Being on the other side of the argument
The bubble that’s on everyone’s mind
The very mention of the word will either trigger speculation or curiosity in your head.
We keep hearing about people on the internet making millions overnight from this “Bitcoin thing”, and we keep hearing how it’s “the next big thing” — So in my opinion, the only important thing we should be asking ourselves now is:
“Is it too late to get involved with Bitcoin?”
But getting involved with Bitcoin is easy.
Just download a Bitcoin wallet from the app store and do a quick Google search on where the nearest Bitcoin ATM is — and you’re set.
What’s not so easy about Bitcoin is helping people get over the speculations they have about it.
Which is precisely why I’m writing about Bitcoin in this article.
So is Bitcoin a “bubble”?
Undeniably one of the go-to points made when people express their reservations on Bitcoin. People have trouble understanding the actual value of Bitcoin, and because of that, they explain any dip in price as a sign of a bubble.
But if you do consider Bitcoin to be a bubble, would you also have considered the internet to be a bubble in the early 90's? Or what about the American Dollar? Would you call the act of excessively printing money through “quantitative easing” a bubble?
In reality, there isn’t a list of codes or rules that I can point to that can guarantee that Bitcoin is not a bubble. But what I can point to are reasons and facts as to why Bitcoin is a better alternative to traditional currencies that are in fact vulnerable to bubbles.
What most people conveniently forget is that Bitcoin was called a bubble when it rose to $1,000 and fell to $230 in November 2013. Or even the time in 2011 when Bitcoin went from $30 and dropped to $0.25. As of writing this article, Bitcoin is sitting at $14,100.
But what’s pushing the actual value of Bitcoin?
A reason why people think Bitcoin is a bubble is that people don’t quite know what the actual value of bitcoin is. Buying Bitcoin is not like buying a stock in a company, nor is it like buying a house in the early 2000s as an asset.
Instead, Bitcoin as a network is more similar to Facebook, Alibaba, and Google — And if we used the same metrics that measure the value of these companies, we can explain 94% of the behavior of Bitcoin. Metcalfe’s Law states that the value of a network is the number of users squared. Just like a cellphone, the value of your cell phone increases when more people have cell phones for you to reach them with.
So when you call Bitcoin a bubble, is it because you don’t understand where the numbers are coming from? Or is it because you’re still waiting to be right one day?
