Many critics of Bitcoin’s skyrocketing value say that it is an economic “bubble:” a rapid increase in price with no corresponding underlying value. Bitcoin supporters, of course, argue that assertion.
Bitcoin.com reported that Malavika Nair of Troy University describes Bitcoin’s price phenomenon as something other than a classic bubble. Bubbles, she said, do not go up, up, up, then down a bit, only to go up, up, up in price a full step higher than before.
“Whatever it is,” she reiterated, referring to Bitcoin’s valuation, “it is definitely not a bubble.”
Timothy B. Lee of Arstechnica.com made the following points:
“…people have been predicting Bitcoin’s impending demise for years, and they’ve consistently been wrong. Even if Bitcoin were to lose 90 percent of its value in the coming weeks, it would still be worth around $800—a value many people dismissed as an absurd bubble four years ago. If it lost 99 percent of its value, it would be worth $80—a value that would have been considered absurdly high less than five years ago.”
“Blockchains are an important new technology, and cryptocurrencies are a fundamentally new asset class. Bitcoin, the most popular cryptocurrency, might be overvalued right now, but it might not be.”
Either way, it certainly isn’t going to suffer an Enron-style collapse.
John McAfee — whose company, MGT Capital, recently announced it is mining cryptocurrencies — is among those who see both the current and future value.
“Those who understand this tool see immediately the absurdity of words like ‘bubble,’ ‘investment,’ etc. when applied to cryptocurrencies,” he wrote at BusinessInsider.com. “These thought leaders use Bitcoin to buy and sell and those who use bitcoin exclusively as a currency and use no other currency – and I personally know dozens who do so – could care less about what bitcoin is worth in dollars.” He added:
These people see, and have seen for some time, that the old paradigm constructs are meaningless in this new world.
The Bitcoin Coaches have consistently stated that the people who understand the multiple underlying characteristics that give Bitcoin value are the reason the value keeps increasing. We certainly discount the notion that Bitcoin’s price elevation represents a bubble. We believe that, for the most part, it represents people with an understanding of what value means putting their money into a good store of value.