Marc Serafino
Bitcoin is seemingly unstoppable. China has recently decided to (temporarily) ban ICOs (Initial Coin Offerings) in the country, and that slowed down the momentum of the world’s first cryptocurrency. And we’re going to talk about that “momentum” in this article…
Some people think Bitcoin is a bubble some disagree, saying that it paves the way for a new technology (blockchain) that will change many industries, and that’s why it’s worth that much.
We’ve browsed around the web, read a dozen articles and here we present you with different points of view. You be the judge whether this is a bubble or not…
Is it a bubble?
There are folks who think Bitcoin is indeed a bubble and that it is only a matter of time when it will burst. But… even they realize the benefits of the underlying technology — blockchain.
In that sense, some of them argue the fact that many people are trying to convince themselves that Bitcoin is not a bubble — is another sign of a bubble. However, they also add that it is not necessarily a bad thing, rather it is just the way the economy works.
We had a dot-com bubble in 1990’s, railroads bubble, biotech bubble and so on. None of those industries perished, they have just changed. Similarly, we may be at the point when the Bitcoin bubble will burst, causing the decrease of its price, only to get back to its current levels — and even grow afterwards.
Or not?
Yes, Bitcoin has experienced a tremendous growth though that doesn’t mean we are in the bubble. Sure, there is a lot of “hype” around the entire cryptocurrency market, but that comes as given with many modern technologies that aim to change the world.
“If bitcoin succeeds, there will likely be a series of tipping-points where the value jumps up due to a widely observed new plateau of acceptance,” said Josh Hannah, venture capitalist and entrepreneur with Matrix Partners.
He went on to add that we may be in one of those tipping-points before the next wave of growth.
My thinking falls between the same lines. Personally, I believe we may have entered a short period of stagnation that could last for a few months, after which we’ll be back on the growth path.
During this stagnation, a major news — such as the mentioned decision of China to regulate ICOs — may cause the drop in price of Bitcoin. But things will get back to normal shortly afterwards. We live in the age of fast change, and what used to take years, today takes months, perhaps even weeks.
Bitcoin has strong fundamentals that, long term, work in its favor:
- A strict monetary policy that will produce no more than 21 million bitcoins — as with any limited commodity, Bitcoin gains value over time.
- Growing acceptance – with new vendors joining the market on an almost daily basis.
- Remittances – this is one of the markets Bitcoin and other cryptocurrencies can truly transform, making it more affordable and secure to move money from one side of the globe to the other.
- Big business support – you can spend your bitcoins with companies like Microsoft, Expedia, Overstock and many others. Also, big banks are looking for their share of the pie.
- Decentralized – no government or any other body can (directly) interfere in the value of bitcoin and transactions in its blockchain.
- Great underlying technology – beyond peer-to-peer money transfers, blockchain has many other use cases.
Finally, Bitcoin gets to benefit from the uncertainty in the world affairs; it remains a beacon of stability in the crazy world we live in.
Conclusion
While we may agree that Bitcoin, and other cryptocurrencies, have been and still are over-hyped, we don’t think this is a bubble.
Simply put, cryptocurrencies aim to disrupt the huge market and right now they are just a drop in a bucket, leaving a ton of room for growth.
Bitcoin will have its ups and downs, but long-term it has something to offer, all while changing the global financial system for good. And you know what? You can take part in that revolution. So what are you waiting for?
