I really have very little clue about what's right, wrong, good or bad about crypto or Bitcoin's meteoric price rise, but I thought this chart was very interesting.
So far I've also not made much from my admittedly limited crypto investments. Got much of it in Ripple, so in my utopia I hope it will one day reach the dizzying heights of Bitcoin. Or at least closer to Ethereum.
Congrats on your big payday,
@Danishfurniturelover, well done!
All those lines on that graph represent money-making companies, bricks and motar, or in gold, a usable commodity. Yes they became inflated at some point, but they always had some real value to people. As of yet, bitcoins only value is to allow a tiny amount of illegal spending. The only people using bitcoin are purchasing drugs, and they must account for 0.????% a tiny fraction of all the coins held.
Doesn't that scare anyone? This bubble may well have further to run, but understand that the increases are not based upon value to anyone. The increases are solely fueled by more people speculating and looking to make a fast buck. It is not like droves of people are buying bitcoin to buy drugs, ever-increasing the demand and price (which would be real demand based upon real value). No, bitcoins sole reason for growth is speculation. It may keep going as more people are impressed by the huge returns. But make no mistake there is no value underpinning the asset. When the people stop piling in greedily trying to ride this wave, there isn't a usable asset, commodity, or profit-making company underpinning it.
Cryptocurrencies premise, foundation, and hype is all tied to people using a digital currency for transactions. As of yet, none of these currencies have cracked it as far as I can see. Apart from bitcoin which facilitates a tiny amount of illegal economic activity.
Some say crypto is an alternative to gold. If true, it needs the world to have faith that crypto is as secure as gold. Some have indeed bought into crypto and have true faith, institutional investors as well. But let's not get ahead of ourselves, a piece of blockchain, a digital ledger, is not going to store your money in an apocalyptic scenario. In fact it will be the first to fall if things go pear-shaped because it has no intrinsic value. Gold with 3000+ years of value will remain a valued asset that doesn't need a computer to exist.
The other issues with Crypto: energy consumption, its difficult to spend, and regulation. Bitcoin uses as much electricity a year as Switzerland! That can't be too promising when we are trying to clean up the planet, especially when only a few pot heads and criminals actually make true use of it. The next issue is you can't easily spend bitcoin. It takes considerable time and energy to transfer a crypto payment currently. You couldn't go to Tesco and pay for something with Bitcoin. It would be hugely inefficient to wait half an hour, while X kilowatts of power is used to transact the payment. Then how likely are governments to relinquish control of currencies, taxation, monitoring money laundering?
So is crypto a bubble? Unless everyone believes in it ad infinitum, yes it is. That is not to say digital currencies don't have a future. They do, but it has to be something that people can easily use to pay for things, right?
Of course I had no clue as to how to buy Bitcoins and I definitely didn't see a future with the current price, but in hindsight I wish I'd spent £100 on them. Oh well.