Bitcoin and bubbles – in our three-part series, we explore what makes bubbles speculative, whether we are currently in a bubble, and how the future might look like. Today: Is Bitcoin a bubble?
As we learned in part 1, among other things, is the speculation of a market bubble a situation in which the prices of goods are above their intrinsic value. Like the Tulip mania or the DotCom Bubble of the people from the greed of the quick money push. While a Few stand as the winner, will lose a Lot of that invested in their delusion for the blind. However, we are also currently in such a Situation? Bitcoin is a bubble? Here, first of all, to the intrinsic value, the fundamental value of Bitcoin.
The question of inner values – the heart of the matter
The crux of the matter – That we recognize what holds together the crypto world in the innermost.
Strictly speaking, as many researchers agree, Bitcoin has no fundamental value. You can eat it, nor someone to throw – what should he be worth it? Theoretically, you could cancel the viewing. Bitcoin = Bubble. However, let us recall the basic idea behind Bitcoin.
Bitcoin, the Vision of Satoshi Nakamoto, is a digital peer-to-peer payment system. Without middle men, without institutions, Without banks. Without interest, without having to trust in something outside of technology. And that is, in the broadest sense, the fundamental value of crypto-currencies, respectively: The technology, the Blockchain, and all of their children.
Again and again, Zimbabwean money is a matter of trust
The Victoria falls in Zimbabwe: Here, the Inflation was so high that it is abolishing the country’s own currency
Zimbabwe, my favorite example: The inflation rate increased in the African country sometime so strong that the money was in the evening only a fraction of its value, what it had tasted in the Morning. The state abolished the country’s own currency, the bubble had burst. In the Wake of the state used foreign currencies, but even this came soon to their limits. Either the banks calculated much to high fees or there was simply no money there, that could come out of the machine. And here, Bitcoin came into the game, the people familiar with the technology much more than the institutions.
Bitcoin should be a bubble that can blow up the crypto-currency, like in Zimbabwe, the largest of all the rank in dispute: The Central banks-issued Fiat money. Because Fiat money is “just” a bubble. The US Dollar consists of 75% cardboard and 25 percent of paper. The actual fundamental value, ultimately, is trust. Fiat currencies are worth just as much as the paper they’re printed on.
Which bubble will burst first?
Crypto-or Fiat – Which bubble will burst first?
And here it comes finally also to it, which bubble now bursts. You have to be well balanced. Will prevail, the distrust of institutions? It may occur that the confidence in the technology, on the other hand, is large enough, the other bubble to Burst.
An important question arises: How to measure the value of trust? For some it is priceless, for others completely overrated. The market situation is, at least, indisputably, has a strong blow character. The speculation percentage is very high, while the use of crypto is barely present currencies at the moment – the market is probably still too young. Many smell the easy money, invest blindly and have very little idea of the technology behind it. We hold, therefore, that The market has clear bubbles character, strictly speaking, Bitcoin is currencies, as Fiat is a bubble. (And both are blown often!) However, he should not disturb us, indeed?
There’s quite a Lot still comes
What time is it separates the wheat from the chaff?
In the crypto-universe about to burst a few bubbles – the chaff will separate from the wheat. Because our Situation is quite similar to the beginning of the dot-com bubble. There’s this new ground-breaking technology on the one side. On the other hand, there are free-riders who want to draw as much capital as possible out of the bubble before it bursts. Currently, 1676 announced ICOs circulating on icobench.com – 1258 in the area of “crypto-currencies” – we need more crypto-currencies? On The Contrary.
What we need are currencies less Crypto, for those that work. If Bitcoin and the Lightning Network manage to get the scaling problems in the handle, or whether Ethereum Smart Contracts ultimately will establish the white. Perhaps one of the ICOs also manages to actually enforce. Or it is the outsider Monero appreciated? This is also in the stars, such as the question of whether to enforce IOTA and Tangle in the Internet of things. Maybe a competitor comes around the corner shot and wide.
One thing is for sure: The crypto – and, above all, the ICO-bubble is yet to burst more often. But the Blockchain technology will prevail, in whatever Form. Whether it is to enforce Bitcoin as a currency, is uncertain. As a classic form of investment in the sense of an asset or as a digital Gold, it has a lot more opportunities. But more about that in the third part.