get. He doesnât mind being seen as a dictator if he can win the election. &lt;/p&gt;
94
95&lt;p&gt;Initially, banning Twitter seemed like a way to distract everyone from bigger pending issues. So far itâs been working somewhat well. While no one has forgotten the surfacing corruption charges or a potential economic crisis, everyone canât stop talking about Twitter. &lt;/p&gt;
96
97&lt;p&gt;Twitter censorship also gave Erdogan another chance to demonstrate his ability to flex his power against political dissidents on their own media medium. Also, the increasing amount of Turkish social unrest seen across social media is becoming worrisome for him; heâs already gearing up for demonstrations on the streets.  While itâs unclear whether Erdogan realized how much backlash the Twitter ban would bring, he and his party have boxed themselves in the corner. &lt;/p&gt;
98
99&lt;p&gt;Like many countries in the Middle East, the Turkish government has had strong central leadership founded in military tradition since Ataturk. However, this makes the government inept with compromise, and the AK party is out of touch with the growing educated middle class, who happens to be very tech savvy.  &lt;/p&gt;
100
101&lt;p&gt;Like an angry parent who continues fighting with their children and refuses to relinquish their position even when they realize they are wrong, Erdogan wonât back down on the Twitter ban while President Abdullah Gul keeps tweeting. &lt;/p&gt;
102
103&lt;p&gt;&lt;a href="https://svbtleusercontent.com/rbw8umttzoe23w.jpg"&gt;&lt;img src="https://svbtleusercontent.com/rbw8umttzoe23w_small.jpg" alt="abudullah gul tweets.jpg"&gt;&lt;/a&gt;&lt;/p&gt;
104
105&lt;p&gt;&lt;b&gt;The Consequences of Erdoganâs Stubborn Pride for Turkey&lt;/b&gt;&lt;br&gt;
106The censorship of Twitter is becoming a national embarrassment for Turkey. The world is watching to see what Erdogan does next, and he isnât budging. Erdoganâs pride and desire to control the Turkish people supersedes his concern with how the international community views Turkey.&lt;/p&gt;
107
108&lt;p&gt;Erdogan has maintained great composure in the last decade through conflicts across the Arab world and intensified violence and bombings in Eastern Turkey is starting to look shaky. &lt;/p&gt;
109
110&lt;p&gt;For the first time the ball isnât in Erdoganâs court. With increasing infringements upon freedom of speech and mounting corruption cases, the AK Party is losing its higher moral ground. &lt;/p&gt;
111
112&lt;p&gt;There is no doubt Turkey has made great progress in the past two decades in economics, globalization, and living standards.  Yet, even with these great improvements, the faÃ§ade of a fully modernized Turkey is collapsing under the tantrums of Erdoganâs dictatorship. And the whole world is watching us.  &lt;/p&gt;
113
114&lt;p&gt;Itâs going to be a bumpy spring. &lt;/p&gt;
115
116&lt;p&gt;&lt;a href="https://svbtleusercontent.com/dgbcqte7ls8bma.jpg"&gt;&lt;img src="https://svbtleusercontent.com/dgbcqte7ls8bma_small.jpg" alt="turkish spring.jpg"&gt;&lt;/a&gt;&lt;/p&gt;
117
118&lt;p&gt;&lt;i&gt;Heather R Morgan is an economist who formerly lived and worked around the world, including in Asia and the Middle East. She now consults startups on marketing and sales. You can reach her at Heather (at) salesfolk.com and follow her on Twitter @HeatherReyhan &lt;/i&gt;&lt;/p&gt;
119</content>
120  </entry>
121  <entry>
122    <id>tag:econgoat.com,2014:Post/focus-or-fail</id>
123    <published>2014-03-01T23:01:31-08:00</published>
124    <updated>2014-03-01T23:01:31-08:00</updated>
125    <link rel="alternate" type="text/html" href="http://econgoat.com/focus-or-fail"/>
126    <title>Find a Focused Direction or Fail</title>
