It started as an underground project of a person (or persons) whose identity we still have not figured out. Bitcoin sprung out right after the 2008 world economic crisis, at a perfect time for a new and subversive idea. But the subversive element of this story is long gone now when the value of a single bitcoin rose to almost 11.000 dollars.
So far, most of the money, time and work which fuel the value of bitcoin had come from computer enthusiasts, nerds and fans. However, the rising value of this cryptocurrency with global ambitions attracts more and more large investors and, of course, speculators. This fuels the bitcoin craze even more, but where is the limit of this growth? What will bitcoin turn out to become?
What do the experts have to say?
Many economists and business experts compare bitcoin’s rise to stardom to some of the famous economic bubbles from the past, like the tulip craze in The Netherlands or the dot.com bubble in the late 90s. Their main argument is that the currency has on intrinsic value whatsoever, other than the value ascribed to it by the owners themselves. This is a great danger, according to most of the commentators, because the fall would be very hard once the owners realize that the emperor is naked.
Furthermore, all of the experts point out the extreme volatility and instability of bitcoin. According to statistical data, the value of bitcoin is now at six times the historical average. Just in the last week, the price of bitcoin rose by 10%, and the fell by almost 20%.
On the other side of the story are the fans and defenders of bitcoin. They say that this idea will (if it hasn`t by now) revolutionize the monetary system and bring about a completely new way of how we look at money and finance. Most of the bitcoin enthusiasts still hold on to it, saying that the value will grow constantly. They also like to point out that the dot.com bubble burst when the value of the stocks reach about $3tn. Right now, bitcoin’s market cap is at about $170bn, leaving room for the bubble to grow.
Bitcoin in the future
Leading economists and high-powered figures of the financial world like Joseph Stiglitz and Lloyd Blankfein have expressed their negative sentiment towards this cryptocurrency. They went so far to say that there is no social benefit of bitcoin and that it is a fertile ground for speculators and fraudsters.
More and more people keep pumping money into the bitcoin, fueling its growth. How long will this keep going on, nobody can say with certainty? Will it keep growing or will it plunge into oblivion, we will see. But nobody can claim that there is a logical, rational and scientific explanation which can explain the future success or downfall of bitcoin. All we can rely on is our intuition, which most people would call a gamble.