When Thorstein Veblen invented the notion of “conspicuous consumption” he was not thinking of a crypto tycoon paying $6.2mn for a banana and consuming it. Or a digital asset with no fundamental value changing hands for almost $100,000. But the 19th-century sociologist would recognise his theories in both events. Bitcoin and bananas are now Veblen goods.
That label describes assets that defy normal market forces, by getting more desirable as they get more expensive. Classically, it includes indulgences such as luxury cars, fine wines and occasionally designer sneakers. These items show one’s elevated place in the world, but are inherently, to Veblen’s mind, “a patent waste of time”. The more useless and costly the bauble, the more precious.
Bitcoin has almost been a Veblen good for years, but not quite. Purchases of the digital currency have been driven not by status, but by the prospect of selling to a greater fool at a higher price. The pursuit of investment returns is generally not a factor for wealthy buyers of Hermes Birkin bags, Patek Philippe watches or Tesla trucks. Conversely, even the most absurd meme stock has utility if it can be flipped at a profit.