Over the course of Bitcoin’s nine year history, there have been at least a half dozen crashes similar to last week’s near-50% dip.
Prices have recovered somewhat. Bitcoin’s market dominance remained pretty steady throughout the crash and recovering, peaking at 37% during the worst day of the crash, and now representing about 35% of the value of all crypto.
I think that within the crypto space, Bitcoin represents stability. (The next newletter will outline Bitcoin vs everything else.)
So is it a bubble?
Here are the accurate arguments for each camp:
Crypto Currencies are a Bubble
– Compared to normal businesses, many crypto currency projects have outrageously high valuations, especially considering how many of them are still at the idea or prototype stage.
– Many crypto investors have only seen huge success and are excessively exuberant.
– Many crypto investors make investments with little or no serious research.
– The deluge of money has attracted unsavory entrepreneurs.
Crypto Currencies are not a Bubble
– Crypto currencies are a new technology that allow people to do things which were previously impossible, namely structure incentives with strangers in a way that does not rely on trust.
– Crypto currencies solve real, tangible, important problems.
– Normal people have access to investment opportunities like never before. The most charitable explanation you can give to the ridiculously high valuations of idea-stage projects is that people are willing to risk failure and fraud to have a stake in world-changing research.
– The values of crypto currencies will not go to zero.