Is Bitcoin in a Bubble?

by Alex Lightman and David Lightman. February 19, 2018

Max Keiser points out that Bitcoin has 3 important properties in this order:
1) it’s a communications app
2) it’s a store of value
3) it’s a currency / medium of exchange.

First and foremost it’s a communications app! It grows virally and exponentially because of the nature of the Internet.

Were Whatsapp, Snapchat, Instagram, Twitter and Facebook in a bubble when they hit 20 million users? Of course not. Bitcoin is more compelling than these services because it involves something more vitally important – money. Just like we wouldn’t have expected Twitter adoption to slow down until it started running out of humans with cell phones, so too will Bitcoin and friends do the same. It does not appear that we are in a bubble now. There are occasional buying frenzies but those usually only last a few days.

I’ve been following Bitcoin for years. When it drops – it’s almost always for a good reason. It’s been through many obstacles and growing pains. But now we are out of the awkward teenage years. It’s beginning its take-over-theplanet phase. If anything, it’s going to accelerate faster, as more people recognize its safety.

The medium-of-exchange aspect will kick in later once it starts getting to its saturation phase as the price growth slows. Eventually Bitcoin will be the most stable currency we’ve ever experienced.

Here is Bitcoin’s Value Proposition – its intrinsic value:

  1. it’s finite – the number of bitcoins is limited. only 4% annual growth now.
  2. it’s the email of money, allowing anyone to send money anywhere on the planet
  3. it’s a very private way of holding money – restoring financial privacy and personal financial sovereignty.
  4. it gains in buying power in proportion to the size of the system
  5. it’s going to keep receiving lots of media attention as it keeps breaking records.
  6. It’s constantly increasing in legitimacy as more mainstream players get involved.
  7. institutional adoption is still 6 months away.
  8. it spikes up when financial markets are nervous
  9. it will help people avoid over taxation
  10. it protects peoples wealth from confiscation by banks and governments
  11. protects against inflation/hyperinflation of the local currency
  12. it circumvents capital controls
  13. perhaps most importantly it allows the 60% of people on the planet who lack banking services to hold money securely and gives them access to the global online marketplace.

This is lots of intrinsic value – both for the wealthy and the poor.

Bitcoin’s exponential growth rate will only slow down when it starts running out of people with phones and computers.

Then it will become a stable medium-of-exchange. For now, that’s not necessary.

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