This article provides a brief
high-level management briefing about Bitcoin tokens versus Blockchain
technology. It also addresses the rampant speculation by investors in
Bitcoin, the ‘bubble’ this has been created, and the consequences
when the bubble finally bursts. Unfortunately, the downside of the
current media feeding frenzy around the Bitcoin
cryptocurrency is the way it is obscuring the new,
innovative blockchain technology underpinning it.
About
Bitcoin and ‘Bubbles’
‘Bubbles’
occur when
speculation drives an asset’s price tremendously above any
realistic value.
Most
financial ‘bubbles’
are often tied to
novel new
technologies, that
then start to grow and
swell in value as a result of
constant media coverage.
Speculative
investors don’t seem
to care about the many
‘red flags’
signaling a bubble.
Bitcoin’s
massive hike
in value ticks
almost all the boxes on the ‘bubble’ checklist.
The
final stage in a ‘bubble’ is the breakdown. Just as the price
rose without any apparent reason, it will eventually fall. That’s
when people start panic-selling as the bubble bursts.
Governments
all over the world are
working to find a regulatory
framework for
cryptocurrencies
that are currently bypassing
their existing financial infrastructure. When
the Bitcoin ‘bubble’ finally
bursts, governments
will move
much more
forcefully to regulate
cryptocurrencies and
the needed supporting infrastructure.
Blockchains
are a novel approach incorporating
a number of technologies that allow
new, innovative ways to more securely create, transmit and store
records of a variety of data transaction – including
financial transactions using cryptocurrency tokens.
Bitcoin
– This term is generally
used
to refer to the cryptocurrency
token used
by the public
Bitcoin
blockchain
network
to exchange value when a financial transaction takes place.
|
Consequences of Bursting
Bitcoin Bubble
What
could happen when the
Bitcoin
‘bubble’ crashes.
How bad will it
be? How
will
it play out? Like all
manias, when it finally
comes to an end, many
people who
didn’t get out in time are
going to be wiped out financially.
Most
of Bitcoin’s
estimated $1+ trillion market value is held by a relatively
small number of the
super-rich, criminal
organizations, speculators,
and early
adopters.
Primary
impact - A few
thousand very wealthy people will
simply become less wealthy.
Companies
and coin owners will
suddenly stampede to
convert Bitcoin to
nation state-sponsored
currencies,
like dollars or pounds.
A
lot of Bitcoin
companies – exchanges, wallet companies, etc. – will go out of
business.
Many
people borrowing
money and going
in debt to fund their
speculative investment will get hurt and
go bankrupt.
A
number of major cryptocurrency and Blockchain technology companies
will eventually emerge from the wreckage.
When
the bubble pops,
you will finally see much
needed government
regulation of the
ongoing future cryptocurrency industry.
Selected
Articles on Bubbles
The
following are several selected articles on Bitcoins and ‘bubbles’
that you might want to read:
The fact that
‘Bitcoin’ is in a speculative bubble right now doesn’t mean
that some form of cryptocurrencies and blockchain
technology cannot ultimately succeed – it will. Financial
exchanges, government regulations, and new more trusted and more
stable cryptocurrencies will eventually emerge. We’re starting to
see this happen.
* Do some more
research on your own. Check out Coinbase
Exchange, Etherium,
Facebook’s
Libra/Diem, Ripple/XRP,
Cryptocurrency
Government Regulations...