Why Cryptocurrency isn't a bubble, but Bitcoin might be

in #cryptocurrency7 years ago (edited)

Bitcoin: The Bubble of The Century

At least, that's what Jamie Dimon would have you believe. But does what he say have some merit to it?

Let me start off by saying I'm far from a Bitcoin hater. Currently, among my portfolio of 13 cryptos, Bitcoin makes up of a significant portion of it with my wallet containing roughly $1.2k worth of Bitcoin. But, conversely, I'm also not like the thousands of people who know nothing about cryptos and blindly defend Bitcoin on Reddit.

So let's get down to it: is Bitcoin a bubble?

Yes and no. Think of it like this: Bitcoin is your gold, altcoins are your dollars. In "the real world", gold is used as a saving mechanism because it appreciates in value rather than depreciating, there's no inflation, and it's malleable enough to be transported (although lackingly enough to prohibit it from being a primary form of currency). On the other side of the coin, dollars are used for utility. I can carry $100 in my wallet while taking up a negligible amount of space and not even feeling it on me, but if I tried to carry $100 worth of gold or precious medals and use it to buy lunch I'm gonna have a bad time.

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Really, it's the same thing with cryptocurrencies. Bitcoin transaction fees are prohibitively expensive to where it only makes sense to move Bitcoins in very large amounts. Why would I send my friend $5 in Bitcoins to pay him back when it will cost me $25 in transaction fees? So there you have it, Bitcoin is a bubble in my opinion, but don't sell just yet...because perhaps a bubble isn't something to be afraid of. What Bitcoin is useful as is a saving mechanism. I know it has value, you know it has value, therefore, it has value. Look at gold - it's the same concept. It's scarce enough to where it has significant value, it's malleable enough to be used if need be, and it's relatively easy to store. It's the exact same truth with Bitcoin. The gold "bubble" has been going on for 4,000 years and will not pop any time soon. One can expect the same thing with Bitcoin. I feel as though the word bubble does neither Bitcoin or gold any justice: because they're really not in danger of popping.

Now what about altcoins? Altcoins, in my humble opinion, are what's going to take humanity into the future - not Bitcoin. Like we discussed earlier, Bitcoin is the most valuable, not the most useful. Currencies like Ripple, Iota, Cardano - even smaller currencies like Komodo and Bitshares - are multitudes more useful than Bitcoin. Think of it like this: go back to the situation where I want to pay back a friend. I can either send him $5 worth of Bitcoin and pay $25 in transaction fees and then wait 10-15 minutes; or, I could send him $5 worth of Ripple paying $0.0007 in transaction fees and wait 3 seconds. The fact of the matter is altcoins are more liquid, more anonymous, more decentralized and more useful than Bitcoin could ever be.

The Verdict:

Buy Bitcoins and similar cryptos as a saving/investing mechanism, buy Ripple and other altcoins for the sake of utility. But remember: Caveat Emptor.

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Truth is, fiat currencies that are not backed by anything and can drop in value ('inflation') are no longer acceptable, so the free market sorted it out 😎

Thanks for the feedback, if you liked it give an upvote or a follow!

Interesting valid points. I also wrote an article that may be of interest on the same topic. If you are newbie welcome aboard this platform is better by adding someone of your caliber. I follow everyone who follows me and upvote every comment on my blogs. Check them out as well and tell me what you think! Again welcome aboard!

I'm interested in crypto, but it's true that bitcoin has a couple of problems. First, nobody can agree what kind of asset it is or if it belongs in a new asset class. Second, it's impossible to value. Third, fees are getting out of hand. Forth, it uses so much power. Fifth, dang, I should have just written a post! Thanks for your thoughts.

If you're in crypto totally for speculation, bitcoin definitely is not a bad choice...but as far as utility goes, if you're actually interested in cryptos not only for profit but utility then Ripple, Litecoin, Iota, Cardano, Bitshares etc. are a better option. I recommend checking out coinmarketcap.com if you want to find some good altcoins to research further.

Agreed, so many people want to start investing in bitcoin without having any clear understanding of it or alternatives. Anyway, I resteemed this post, so I can easily find it later. :)

Thanks for your post @profitmotive,

I found it very informative and I completely agree. Many people see Bitcoin as the holy grail, rather I see it for what it is. So many better technologies out there that are superior.

I enjoyed your post and have followed you. So that we can both gain viewers, would you please follow me too?

Look forward to more of your content @thescholarlyowl

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