127    <content type="html">&lt;p&gt;Stop pretending to be Superman or your kryptonite will kill you. By lying to ourselves by believing we can do everything, we are setting ourselves up for failure. Do yourself a favor and stop screwing yourself over.&lt;/p&gt;
128
129&lt;p&gt;We all think we can do everything. We lie to ourselves thinking we have more time than we do. We believe we can multitask and overbook. But we are wrong. By doing so, we are left with dozens of projects half-assed, half-done feeling burnt out.&lt;/p&gt;
130
131&lt;p&gt;&lt;a href="https://svbtleusercontent.com/xfybazsrwbeo4g.jpg"&gt;&lt;img src="https://svbtleusercontent.com/xfybazsrwbeo4g_small.jpg" alt="hkkkkk.jpg"&gt;&lt;/a&gt;&lt;/p&gt;
132
133&lt;h2&gt;Hong Kong: the Asian version of a New York minute on speed&lt;/h2&gt;
134
135&lt;p&gt;In my early 20âs I lived in Hong Kong and worked in project management. I accepted my job just after ending a long relationship to a Hong Konger I met in college. At the time the only people I knew there were three loose acquaintances from California and Turkey. &lt;/p&gt;
136
137&lt;p&gt;To compensate for my lack of network and social support in this new country, I made a great effort to go out of my way to meet new people and make friends. I went to every expat meetup that existed and went out almost every night ânetworkingâ with little direction or purpose. I ended up making a lot of friends and partying my butt off, but one day six months later I began wondering what I was doing with my life.&lt;/p&gt;
138
139&lt;p&gt;I was bored with my job, and so I found myself regularly doing side economics projects and freelance writing. I began looking into starting my own wine import

139company, and started taking steps to make it a reality. I also got into event planning and community management because I had established good relationships with most of the HK venues and event planners through partying.  And I was still partying a lot too. &lt;/p&gt;
140
141&lt;p&gt;Add a few more dozen things, and I think the only thing I wasnât doing was sleeping. &lt;/p&gt;
142
143&lt;p&gt;My calendar was constantly booked, and I never had enough time to do anything. &lt;b&gt;Something needed to change.&lt;/b&gt; And fast.&lt;/p&gt;
144
145&lt;p&gt;&lt;a href="https://svbtleusercontent.com/2wdhh0bzbrkqna.jpg"&gt;&lt;img src="https://svbtleusercontent.com/2wdhh0bzbrkqna_small.jpg" alt="lebanese guy.jpg"&gt;&lt;/a&gt;&lt;/p&gt;
146
147&lt;h2&gt;Finding Perspective and Reevaluating Your Life&lt;/h2&gt;
148
149&lt;p&gt;I needed to get perspective and clarity. I needed to get out of Hong Kong for a bit. An Egyptian economist invited me to a UN conference in Beirut, and stuffing my face with Lebanese food sounded great. &lt;/p&gt;
150
151&lt;p&gt;As soon as I left Hong Kong, it felt like time slowed down. On the ten hour flight from HK to Duabi, I slept more than I had in six months. &lt;/p&gt;
152
153&lt;p&gt;Seeing the laidback lifestyle of Lebanon was refreshing. It reminded me that the HK ratrace was not a global norm. After attending the UN conference, I realized how much I had loved and missed economic research.&lt;/p&gt;
154
155&lt;p&gt;&lt;b&gt;I realized something:&lt;/b&gt; Only I had the power to decide how I would live. It was up to me to be happy and do the things I loved. No one was going to hand me the lifestyle I wanted. I needed to make some big changes from the way I was living if I wanted to stop being stressed and exhausted. &lt;/p&gt;
156
157&lt;p&gt;By the time I left Beirut, I was finally ready for a complete transformation.&lt;/p&gt;
158
159&lt;h2&gt;Forging the Change&lt;/h2&gt;
160
