Bitcoin is a bubble, this is a statement that is thrown around a lot, but is it true?
In my opinion yes and no, its complex and a few misconceptions about Bitcoin exist I will break them down here;
“Bitcoin is based on nothing” – this statement is simply not true its actually pretty simple as to what the value of bitcoin is, electricity, it takes intensive Data Mining to get Bitcoin this method is what they call proof of work. This is pretty similar to mining gold it takes intensive industrial action to get gold, therefore, the price of gold must be in excess of these costs, bitcoin is the same the price of bitcoin must always be in excess of the cost of mining it. This is not to say that bitcoin or gold can’t drop in price so much that it would be a waste of time to mine it. However, this can only come from a lack of investor interest in buying gold of bitcoin. As long as there is a market to buy it those who mine gold or bitcoin will make sure their mining operation continues to turn over a profit, so prices will naturally increase over time.
“Bitcoin is crashing” – this one is something that is constantly said whenever bitcoins price makes a move of more than 20% downward, the hysterical articles fair to mention that if you look at the price over 6 months most of the time the increase is huge and even with a “Crash” the price still generally remains higher than the start of the price increase. The truth is bitcoin is still gaining liquidity and until it does it going to be a bumpy ride. In my opinion, bitcoin is a long-term investment not a get rich quick scheme.
“Its based on pure speculation” – this one is pretty funny because its true, but at the same time most other things in our stocks and banking system are too.
“Bitcoin is a bubble” – finally is it a bubble?
Yes, it is, and we are still in it the bubble hasn’t popped at least not the big one. I would look at blockchain as a secession of small bubbles which all happen within a larger bubble, these are in my opinion the bubbles we have been through and what I predict to be the next one; Frist we had the bitcoin bubble popped by mt-gox happened when bitcoin went from above 1000 USD down to almost below 200 these were dark times and even I also thought it was over and bitcoin was dead but not so. Next, up ICO’s this was 2017 bitcoins price went from 1000usd to almost 20k over the course of one year all major altcoins also rose by about 1000%. This popped and bitcoin currently stands at about 7k and while most altcoins are still up a lot from last year they have dropped since the ICO craze. Next, up well we have some indicators so as I see it its one of two things or both NTF’s like crypto kitties and projects like ours. NFTs have a lot of use cases from ours “art” to things like airline tickets, diamonds and other non-fungible things. The other boom could and will come from projects working on incentive-based peer to peer file storage such as file coin or Storj.
The author of this article is not an investment consultant and only opinions are expressed never invest what you are not willing to lose and do personal research first too.