Mainstream media outlets and other financial publications have been trying to smear bitcoin for years now, so much so that most bitcoiners started ignoring these claims., although they’re arguably helping the cryptocurrency ecosystem grow. Back in 2013, when one bitcoin was still worth $84, Whistling in the Wind published a story dubbed “The bitcoin bubble has burst.”
In it, the author stated that it “finally happened” and that once we looked at the charts it was clear all was left to do was “watch its steady an inexorable decline.” Per that post’s author, there was no reason to see why there shouldn’t be a bit of smugness in his words, as bitcoin’s “crash” mirrored other crashes, and allowed us to draw conclusions on how an economy would operate without a central bank. The author’s words certainly didn’t age well, as bitcoin is currently trading at $17,650 and recently hit a new all-time high above $17,900, according to data from Cryptocompare.
Although the bubble talk has clearly been around for years, it has been intensifying due to bitcoin’s recent heights. Recently, various Wall Street personalities and financial news outlets have been comparing bitcoin’s growth to the 17th-century tulip bulb bubble, to the dot-com bubble, to the South Sea bubble, and to the housing bubble.
Vice News recently published a video dubbed “This is what it’s like to be addicted to bitcoin.” In the video, Jay Kang tells us his bitcoin story, which he calls his “life on the bitcoin bubble,” where he somehow doesn’t remember any good moments but only crashes. In the video, Kang admits he gambled away three bitcoins in a soccer game between two teams he didn’t even know when he heard about China’s cryptocurrency crackdown.
This shows us that Kang (probably) has a gambling problem and that he didn’t buy bitcoin for the right reasons – he bought the currency as an investment, hoping it would make him money. Later on in the video, however, he has the nerve to add that “everybody’s a genius right now because everybody’s getting rich.”
Vice’s video, much like various mainstream media articles seem to be trying to fill the cryptocurrency community and the unsuspecting public with fear, uncertainty, and doubt (FUD). What they’re showing us is their bias.
Is This A Bitcoin Bubble?
The short answer here is: we don’t know. An asset’s price is typically derived from its fundamentals, defined as the aspects that asset has that make it valuable. These fundamentals could be the income earned from dividends, the company’s cash flow, or the rent a property will yield.
Bitcoin is a currency, it doesn’t pay dividends, there’s no rent involved, nor is it attached to a national economy like fiat currencies. The world has never seen anything like Bitcoin, and in search for fundamentals some have looked at its limited supply, regulated by its own technology, and to its number of users.
Truth is, economists don’t know how to value bitcoin yet. It is uncharted territory to which historical examples may or may not apply. All we truly know is we are witnessing a new phenomenon, which can either be a complete failure, or the emergence of the people’s money.
Yet, mainstream outlets keep trying to smear bitcoin, with headlines such as “Is Bitcoin a Bubble? 96% of Economists Say ‘Yes’”. When JP Morgan CEO Jamie Dimon compared bitcoin to the Dutch tulip bubble, the media went crazy over it, yet most (or all) neglected to mention that, as a matter of fact, the “tulipmania” story has been completely distorted throughout the years. Per these ludicrous headlines, bitcoin has already died over 200 times.
There’s no other good store of value
With all of the above being said, many may argue bitcoin’s fees are currently stopping it from being a currency, hence most people just buy it as an investment. Most may buy it as an investment, partly thanks to the media’s ludicrous headlines, and partly due to FOMO (fear of missing out).
Either way, once their money is on the line, they’ll study the cryptocurrency and will then see the big picture. They’ll see traditional savings accounts don’t even allow people to keep up with the pace of actual inflation, they’ll see central banks control the currencies people use, and manipulate them to keep interest rates low.
Moreover, they’ll notice stocks, bonds, and estate are all in a bubble, as the economy has reached its “maximum sustainable output,” something that hasn’t happened since 2007 – and we all know what happened next. Only two options are left: bitcoin and gold. Out of these, only one can’t be manipulated, or transferred without the need of an intermediary, for example.
Bitcoin is censorship-resistant money that’s here to stay. All the media’s bitcoin “bubble” talk is doing is showing cryptocurrency to the world. Coinbase, one of the U.S.’s most popular cryptocurrency exchange, recently surpassed the 10 million user mark, with Blockchain.info going past 20 million. In the words of Oscar Wilde:
“There is only one thing in life worse than being talked about, and that is not being talked about.”