What Happens When the Bitcoin 'Bubble' Bursts?

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:

• If the Bitcoin bubble bursts, this is what will happen next

• What happens if the Bitcoin bubble pops?

• Unraveling the Confusion About Blockchain Technology vs. Bitcoin

• There could be a silver lining even if the Bitcoin bubble does burst

• Is Bitcoin a Bubble? If So, When Will The Bitcoin Bubble Burst?

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...