Good or Bad, one thing is certain Bubbles move the world forward

After a gargantuan leap last week, the price of Bitcoin hit a record high above $4,500 on Thursday and the total value of the cryptocurrency reached an astonishing $74 billion.

The media is once again abuzz with the self-proclaimed experts telling anyone that will listen, that crypto is a classic bubble. This is worrying and fascinating at the same time. Everyone is jumping into the market, fuelling a spectacular bubble that Goldman Sachs predicts will burst within months.

Since the beginning of the year, we’ve seen a lot of volatility, mostly due to the scaling debate that was going on for the past couple of years. With the SegWit activation locked in, good things will happen. It looks like they already are happening, the first being the uncertainty is reduced.

The second important thing that’s happening, is institutional acceptance. Institutions are starting to come into the market. High net worth individuals, fund and assets managers, private funds and institutional investors are one of the main reasons we are seeing the price of Bitcoin rising. They are starting to realize that this is a non-correlated new asset class with very high returns. Since its launch in 2009, Bitcoin has consistently outperformed every stock and currency in existence, by incredible margins. There are so many institutions looking to get into this space, there is a mountain of money ready to come into the market.

The third was the hard fork on August 1, with the Bitcoin network splitting in two, creating the new Bitcoin Cash. Everybody that already owned Bitcoin, got a bunch of Bitcoin Cash, kind of like a dividend. There was plenty of fear that the fork would hurt Bitcoin, but now with the split completed these fears have evaporated.

Perhaps more importantly, the Bitcoin and cryptocurrency markets have matured significantly in a span of 12 months, as the cryptocurrency market cap increased from a mere $11 billion to over $120 billion. Overseas markets have evolved, and an increased number of governments have legalized Bitcoin.

All these factors combined have caused a bull market. But can the market turn into a bear? It certainly can, if for example the government of major economy, lets say the US., passed regulations that are not crypto-friendly.

Bubbles are exhausting and people can easily get hurt, but all bubbles are not bad. Bubbles laid out railroads, built the telegraph and ships, created alternative energy, and brought the Internet to everyone around the world. Bubbles are moving Bitcoin the and cryptocurrency market fast forward.

But what creates a bubble, does not disappear when the bubble goes away. Not tulips, not railways, not the Internet. Nor will blockchain or cryptocurrencies disappear.

Bitcoin has laid out the path for decentralization. Decentralized money is better than fiat money. Decentralized social networks will be better than Facebook and Twitter. Decentralized search engines will be better than Google.

I think John McAfee said it best: “Bitcoin critics will point to temporary Bitcoin price declines as proof of their understanding, but it won’t matter in the end. The blockchain revolution will not be stopped. Those who understand the revolutionary potential of cryptocurrency, will be the leaders of this new world.”