History never really says goodbye. History says: 'See you later'. - Eduardo Galeano
There are people who agree on that theory and compare Bitcoin's incredible rise with the famous Dutch tulip craze.
Before I get into that, I'd like to ask you the following question:
How much would you pay for a tulip?
Well if you had lived in Holland 400 years ago, it may have cost you your entire home. Back then a good trader could earn up to 60,000 florins in a month - approximately $61,710 adjusted to current US dollars.
Tulip traders were the miners of the 17th century - until the market crashed entirely.
Now there are people who compare the tulip bubble with today's Bitcoin high. The believers advice to not confuse speculation with serious investment while the doubters remind us of the missing basis and countervalue.
According to Nasdaq Bitcoin is not a bubble. Bitcoin is rather starting out than peaking if you believe in Nasdaq's Five Reasons Why Bitcoin is Not A Bubble.
But talking seriously: Doesn't the pace scare you sometimes? I really believe that this is a legitimate question.
If it's not a bubble, what will be backing its value in the long run?
Picture kindly provided by pixabay.com
What a ride!
This is my very first blog post about Bitcoin, so please excuse any beginner's mistakes and stupid questions.
Since more and more people who I trust are trying to convince me to invest in Bitcoin, I need to start calculating the risk.
Looking at the numbers one might be stupid keeping out off the market.
Bitcoin is going mainstream and I'm asking myself why I shouldn't be part of it.
A couple of years ago, if you would have asked an average person on the street what Bitcoin is, they would have most likely shrugged their shoulders. In 2017 if you ask people what 'digital money' is, they proactively reply: 'Bitcoin.'
The awareness level of Bitcoin is increasing as fast as its price.
Bitcoin has become the driving force of a whole new and very promising market like it has never existed before. 'The mother of all coins' has smoothed the way for all following tokens and also proved that 'internet money' is for real.
In distressed economies like Venezuela, for instance, Bitcoin has been already implemented as a store of wealth.
As an answer to fiat currencies that are weakening into worthlessness, Bitcoin has been successfully used as an alternative spending currency. Thus, it has ensured to give the value back to the economical owners.
According to these evolutions, it's really hard to stay away from it. Stories like these are grist to the Bitcoin mill - and great arguments for my friends that want to get me on board.
The basis is: trust.
Yet, what prevents us from distrust - the crash?
Getting back to the famous tulip mania, the reasons for the burst were very simple: someone just decided not to pay, everyone lost confidence and the prices start to fall.
It happens very often with economic bubbles that as the price rises to a point where it's obviously so incredibly inflated, some smart stakeholders decide to get out and capitalize on the absurd prices. If these stakeholders have enough influence in the whole market, a domino effect can take place where more and more people try to sell at ever decreasing prices.
Now how do we know that this is not going to happen with Bitcoin?
Are we sure that some of the early adopters - that are already Bitcoin millionaires - won't have enough in a couple of months or years?
What if they're not driven by ideology but simply personal financial success? May they have enough influence to sweep away a whole market?
The ultimate safety strategy is: diversification.
Warren Buffet said once:
Never test the depth of a river with both of your feet.
Diversification - even in high-risk markets like the crypto market - helps reduce risk and maximize safer earnings. When one coin fails, you still don't loose all your assets.
It's a smart strategy. However, Bitcoin is the flagship. If the 'mother of all coins' crashed entirely, any other would supposedly follow.
Supposedly.
There are a lot of 'maybes' in this article, and I have the sensation that it might be almost impossible to clear them out completely.
But feel free to give it a try :-)
Have a splendid weekend crypto people,
Marly -
Thanks for your valuable time!
This blog was launched at the end of July 2016
aiming to provide stories for open-minded
people who enjoy living on the edge of their lives,
stepping out of comfort zones, going on adventure,
doing extreme sports and embracing the new.
Welcome to the too-much-energy-blog!
PS: Who again said that these crazy coins weren't for real?
Original content. Quote found on quotefancy.com.