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News Link • Bitcoin

Bitcoin Bubble 2.0: “From A Monetary Standpoint...


Publisher’s Note: One of the hardest working young college graduates I’ve met in recent years, Patrik Korda, was kind enough to contribute an essay shown below regarding the issue of “Bitcoin”.

For context, Bitcoin is a newly formed digital currency which has rapidly grown in popularity (as well as in price) following the Cyprus banking system collapse. The chart below is the price performance of Bitcoins, which have seen a market cap expansion of almost 20x—from about $50mm to roughly $1B where it stands today—in less than one year

(click to enlarge)

Bitcoin Bubble 2.0

By Patrik Korda

It is also important to make certain that our efforts are directed at the decisive core of the problem and not on distracting side issues. The more complex the difficulties we face, the more important it becomes to bear this in mind, for it is human nature to try to evade what we cannot cope with
- Bernard Baruch, My Own Story


2 Comments in Response to

Comment by Ed Price
Entered on:

Almost forgot. It wouldn't surprise me at all if I found out that Bitcoin, more than PayPal and the other ecurrencies, more than Occupies and million-man-marches, wasn't the final straw that caused DHS to purchase that big billion plus of rounds of ammo, along with all those armored vehicles that have been reported in Arizona and elsewhere.

Comment by Ed Price
Entered on:

The points are these:

1. New Bitcoin only enter the market at a predetermined rate. The next 4 years are scheduled to see only an additional 5 - 6 million of them introduced to the market.

2. Bitcoins are divisible down to 100,000,000 parts of a bitcoin, so they can be used for trading all kinds of things.

3. When you have a limited number of desired Bitcoins in an ever increasing and expanding market, like everything else that's limited, the price will rise. Gold isn't way above pre-1950 prices because you can find it lying all over the ground. No, it is rather rare, like Bitcoin.

4. Expect two basic kinds of things to happen with Bitcoin: A) there will be continual fluctuations in price - bubbles that will come and go; B) the bubbles will become larger every time they grow again. If Bitcoin remains safe and usable, expect a single Bitcoin to be on a par with an ounce of gold within the next year.

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