Why is Bitcoin called a bubble and why hasn’t it burst yet?
For one category of people, Bitcoin is an absolutely incomprehensible digital asset and at the same time, many people are not even interested in what it really is, it is very easy for such people to call anything at all a bubble, since for them it does not matter at all.
The second category finally got to its purchase, having learned that it is possible to earn a lot of money, but in the end, the excitement led to the loss of all funds. This category can be attributed to the most harmful for the entire industry. People who, due to ignorance and unwillingness to understand any issue, play a certain lottery during the investment, as a rule, blame everyone around them for this and their desire to take revenge on the asset at any convenient moment will call it a bubble, using all available resources.
The third category of people learned about the existence of Bitcoin and did not immediately run to invest all their money in it, but studied what it really is, realized that it is suitable only for long-term investments due to high volatility, managed to multiply their capital and gain influence in the cryptocurrency market.
Separately, we can single out the governments of different countries, for which the financial independence of citizens is equivalent to a shot in the head, they use all available tools to promote the fact that Bitcoin is a bubble.
Such a distribution of people into categories may be a little exaggerated, but it still explains the appearance of such a term as “bubble” when discussing Bitcoin as much as possible.
What is Bitcoin?
You can find a lot of information about what Bitcoin is, let’s look at the reasons for the hype around it.
Bitcoin is a digital asset that has given the world an extremely popular blockchain technology, it finds application in almost any sphere of life, is distinguished by its reliability, and reveals many useful prospects. In order not to go into technical details, the blockchain is often compared to a notebook, which everyone has access to and any entry in it is visible to everyone else.
In addition to the blockchain technology, Bitcoin has brought with it a kind of financial independence, which is accompanied by the anonymity of transactions and the reliability of storing funds in special cryptocurrency wallets that are protected from outsiders, including government agencies.
Of course, on this basis, there is a lot of talk on the part of the governments of some countries that money is laundered through Bitcoins, so they can not be used. Although for certain people there are absolutely no barriers to laundering funds in cash currencies, even the creation of cartels on a state scale on this basis.
In this case, it is only important to understand that Bitcoin is a digital “financial instrument” primarily aimed at developing technologies and opening up new opportunities for every person in the world, regardless of location, wealth, or the presence or absence of higher education. It is more than just an asset, it allows people with rich potential to fulfill themselves even when society may reject them.
There are too many things that can be used both for good and for harm, but this is not proof that they themselves are originally designed to lead to negative consequences.
Considering Bitcoin as an object for investment, we look at the history of the asset’s life cycle, its areas of application, the growth of its popularity, the technical component, and what do we see?
- Throughout its existence, the price of Bitcoin has been constantly growing and the uptrend continues;
- The popularity of Bitcoin is growing very rapidly, especially against the background of the global economic crisis and pandemic. People who have had time to explore alternative assets are now increasingly trusting digital currencies;
- The Bitcoin software code contains its limited emission. The increase in demand (due to points 1–3) directly affects the price increase, because the supply is limited. A total of 21 million Bitcoins will be issued and none more.
This is not an exhaustive list, you can do your own research, study the issue in more detail, and then you will understand very well what lies behind the statement “Bitcoin is a bubble” and how much it has to do with reality.
Is it worth investing in Bitcoin, suddenly the bubble will burst?
Perhaps you still prefer to believe that Bitcoin will disappear from the market at one point, leaving you with nothing, and, for example, Tesla made the mistake of investing $1.5 billion in Bictoin.
In this case, the only thing you can be 100% sure is that another person will take your place, and in 5 years you will be able to either regretfully or curiously (depending on your wealth) calculate what profit you could earn during this period.
There is also a high probability that during this period, Bitcoin will take root so much that a small part of this asset will be owned by most of the world’s population, questions about the bubble will finally disappear and you will be able to safely invest your funds in an asset that is at least several times higher than today’s price.
There is an investment strategy called DCA (dollar-cost averaging). It can help you make decisions in case of any doubts. The strategy implies a smooth entry into the asset, namely, investing in it in equal parts on a regular basis, which reduces the risks from high volatility. Without going into details, this strategy helps to reduce the psychological burden that can arise when making a one-time decision.
What can really become a “stumbling block” is the provision of reliable and secure storage for Bitcoins. There are indeed many attackers who make any attempts to break into hot wallets in order to steal cryptocurrency funds. A hot wallet is an online account that stores cryptocurrencies, therefore, hackers can get access to it if the user is careless.
Secure storage of Bitcoins can be provided exclusively by cold wallets, that is, physical media containing digital assets. The cold wallets themselves, in addition to being completely protected from hackers, can also be located in vaults, the same as bank ones, with round-the-clock security and all modern security technologies.
Here you can also highlight another advantage of digital assets, you can invest them in storage through a specialized platform on the Internet, being located in one part of the world, while your Bitcoins will be placed on a physical medium and placed in storage in another part of the world. At the same time, no undesirable state structure will know about this.
One of the most reliable countries, in which such storage facilities can be found, is Switzerland. In general, Switzerland is one of the most loyal countries to cryptocurrencies, it is home to the “Cryptovalley” (analogous to Silicon Valley, but in the cryptocurrency industry). Also, Switzerland has fully formed legislation that clearly regulates activities with cryptocurrencies and allows companies to conduct their activities transparently and fair.
Among the repositories from Switzerland, Simba.Storage can be distinguished, which provides services for the custodial storage of Bitcoins. Simba is an entire ecosystem, investing your funds in storage, you get tokens of the ERC20 standard called SIMBA, which, if necessary, can be used for any types of payments and transfers.
All Simba.Storage locations have the maximum degree of protection, and the location in a country with such a high standard of living and a low crime rate, like Switzerland, additionally guarantees that there will be no attempts to physically break into the storage.
To sum up, we can say that there are actually no prerequisites to consider Bitcoin a bubble. The hype around the cryptocurrency industry is explained by the fact that many people have just begun to learn about the prospects of Bitcoin, blockchain technology and began to trust digital currencies, having seen all the flaws of fiat currencies during the pandemic and crisis.
It may seem that Bitcoin has already reached some incredible heights and it is too late to buy it, but in fact, it is just the beginning to enter the phase of generating its real value, despite the fact that its issue has not even been completed yet.
You can watch it from the outside or buy a piece of the future today, which will bring incomparably higher profit than any other asset.