Topic: Is Bitcoin a Bubble or Not? (Read 18580 times)

For those unfamiliar with Bitcoin, there are better ways to begin understanding it than this article; I'd recommend Wikipedia for starters. This article is intended for those who already think they know what Bitcoin is, but haven't yet traded in it. I was there - I thought I comprehended it, too, but having since dipped my toe in the pond, I've discovered an unexpectedly enlightening experience. There are so many nuances involved in the trading of Bitcoin as to make it tremendously educational. It forced me to consider a lot of the built-in features which go unscrutinized and even unrecognized in traditional currencies. In so doing, it made me assign my own values to those features, and allowed me to decide the most preferable ways of satisfying my various needs - choices which are normally taken from us.

There are aspects of Bitcoin which make it similar to fiat currency, but it is not cash. There are aspects similar to gold, but it is not bullion. There are aspects similar to securities, but it is not exactly a security. The question of "What is it?" is actually much more complicated than it appears. It exists solely as an entry in a distributed digital ledger; "having" Bitcoins really means having authority to transfer Bitcoins. No, in fact, that's not even technically correct. It means having a degree of authority measured in Bitcoins to transfer that very same authority. Try to wrap your brain around that. Going forward, I'll resort to referring to Bitcoins as the thing of value which is transferred, but understand that my doing so is solely shorthand to make this essay by professional "essay writer" readable. Having Bitcoins is the authority to transfer authority.

Thus, upon deciding to acquire my first Bitcoin, the first step was to determine how to attain authority to transfer Bitcoins. One could theoretically print out the cryptographic code of a Bitcoin and hand the paper to someone else as a means of transferring the Bitcoin represented by the code, but how would that recipient know that the printout hadn't been duplicated and already spent? For that matter, how would the recipient know that the printout even represented some value in Bitcoin rather than merely a string of random characters? Transferring printouts of Bitcoin on paper may work (albeit inefficiently) between people who implicitly trust each other, such as for gifts between relatives, but the genius of Bitcoin is the distributed but authoritative nature of its ledger, and for that to work, transactions have to be exposed to its network.

If a Bitcoin printout is transferred around amongst a group of people without being exposed to the network, none of them would know whether it was valid or counterfeit. It would be like passing around a bank draft made payable to "Bearer;" it might have already been paid, or it might never have been good in the first place. No one would know until they tried to present it for payment at the maker's bank. As long as someone else is willing to accept a potentially-hot potato for goods or services, perhaps it doesn't matter, but people tend to be wary of ending up with hot potatoes. I am one such person, so I wanted my receipt of Bitcoins to be verified by the network. This turned my focus to a study of digital Bitcoin "wallets." Wallets are a digital place to store Bitcoin authority codes.

I think we have seen enough performance in the crypto space so far and I think that it would be sought of absurd to called Bitcoin bubble because it has been pretty amazing so far in the market so far. In addition, the great companies in the IT sector like Microsoft or companies like Facebook have embarked upon the journey to crypto specialization. So there are not enough evidence to call it bubble.

The Bitcoin bubble and tulip bubble are both somewhat unusual because the assets being traded aren't expected to produce any kind of revenue for owners. When someone buys a technology stock, they expect the company to eventually become profitable and pay dividends. You can say the same thing about railroad stocks in the 19th Century and radio and airplane stocks that contributed to the stock market bubble in the 1920s.


Goldfarb compares bitcoins to assets with "artificial scarcity" like fine art. "It'll have value so long as people believe it has value," Goldfarb says.

We shouldn't take this line of argument too far, however. Bitcoins don't pay dividends, but their value can be pushed upward if a lot of people start using the Bitcoin network. The supply of bitcoins is permanently capped at 21 million. So if a lot of people want to make payments over the Bitcoin network, the value of bitcoins will need to rise (or at least stay at high levels) to accommodate that demand.

The other, weirder possibility is that bitcoins could prove to be a digital version of gold. Gold's value defies conventional market analysis in much the same way bitcoin's value does. Gold doesn't pay a dividend and only about 60 percent of the world's gold supply is devoted to jewelry or industrial use.

A lot of gold is held in vaults and under floorboards as a long-term store of value and a hedge against inflation and global turmoil—and this kind of speculative trading has a big impact on gold's price. If enough people continue believing that gold is a good investment, this becomes a self-fulfilling prophesy.

Something similar could be happening with an emotional support animal (ESA) Letter. Bitcoin now has a large subculture of "hodlers"—a deliberate, whimsical misspelling of "holders"—who make it a point of pride that they hold on to their bitcoins as a long-term investment regardless of short-term market fluctuations. The hodler ideology could be self-fulfilling in much the same way that goldbug ideology is: the more people who come to believe that bitcoins are a good long-term store of wealth, the more it will be a good long-term store of wealth.

Correction: This article originally said jewelry accounted for a small fraction of gold usage, but it's actually about 60 percent.

Yep, that's right, so indeed bitcoin is a bubble, but wait, how can we categorically says its a bubble when it can recover after being burst? And that is the mystery that's why many are intrigue about it and why many are anti-crypto (specially those old fart/traditional economist). 

Bubble when burst never return back but this is not what happens with bitcoins. Bitcoin might make lower lows in bear trend, but it do always recover well. Since bitcoin adaption is increasing on daily basis, we will less frequently see the bitcoin pump and dump situation and bitcoin will rather emerge as a stable currency.