161&lt;p&gt;My calendar had gotten out of control. I had let too many people take over my schedule, and many of them were draining my energy without adding value to my life. &lt;/p&gt;
162
163&lt;p&gt;I was sick and tired of pointless parties and meaningless conversations with people I had superficial relationships with. What was the point? &lt;/p&gt;
164
165&lt;p&gt;I made a decision to stop doing things I didnât completely enjoy unless they were valuable and âgoodâ for me. It was shocking to discover how much time I had been wasting on obligations.&lt;/p&gt;
166
167&lt;p&gt;I began plucking the excess people and things out of my life, but I still needed to weed my activities so I could devote enough time to the things I cared about most. No more wine business, no more event-planning, etc.&lt;/p&gt;
168
169&lt;p&gt;It wasnât an easy task, but in the end I felt better. I had more time to do the things I loved with the people I cared about most, and I was much more happy and relaxed. I would have never been able to co-author an economics book and do the necessary research on Arab Spring if I hadnât made the change. &lt;/p&gt;
170
171&lt;h2&gt;Action Steps&lt;/h2&gt;
172
173&lt;p&gt;&lt;/p&gt;&lt;ul&gt;&lt;br&gt;
174&lt;li&gt;&lt;b&gt;STEP ONE: Find Your Focus&lt;/b&gt; What really matters to you the most? Think about it. You donât have to answer it now. Maybe itâs time to take a step back and do some soul searching.&lt;/li&gt;&lt;br&gt;
175&lt;li&gt;&lt;b&gt;STEP TWO: Reevaluate things&lt;/b&gt; Once you knowâs whatâs important, take some time to think about whatâs not. &lt;/li&gt;&lt;br&gt;
176&lt;li&gt;&lt;b&gt;STEP THREE: Make immutable laws&lt;/b&gt; Now that you know what matters and what doesnât, use that to create a list of 3 rules. These rules will guide you and help you keep your focus so you donât waste time. If something goes against more than one of your rules, cut it out. (Examples could be: âTake care of my health,â etc) &lt;/li&gt;&lt;li&gt;&lt;b&gt;STEP FOUR: 80/20 Rule&lt;/b&gt; Weed out the people and things who donât add value. They are zapping your energy and destroying your focus.&lt;/li&gt;&lt;p&gt;&lt;/p&gt;
177
178&lt;p&gt;&lt;i&gt;

178Heather R Morgan is an economist and ad copy consultant for tech startups and e-commerce businesses. &lt;/i&gt;&lt;br&gt;
179&lt;b&gt;For enquiries about Heatherâs services, please contact her at Heather at untraveling.com&lt;/b&gt;&lt;/p&gt;
180&lt;/ul&gt;</content>
181  </entry>
182  <entry>
183    <id>tag:econgoat.com,2014:Post/a-lesson-in-economics-for-engineers</id>
184    <published>2014-02-25T02:10:33-08:00</published>
185    <updated>2014-02-25T02:10:33-08:00</updated>
186    <link rel="alternate" type="text/html" href="http://econgoat.com/a-lesson-in-economics-for-engineers"/>
187    <title>A Lesson in Economics for Engineers</title>
188    <content type="html">&lt;p&gt;If you are thinking about investing in Bitcoin you might as well flush your money down the toilet by investing in the Egyptian pound. &lt;/p&gt;
189
190&lt;p&gt;Even the smartest people are susceptible to the shortcomings of confirmation bias. We search for the data and metrics that support our claims, giving us the answers we want to see. &lt;/p&gt;
191
192&lt;p&gt;It was easy enough for engineers and the Silicon Valley tech crowd to believe in Bitcoin, a new kind of self

192-regulating currency based in the beauty of mathematics.  Avoiding the pitfalls of politics, bureaucracy and monetary centralization sounds like a good plan on paper, but the efficient market hypothesis (that free markets will regulate themselves) doesnât always work in practice.  Unexpected ripple effects of the absence of regulation are even messier when financially engineered assets like Bitcoin are involved.  &lt;/p&gt;
