Bitcoin might be a bubble, but it's a bubble that eats every other asset
Talk to any finance bro about their opinion about Bitcoin, their response is typically the same ‘It's a bubble’
Not to mention, they ignore the massive bubbles created in ‘Real estate’ and ‘Stock Markets’ created by endless and reckless money printing by central banks.
These finance gurus also think and profess as though ‘inflation’ is a natural phenomenon
Now for the sake of argument, let's assume Bitcoin is indeed a bubble but a bubble for some reason keeps growing and growing.
At USD 75,000 per Bitcoin ( as of writing ), Bitcoin is the best-performing asset of the last 15 years, not 15 days or months, 15 years is typically 3 business cycles in which many companies see their hey days and fall out of fashion from the public eye permanently.
Let's assume Bitcoiners ( those who invest in Bitcoin ) are crazy but as the price keeps going up, it attracts more buyers and due to its absolute scarcity of 21 million tokens enforced by verifiable mathematics, this means as more and more people get involved the price pushes higher and higher ( which looks and feels like a bubble ).
Here’s the interesting bit, no other asset in the world has this absolute scarcity
More houses can be built
More gold can be dug from the ground
More stocks can be printed by CEOs
More fiat currencies are always printed by central banks ( which is the primary reason for the bubble in everything else )
Since every other asset except Bitcoin has unlimited supply the ‘Bubble in Bitcoin’ can run forever.
If house prices in your county go up by 100% in a year, people will migrate to another county and build their houses there.
If the stock price goes up 100% in a year like in the case of Game stop CEOs will issue more stock and send the stock tumbling down (https://www.investopedia.com/gamestop-issues-new-shares-sending-stock-tumbling-8650090 )
If Gold price goes up too much, governments intervene and confiscate Gold, thus reducing the appetite for the asset.
Bitcoin is unaffected by these risks
No one can print more Bitcoin as its scarcity is enforced by decentralized computer nodes numbering in millions.
No government can confiscate Bitcoin because all it needs is a private key that can be a 12 or 24-word random word string that can be stored in memory and more importantly perform real-life business transactions with merchants if needed without needing a 3rd party like a bank.
The only risk to Bitcoin’s dominance is its clones — alternate crypto-currencies
The interesting thing to note here is that despite being over 15,000 competitors to Bitcoin in the last 15 years, None are able to dethrone Bitcoin’s dominance.
Every alternate cryptocurrency claims they are superior to Bitcoin, raise a bunch of funds via ICOs, out-perform Bitcoin for 1–2 years, then stop performing well and get lost into obsolescence.
This is the signal from the market that serious investors value Bitcoin over other cryptocurrencies.
Now going back to our discussion about Bitcoin being a bubble
what happens if Bitcoin crosses $100k ,or if Bitcoin crosses $500k
As mentioned the frenzy just piles up on itself, even the most ardent haters will be forced to bend their knee
What happens if Bitcoin crosses the hallowed $1 Million price mark, something very bad for Real-estate can happen
Now speed up the gears and think of Bitcoin crossing $2 Million.
Now Bitcoin would be larger the the world’s largest financial asset — the US treasury Market.
At this size, world’s biggest fund managers, sovereign wealth funds will be forced to invest into Bitcoin.
Eventually, even central banks will be forced to hold Bitcoin as a reserve asset on their balance sheets.
we are still not done here, total global assets including Real-estate, bonds , equities, land, Gold , Art is about 500 Trillion dollars.
So there is plenty of room for Bitcoin to go further, as people pull their money from these sub-par assets and go after Bitcoin propping up it even further.
Once Bitcoin crosses $10 Million a coin, something interesting will happen, weaker currencies like the Nigeria naira will fall into hyperinflation as more and more people dump their worthless fiat currencies for Bitcoin and use Bitcoin as their currency instead.
we are still not done.
The fall of one fiat currency will spook another country and prompt them to dump their fiat currency as well.
Eventually, everyone in the world will dump their fiat currencies with endless supply to one with a limited supply like Bitcoin.
This process will not happen tomorrow but will unfold over 50 years.
The laws of mathematics are inescapable even to the most despotic regimes on earth.
