Bitcoin: A buzzword with Banks and Counter Culturists – From Automobile Associations To Zoologists.
I can tell you what I know will happen to bitcoin and Cryptocurrency.
In a world of sensationalism, scaremongering fragility pedlars, hyping the counter-economics culture we live in.
I shed some light on the financial climate we live in today.
- The first idea is obvious. Bitcoin could go to $0 it’s just a hula hoop. It will be banned. It will be cracked. It’s just madness. This could happen, but let’s go back to the golden rule. We are sure this is not going to happen.
- Cryptocurrency is the new gold. There is $5 trillion of gold in the world. Why not $5 trillion of bitcoin and alt-coins? That’s about $100,000 a Bitcoin
- There is $13 trillion of US money, but $ 19 trillion in US debt. That’s a gap of $6 trillion dollars – not enough US cash to cover the US government’s debt. That is creating a monetary vacuum that Bitcoin WILL fill, one bitcoin will be worth a staggering $500,000 at the current level of issuance. (There is also $25 trillion in shares needing money to transact, so this idea has a certain attraction for me.)
- Cryptocurrency could be as big as the NYSE stock market, which has a current market cap of $17 trillion. That’s equivalent to well over a million dollars per Bitcoin.
- Bitcoins have 100,000,000 fractions, called satoshis. If each fraction was worth a US cent, the biggest convenient fragment, then a bitcoin would be worth $1,000,000. I like this one especially because it is so simple, contains lots of zeros, is hilariously huge, just looks good on paper and is crazy enough to be right. (But don’t bank on it.)
Trees don’t grow to the skies–so goes the old investor saying. The idea is that there is always a top to any boom or bubble and while “to the moon” is a great motto, it is not a likely outcome.
The boom, bubble and bust cannot be avoided; it is the history of innovation. But where are we in that cycle in regards to Bitcoin?
I believe we are still early in the process. We all know about the Tulip bubble.
It is generally considered the first recorded speculative bubble . In Europe, formal futures markets appeared in the Dutch Republic during the 17th century. Among the most notable centered on the tulip market, at the height of tulip mania.
We had the global financial crisis of 2007/2008 which was, in effect, another bubble burst. It was the worst we had seen since the crisis in the 1920s – The Great Depression These are bubbles which affect billions of people.
The Black Swan and anti-fragility education I am receiving now is teaching me in the most diligent manner how to deal with the impact of the unexpected, the improbable. The gaining from stress, building barricades to become strong to anything not predicted. Reading speculators will not teach you anything. Anti-fragility and Black Swan education is essential for all humans.
Umberto Eco is encyclopedic, insightful, and nondull. He owns 30,000 books. He separates visitors into two characters those that say “Wow!” and those that – a very small minority – who get the point that a private library is not an ego boosting appendage but the most powerful tool that a human being can possess.
Not the books read.
The books unread.
The history of our time on earth since the Dutch tulip mania in 1637, tells you all you need to know. Crypto will blow.
I think blockchain is bigger than dot-com because while dot-com was about chat – sorry communications – blockchain is about resources. While chat, sorry communications, has value, money is value. Blockchain will be for assets, what AI will do for trucking.
I speculate below about the numbers involved in the bursting of this bubble. Look at the fragility of the dot-com bubble. The NASDAQ index spiked sharply from 1996. Until March 2000. Traditional metrics of business success were seemingly rendered obsolete. Several companies launched hugely successful initial public offerings (IPOs) without ever having made a dime in profit. This has similar traits to the initial coin offerings (ICOs) being banded around in the blockchain sphere.
Inevitably, this market came crashing down.
It never recovered to the levels at the turn of the millennium.
Beginning in March 2000, trillions of dollars’ worth of paper valuations vanished in a matter of months. Yet amid the rubble, certain companies survived. Steve Jobs did well out of it. He got himself a job after, losing Apple, recovered, returning to Apple and built a juggernaut. Amazon and E-bay went from strength to strength and now stand on the crest of a wave – as China grows, it will innovate and the western world will look to them for trade, innovation, design and labour.
It is important to distinguish between network effects from market building tools, such as price effects and brand effects. Misunderstanding of these distinctions is the source of the current confusion over how to follow business models, this was the major contribution to the dot-com boom and bust.
Companies were captivated by the “Get Big Fast” and “Get large or get lost.” Companies spent lavishly to lure customers in the hope in hopes of achieving insurmountable market share advantage. The companies responded: for example, via discounting and couponing, creating price effects. Attracting customers through extraordinarily low prices as low as zero in some cases – is a foolproof way of buying market share, at least temporarily. The problem is that price effects are evanescent. They just disappear. None 1-2 percent convert from free contracts to paying. The sheer quantity of paperless valuations from millions of false contracts caused a crash which had serious financial ramifications for millions across the world.
Cryptocurrency has to learn from this bubble.
What can it do to prolong its rise? Putting these foundations in place – the regulations which have caused the price to dip are actually necessary for the cyber-currency to gain strength and traction again.
The Bitcoin and cryptocurrency market bubble will eventually burst.
A tree doesn’t just go up, if it did, you wouldn’t be able to have planes.
Knowing when to get in and out can be extremely lucrative.
Surely this is madness – let’s go back to the start.
Things don’t go up forever.
But we should think again.
We must try and forget what we think we know,
We must keep our minds as open as possible and even stretch them.
So let’s do a little mental workout.
The maximum number of Bitcoins is 21 million (that’s the hard limit the creators put in place), so at $1,000,000 each that would be $21 trillion dollars of Bitcoin.
…not impossible, just inconceivable.
To be fair, no one knows.
There is a shortage of money in the world, that is helping to drive Cryptocurrency prices.