193
194&lt;p&gt;&lt;a href="https://svbtleusercontent.com/lwyeg4xaznplda.jpg"&gt;&lt;img src="https://svbtleusercontent.com/lwyeg4xaznplda_small.jpg" alt="bitcoin1.jpg"&gt;&lt;/a&gt;&lt;/p&gt;
195
196&lt;p&gt;&lt;strong&gt;The Fragility of Artificial Assets&lt;/strong&gt;&lt;/p&gt;
197
198&lt;p&gt;No matter how brilliant or elegant an asset may sound to investors, it is as vulnerable to financial crises as any deregulated financial market. Whether e-gold or the derivatives of the US subprime mortgage market, bubbles follow the same patterns for growth and implosion.  Bitcoin is an extremely volatile asset by nature because itâs value responds directly to the marketâs demand, increasing the exposure to speculative attacks. &lt;/p&gt;
199
200&lt;p&gt;Although some saw Bitcoin as a revolutionary currency, itâs actually not a real currency, but instead a volatile asset. Fiat currencies (money) are pegged to real assets and backed by governments, which give their valuation credibility. However, since Bitcoin has no legitimate peg, government backing or regulation, its value rests with the demand of its buyers, holders, and the willingness of merchants to accept it.  &lt;/p&gt;
201
202&lt;p&gt;Some may argue that money also has no inherent value, and that precious metals like gold initially had value because they were multi-purpose and could be melted down for other uses. However, assets are only valuable as long as they can be traded for liquid cash or other goods and services, and Bitcoin has no other use other than as a cyber currency. Bitcoin mining is not valuable for anything other than creating Bitcoins. &lt;em&gt;Bitcoin is possibly the most valueless asset in history. If people no longer wish to hold or accept Bitcoin, the value will be exactly zero since it has no inherent value&lt;/em&gt;, making it an extremely fragile asset.&lt;/p&gt;
203
204&lt;p&gt;The value of Bitcoin relies on the holderâs ability to sell it on exchanges (or not). If exchanges go out of business or have outages the value plummets. If enough Bitcoin exchanges were to disappear, the value of Bitcoin crashes (as we are seeing now with Mt Gox), and those holding Bitcoin are left holding a rapidly depreciating asset that may reach a zero value and collapse (look at e-Gold). &lt;/p&gt;
205
206&lt;p&gt;&lt;a href="https://svbtleusercontent.com/gxrhruwdiruq.jpg"&gt;&lt;img src="https://svbtleusercontent.com/gxrhruwdiruq_small.jpg" alt="bubble.jpg"&gt;&lt;/a&gt;&lt;/p&gt;
207
208&lt;p&gt;&lt;strong&gt;How to Pop a Bubble&lt;/strong&gt;&lt;/p&gt;
209
210&lt;p&gt;Bubbles happen when people purchase assets hinging on the expectation of resale at a higher future price, leading to a spiral of herd mentality, which drives up the asset bubbleâs value until it eventually bursts. Unregulated assets have high price volatility, making it possible for bubbles to form quickly and grow big fast, but this means they crash harder when the bubble does burst. &lt;/p&gt;
211
212&lt;p&gt;Any event that destroys investor/buyer confidence that creates a panic is enough to pop a bubble and begin the downward spiral. When people get spooked, they rush to withdraw their funds in droves, causing prices to plummet as demand drops. In the case of bank runs, the influx of depositor demand to withdraw their funds from their accounts make the bank go insolvent and fail. &lt;/p&gt;
213
214&lt;p&gt;Bitcoinâs founders were ready for the bank runs though. Mt Gox Exchange used their âcrisis strategy plan,â stopping the run before it could begin by freezing withdrawals claiming there was a bug in their code.  This gave them time to cash-out. &lt;/p&gt;
215
