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“It gives women a feeling of freedom and self-reliance. I stand up and cheer every time I see a woman riding the wheel.”
-Susan B. Anthony on bikes
The 1880s saw cyclists shift from sitting directly – and precariously – atop the comically giant front wheel of a Victorian penny to a safer position between the two normal-sized wheels of the modern bicycle.
The change was enabled by the innovation of chains that transferred pedal force to the rear wheel of the bicycle, leaving only the front wheel to steer. Further innovations such as diamond-shaped frames, seamless steel tubes, and pneumatic tires soon completed the bicycle’s transformation from a serious novelty to the practical means of transportation and exercise we know today.
The safest, smoothest and most comfortable ride was an instant success. Within a few years, bicycle manufacturing had become a thriving industry, with the number of manufacturers in Birmingham alone rising from 72 in 1889 to 177 by 1895.
This led to a state of mania among investors that the authors of this book Boom and Bust: A Global History of Financial Bubbles He called it “a particularly clear example of the usefulness of bubbles.”
Crazy investors drove the cycle stock index soaring 258% in the first five months of 1896, attracting a boom in new stock market listings: in the two years before 1897, 670 cycle, tube or tire companies floated their shares on England’s regional stock markets.
Many were of the lowest quality, such as Accles Ltd., which sold £135,000 worth of shares but generated revenue of just £71 before declaring bankruptcy less than two years later.
As expected, shares lost the session 73% of its value From the height of bicycle mania in the first months of 1896 until the end of 1898.
As painful as it was for investors, the Depression may have been worth it: the investment bubble accelerated improvements in tire quality that later empowered the automobile industry and stimulated advances in machine tools and ball bearings that spread throughout English manufacturing and beyond.
Better yet, the flood of affordable bikes produced by the bubble had a modernizing effect on society that no one could have predicted.
Victorian social expectations that women should be accompanied when traveling were shattered when bicycles became widely available – accompanying a woman on a bicycle was impractical, and there were simply too many passengers for Victorian men to police.
This also gave rise to the “rational dress” movement, where the impossibility of cycling in corsets and restrictive skirts led to the development of more practical dresses.
It is difficult to overstate how radical the change has been.
Susan B. said: Anthony to the New York World in 1896: “Let me tell you what I think of cycling. I think it has done more for the emancipation of women than anything else in the world.”
Such was the common association between the feminist movement and cycling, that the bicycle became a symbol of the suffragette movement – where women rode free from Victorian social mores on a thriving supply of modern bicycles.
For this, we have the very enthusiastic investors of the 1890s to thank.
Invest like it’s 1999?
In 1999, Warren Buffett warned that world-changing technologies are often disruptive to investors who anticipate them correctly.
The automobile industry was one example: “If you had seen at the time of the first cars how this country would develop in terms of cars,” He said Annual VIP gathering in Sun Valley, ID. “You’d say, ‘This is where I should be.’ But (out of) two thousand (car) companies, as of a few years ago, only three were able to survive… So cars have had a tremendous impact on America, but in the opposite direction for investors.
Airlines were another example: “Imagine if you could see the future of the aviation industry right there at Kitty Hawk. You would have decided that was the place for you.”
But “until two years ago, there was no money to be made in the aggregate of all stock market investments in the airline industry in history.”
It was Buffett’s way of warning his VIP audience that they might be right that the Internet will change everything — and wrong that investors will benefit from it.
The dot-com bubble popped eight months later.
Today, artificial intelligence is the obvious candidate for the next world-changing technology that will ultimately disappoint investors: perhaps this is the case will A revolution in everything. But which companies, if any, will capture the value they create? It remains unguessable.
Encryption is another thing.
The news this year was shockingly good — the SEC flipped from anti-crypto to pro-crypto, the GENIUS Act legalized stablecoins, prediction markets went mainstream, and TradFi institutions rushed to participate — but token prices were shockingly bad.
It may just be because expectations preceded reality.
But it may also be a sign that whatever value cryptocurrencies eventually create, little of it will return to the investors who funded them.
People are excited about tokenizing assets in the real world, for example. But if most of these assets are tokenized by Robinhood, BlackRock, and DTCC, the cryptocurrency investors who funded the infrastructure that made tokenization possible won’t get much of the value it creates.
Likewise, the cryptocurrency industry has poured billions of dollars into developing zero-knowledge proofs, and it’s easy to imagine how great these things could be for the world — they could be humanity’s last line of defense against AI drift.
But it could also be terrible for investors: ZK’s proof is math that doesn’t need a tradable token to work.
There are many similar examples – most likely because the value that cryptocurrencies aim to create was never meant to be captured.
Quite the opposite: decentralized, composable, open-source cryptocurrencies were meant to disintermediate technology rent-seekers and destroy financial toll booths.
At the end of a disappointing year for token prices, it is tempting to conclude that cryptocurrencies are progressing too slowly towards those goals.
But if cryptocurrencies turn out to be as good for the world as bicycles, no one should complain if they are also bad for investors.
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