For these two reasons, it might almost be possible to conclude that the bitcoin bubble doesn’t matter, at least from a macroeconomic standpoint. The lack of leverage means that if and when the bitcoin bubble implodes, the economic repercussions will be limited and there will be few “ripple effects”. Indeed, our clients may remember that Gavekal likes to classify bubbles as either “productive” (when capital pours into productive assets such as railways, or telecom lines) or “unproductive” (when capital pours into scarce assets, like modern art, gold, or land in Japan). In a nonproductive bubble, when the implosion happens the economic system is left with neither more nor less land, gold, or Van Goghs than it started with. In a productive bubble, the implosion means that assets usually change hands to a new set of owners who can maximize the revenue from the investments made.The other characteristic of bubbles is how they are financed. Bubbles financed by debt have wide-ranging repercussions, and can often trigger a decade-long hangover. Bubbles financed by equity are typically worked out fairly quickly; the equity just moves to a new set of owners without too much long-term drag on the economy’s structural growth.