216&lt;p&gt;&lt;a href="https://svbtleusercontent.com/5ppsjpbknkrdcq.jpg"&gt;&lt;img src="https://svbtleusercontent.com/5ppsjpbknkrdcq_small.jpg" alt="fraud alert.jpg"&gt;&lt;/a&gt;&lt;/p&gt;
217
218&lt;p&gt;&lt;strong&gt;No Protection Against Fraud&lt;/strong&gt;&lt;/p&gt;
219
220&lt;p&gt;While we may dislike the governmentâs regulation and intervention into financial markets, their oversight prevents moral hazard and rampant fraud. Because Bitcoin does not have government backing, Bitcoin holders are not protected.  Mt Gox has been the biggest exch

220ange for Bitcoin, and itâs all anonymous. What would prevent them from eventually seizing or stealing assets on the exchange? Likewise, because Bitcoin does not work through a bank, there is no protection for Bitcoin holders against fraud or their wallets being hacked. &lt;/p&gt;
221
222&lt;p&gt;The Mt Gox exchange already moved their office to a virtual location. With anonymity built into the very nature of Bitcoin itself, it makes it easy for the guys at the top to make off with their millions and disappear into cyberspace (or the British Virgin Islands). &lt;/p&gt;
223
224&lt;p&gt;&lt;a href="https://svbtleusercontent.com/9avwjfokytza.jpg"&gt;&lt;img src="https://svbtleusercontent.com/9avwjfokytza_small.jpg" alt="asset bubble graph.jpg"&gt;&lt;/a&gt;&lt;/p&gt;
225
226&lt;p&gt;&lt;strong&gt;Lessons &amp;amp; Red Flags to Watch For&lt;/strong&gt;&lt;/p&gt;
227
228&lt;p&gt;Asset prices should not appreciate significantly faster than real incomes unless there is a significant change in supply (like a natural disaster). If an asset price is rapidly growing faster than the rate of inflation without a decrease in supply, beware of a bubble.&lt;/p&gt;
229
230&lt;p&gt;The prices around asset bubbles become increasingly volatile just before everything eventually collapses, and Bitcoin prices have been all over the board the last 6 to 12 months. Like all bubbles, some people have attempted and successfully made gains from arbitraging values between the price fluctuations of that asset. &lt;/p&gt;
231
232&lt;p&gt;As people watch asset prices rise and people make money herding mentality kicks in and many people jump on the bandwagon with hopes of grabbing some of the riches.  But by the time the prices have soared to these levels, they are already overvalued and the bubble is already much closer to bursting. &lt;/p&gt;
233
234&lt;p&gt;One of the problems with unregulated asset markets such as Bitcoin is the presence of imperfect information. The creators of Bitcoin and the Mt Gox exchange have far more information than the Bitcoin buyers/traders, making them have an unfair advantage in the Bitcoin market and leaving Bitcoin holders unprotected.&lt;/p&gt;
235
236&lt;p&gt;&lt;strong&gt;Predicting the Crash&lt;/strong&gt;&lt;/p&gt;
237
238&lt;p&gt;While it is difficult to predict the exact time window of when Bitcoinâs value will reach zero, but it will happen sooner or later because it is a fragile asset which retains no real value. Bitcoin will become a lesson in economics textbooks of the classic bubble riddled with scams.&lt;/p&gt;
239
240&lt;p&gt;&lt;em&gt;Heather R Morgan is an economist and author who formerly worked in emerging markets. She now does economic consulting for startups in Silicon Valley and around the world.&lt;/em&gt; &lt;/p&gt;
241
242&lt;p&gt;&lt;strong&gt;Contact Heather at heather at salesfolk.com&lt;/strong&gt;&lt;br&gt;
243Iâm offering an hour of free consulting for the month of March, so drop me an email if you want to set an appointment. My specialities are content marketing and user acquisition, but Iâm happy to help you however I can.&lt;/p&gt;
244</content>
245  </entry>
246</feed>

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