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Is Bitcoin a Bubble? Should investors repose their faith in something that could go bust or are they sticking by their favorite cryptocurrency?
What could be more terrifying than making a lot of money and then losing it the next instant? Markets offer investors the opportunity to make money in both bull and bearish phases but to many, a market bubble is something appalling or frightening.
What would happen if all their ‘hard earned’ profits just vanish as the bubble goes bust? Yet, we see somewhat of a resilience when it comes to Bitcoin investors, who have chosen to repose their faith in the world’s first every cryptocurrency.
Recently, Bryan Rich a contributor at Forbes wrote an article titled, “Is Bitcoin a Bubble.” Rich writes, “If you're looking for a warning signal on why the Bitcoin move might not be sustainable, just look at the behavior across global markets. It's not exactly an environment that would inspire confidence.”
He goes on the propound the theory about Chinese stocks and how they took down the global markets. New York Post quoted Fidelity Investments Chief Executive Abigail Johnson as saying, “It’s no accident that I’m one of the few standing before you today from a large financial services company that hasn’t given up on digital currencies.” Just like Abigail, there are many who choose to see Bitcoin as a currency that has real world application and usefulness.
They also notice that just like any other currency, Bitcoin has come out of nowhere and its value is derived from the belief that its users hold in it. The currency has stood the test of time since it was founded in 2008 even though it has been accused of being a Ponzi scheme, a currency of criminals and other unsubstantiated and baseless things.
Bitcoin has become a foundation of a new economic system that is changing the way the world looks at finance internationally. The technology behind the currency has led to the birth of other cryptocurrencies, commonly known as altcoins that have their own user-base and applications.
Bitcoin has also become the currency of choice for troubled parts of the world where national currencies have come under pressure due to governmental mismanagement or other reasons. Whether it was Venezuela or Nigeria or the demonetization fiasco in India. Other than that there is now also a wider acceptance of Bitcoin even among governments, with Japan leading the pack by giving Bitcoin the status of Money.
Explaining the importance of Bitcoin Tim Draper, Founder and Managing Director of Draper Fisher Jurvetson tells Cointelegraph:
“Long term, Bitcoin is so important to the world economy that I suspect the price will continue to rise overall. Although, I expect to see fits and starts. The importance revolves around global liquidity and simplified and lower cost, lower friction cross-border transactions.”
When it comes to Bitcoin, China and Japan are way ahead of everyone else. China is already the mining capital when it comes to Bitcoin and Japan has already taken lead in adoption of digital currencies including Bitcoin.
Yet Bitcoin can not be relegated to just one geography as Tim Draper says:
“I think Bitcoin is now a global phenomenon, so demand for Bitcoin is coming from all over the world. I know that China is using Bitcoin to more easily send money to other countries, and the people of challenged countries like Argentina and Cypress flee to Bitcoin when their own currencies are no longer viable or if they are inflationary. Throughout Africa, Bitpesa makes it easier to buy and sell goods with Bitcoin.”
When it comes to East Asia though, Bitcoin has already made its mark in Japan and other cryptocurrencies are also on the rise. Kagayaki Kawabata of Coincheck adds, “I think Japan is greatly contributing to the overall price increase of cryptocurrency. At Coincheck user can buy and sell 12 different cryptocurrencies. As well as Bitcoin we are seeing a volume increase in all other cryptos as well. People is looking for next big thing after Bitcoin.”
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