The Inevitable Strikes Bitcoin
I've mourned on these digital pages before about my regret for not having bought Bitcoin in the past. Indeed, my partner on my first website, SwiftEconomics.com, wrote an article about Bitcoin back in June of 2011! Bitcoin was worth less than a dollar a coin then.
This regret, of course, is not an unusual thing. There's even a Bitcoin Regret Calculator online where you can figure out what you would have been worth if you had bought a certain amount of Bitcoin at a certain time in the past.
That being said, while cryptocurrencies and blockchain technology are almost certainly here to stay, the inevitable has struck Bitcoin:
Unlike most market corrections, this was easily foreseeable. People were buying Bitcoin not to use as a currency, but to sell it. Indeed, this is one reason I never bought any; I didn't think of it as an investment. It has recovered a bit of late, but it's still under 50 percent of its maximum and I suspect it will fall further.
Overall, Bitcoin is playing out similarly to the housing crash when people were buying houses not to live in or rent out, but to sell a few years later. When this is the dynamic, it's just a matter of time before people get wise to it and someone gets left holding the bag.
Although, the difference between homes and a digital currency that is literally made up of absolutely nothing (and requires a ton of energy to "mine") is quite substantial. The best analogy, as many others have made, is that to the Tulip Mania of the seventeenth century.
Still, I am overall in favor of cryptocurrencies as they reduce governmental power and makes censorship more difficult. I don't believe for a second the FBI and the like can't track Bitcoin transactions, so I doubt it really makes illegal transactions that much easier. Indeed, the potential of blockchain could make fraud all but impossible.
But that's aside the point. The point here is that this bubble appears to be crashing and with that, hopefully I can let go of my regret for not having jumped in back in 2011.
"Every day is a new life to the wise man."
The Righteous Mind
Star Slate Codex
Consulting by RPM