There is no Bitcoin Bubble

in #bitcoin7 years ago (edited)

Bitcoin Critics Don't Know What Bitcoin Is

       There have always been people who have thought Bitcoin is a bubble, but usually these people have not known much about either what Bitcoin is, or how financial markets work. Many critics recently think that Bitcoin is not useful for anything, but look at my post here to see how it in the future will become a prominent store of value.
      Warren Buffet is a big believer that Bitcoin is a bubble, and has caused many worries in the Bitcoin community, but he has actually said that he does not know much about them*:

"I get into enough trouble with things I think I know something about. Why in the world should I take a long or short position in something I don't know anything about.”

This shows that when Warren Buffet talks about Bitcoin, he really doesn't know much about it, and what gives it value. Many other critics of Bitcoin surely are the same.

Bitcoin Isn't Like The Tulip and .com Booms

      Thinking Bitcoin is a bubble is obviously based in reality, because there have been many bubbles in the past, such as the tulip craze in 1637 and the .com boom in the early 2000s. But Bitcoin is truly different. While the .com boom and the tulip craze were both based on a physical entity, stocks and tulips respectively, that have an intrinsic price (e.g. a tulip can be grown for x dollars, or a company has a yearly revenue of just x dollars) while all that gives Bitcoin value is the hard supply limit of 21 million.

      This means that Bitcoin can grow to 10,000% of its previous price, and there is no intrinsic price to hold it back. While in the tulip and .com booms, once the price grew to absurdly high amounts, investors realized that the current price was high beyond the true intrinsic price of these items. But for Bitcoin, there is nothing grounding its price. This allows it to extend much further than any other massively growing item.While Bitcoin may have a small 'pop' in the future, it will not be large as any Bitcoin critics think.

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Sources:
*Warren Buffet says he does not know much about cryptocurrencies : https://cointelegraph.com/news/warren-buffet-admits-ignorance-while-slamming-cryptocurrencies.