Of course, Bitcoin can be called a financial bubble, since it is not secured in any way and its price is formed solely on the ratio of supply and demand for it in the market. However, this still means little. The dollar can also be called a financial bubble, because it has not been provided with anything since the seventies either. However, the financial system continues to operate.
Bitcoin now does not represent a big risk for investors. Increased risk level will be when it reaches high price values. Then lucky one who has time to dispose of their investments. There are still many surprises ahead of us.

When there is positivity surely there will be something negative. Same is happening with certain group of people who doesn't know much about bitcoin, but looking the growth used to mention it a bubble. From my experience it is the inability of the people, because out of frustration and unable to make an investment that could've profited them good is the reason for this kind of statements mentioning bitcoin a bubble.

Simply put bitcoin is not a bubble.  What prices do on a month to month basis its anyone's guess.  But the utility of btc grows month over month, year over year.  It might take awhile but cryptocurrency as a whole is here to stay.  I'm excited about the future for crypto and what it can possibly do to world economics

I don't have much knowledge about economic bubble but I don't even think that bitcoin is include to economic bubble. See the history of economic bubble which has happened and you can comparing it. Now, I see bitcoin is the alternative for everyone to make a transaction or they can make as a tool for money transfer because it will be easy if we use bitcoin, so as this demand will occur for a long time as long there is a new tool who can do it and everyone believe to the tool. Other than that, lots of people use bitcoin as alternative investment place which has been making many people got wealth from it, and I do believe for those people who has felt it will make him comfortable using bitcoin and this will make bitcoin can be trusted.

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This is correct, can not be taken as a bubble to what is an economy that practically no state or banking agency can control, and that feeling of freedom is what has always been sought, only supply and demand are the determinants and represent to bitcoin. The technology can be seen in different projects, blockchain is here to stay, the best representation of all these advances are thanks to Bitcoin.

Unlike money circulating programs, bitcoin got many real-life applications which makes it worth to invest hence bitcoin cannot be a bubble. It is gaining value for its utility and usage for real-life needs. Sometimes, bitcoin prices may get pumped to beyond the demand levels and then it might get burst out. That is common for any commodity. If bitcoin is a bubble then gold is a also a bubble because gold also has nothing different from bitcoins. Gold is a just a metal and only due to demands its gaining its value whereas bitcoin is a digital asset and lives only in electronic format and this also gaining its value exact similar to gold.

The biggest way to consider this or similar questions would be via contrast.   There is no perfect currency, all have some inefficiencies to them and a purpose and utility gained over what would be simple barter otherwise which of course causes lots of problems and restriction to trade.

Just on the basis could BTC mobilise trade that otherwise would never exist, yes it is justified.  Is it the best product out there is another question and will take longer to consider because the whole sector is new and developing.
I think BTC as a currency is best suited towards digital goods rather then physical, it can do anything but to me I think that is its most likely sucessful domain.  Digital goods is a growth sector so I dont see BTC is a bubble or likely to disappear.   It could still be that a better product replaces it, society as a whole will favour the product which does the job best and that is the way it should be.


Also a big question to consider is that bubbles or inaccuracies in pricing do not exist in isolation.   We have ongoing currency worth mixed with QE programs that have never been reversed, its likely this is related to BTC pricing and all currencies worth imo

Macro economic view of possible bubbles (not just BTC) - https://www.dlacalle.com/en/back-to-fundamentals/

Tulip mania doesn't have anything to get relative to the bitcoin. What we see with bitcoin is the real growth, at times there were little price manipulation and the same gets termed as bubbles if it provides with a large scale profiting. Growth waves will continue to be a part of cryptocurrency, and this at times gets mentioned as bubbles. Nothing is gonna happen on these indications.

The foundations of cryptocurrencies is bitcoin and it is standing today in all structures of cryptocurrencies.  Bitcoin should be trusted as to me it is the future of cryptocurrencies and fiat money. I have see people saying bitcoin is a bubble but it is not a bubble to me.  The up and down of the cryptocurrencies pricing is a sign that activities are going on in cryptocurrencies market.

Bitcoin is a precious gem where you would have seen its potential in 2017, it's clear that BTC is a Star competitor in crypto market. Don't panic and don't be optimistic Bitcoin still leading as a number 1 coin without any doubt. Just believe in this.

With prices that can pump high and also fall then it will be like a bubble, but that's just an assumption and I don't think hard about it. No need to panic, bitcoin still has the opportunity to grow again.

Bitcoin is one of the important building blocks for the market. There is no doubt the future will have much older than the level where I think back to the very important place.

Bitcoin bubble for a while as to whether there is nothing definitive to me. It just needs a bit of improvement will determine when something important measure of the market has to come a little more proper place.

I think that BTC was in a bubble in 2017, but that is almost nothing compared to new bubbles which will come in next few years. BTC is nothing like tulip mania, because tulip bubble burst only once and never came back.

Whenever there is a price pumping some news will come out stating bitcoin is a bubble. There is no need to be worried whether bitcoin is a bubble or not. We need to read the market and invest. If we keep on examining whether it is a bubble scheme what we gonna miss is the opportunity to invest at the low bottom.