Why Bubbles Can Be Good - Using Bitcoin's 2011 Bubble

[fintekneeks]

In general, a bubble creates a feeling of success and prosperity, even though it's only temporary.  Like we saw in bitcoin's 2011 bubble, people overlook reality and give projects and ideas a feeling of success, even though it cannot last because it won't be able to sustain the momentum.  The good projects and ideas ignore this, knowing its temporary; the bad projects do not.  Bad projects become caught up in the bubble, but when it pops and shown to be the fake players they were all along.

The dot com bubble, which people tend to act like was so destructive actually invalidated a lot of bad ideas.  We'll always be richer when bad ideas fail because it makes room for good ideas.  The last thing we want is bad ideas to survive because of low or negative interest rates, or because institutions try to create perfect stability, which keeps bad ideas in existence.  Can bubbles be painful?  Yes, but the pain is only temporary and by removing bad players, it's a temporary pain that increases wealth (Hebrews 12:11).

[youdamushi]

I don't think this time it's a bubble...

Sure the price goes up, but not nearly as fast as it did in 2011.
And it basically goes up for a reason: btc is stable, none of the apocalyptic facts that were sure to happen happened, countries start taking it into account.

Why shouldn't it rise?

[IIOII]

It's not specifically bubbles that lend credibility to project and ideas. It's simply the perception of value. But it's true that it's irrelevant if this value perception is created artificially or based on real fundamentals.

So even artificial bubbles can have a lasting positive effect on projects/ideas. However, sometimes the burst of a bubble can have a severely negative psychological impact, deterring people from further adherence on the projects or ideas in question. Sometimes this promotes a selective process and leads to transformation - giving birth to new and better ideas. But this is not always the case.

I clearly prefer real fundamentals over artificial growth. To me it seems positive that Bitcoin's upward momentum has slowed down a bit in the past (this seems to be changing right now...).

[odolvlobo]

Bubbles are bad because the resources that a bubble wastes dwarf whatever benefits you may find.

[fintekneeks]

Bubbles are bad because the resources that a bubble wastes dwarf whatever benefits you may find.

It depends.

This thinking assumes that a re-allocation of resources is wasteful.  This may not be correct.  If a person who creates opportunity gains, while a person who only takes opportunity loses, the re-allocation may have created even more wealth.

[The Sceptical Chymist]

None of that shit you wrote makes much sense to me.  The internet bubble in the 90s totally allowed stupid ideas to flourish, and HUGE amounts of money to be wasted, money that could otherwise have gone for legitimate things.  Do you even remember that?  Yeah, the sense of euphoria is great, but only in a degenerate drug addict sense.  It's a temporary thing that feels really good, but it's unsustainable and ultimately does harm.

So about this here bitcoin bubble we're inflating.  It is a bubble in the making, but I see this as people playing with monopoly money.  Bitcoin isn't a stock, and hopefully people aren't mortgaging their houses to buy crypto.  If we crash back down to $420 tomorrow, I won't have lost much money and it will have been a good ride.  But if the stock market crashed, I'm a bit screwed, as are millions of people who own stocks or have 401(k)s.

[botany]

In general, a bubble creates a feeling of success and prosperity, even though it's only temporary. 

Classic Wealth Effect. The feeling of success is good for the economy as well, because it encourages people to spend.
The stock market bubble as well as the housing bubble had this effect. Bitcoin, is of course, much smaller in nature.

[talkbitcoin]

i can not say i particularly agree with you.

bubbles are actually destructive of the pubic image of that thing entering a bubble. not because of its price rise but because of what happens next.
people are all happy and skipping around while price is rising and a lot of them buy into those bubbles (like what we see each time an altcoin is pumped) then what comes next is them losing a lot of money and because of how bubble bursts are (price drop with dead cat bounce) they don't sell at first.

and what remains in their memory is the downtrend and them losing a lot of money not their own mistakes of buying into the bubble and not selling the first moment they saw bubble bursting.

i know a lot of guys who bought bitcoin at $1000+ back in 2013 and lost money because they had no idea what they were doing in first place. and now they hate bitcoin.

[cipherer]

It is definitely not a bubble. Barriers in the market are vanishing, see Japan, China and Russia will follow in 2018, even in US there are new posibilities.
This indicates BTC is yet to start to reach the potential value. We can expect a major rise in value, due to fundamental elements. We just can wait fort he tipping point.

[tobacco123]

WHen the price increase with no reasons, it will be a bubble. However, this time round we have a number of positive developments, such as Japan and Russia, and the increase is not exponential, it is likely to reflect the true value of bitcoin. Afterall, bitcoin has been under value for many years...

[cellard]

Bubbles are bad because the resources that a bubble wastes dwarf whatever benefits you may find.

The only way disruptive technology can grow is through bubble-burst cycles. You aren't going to see something as game changing as bitcoin grow smoothly, it's just impossible and it's in its nature go go like that.

So forget about a smooth ride, and get ready for insane price rises up to $10,000, with crashes of down to more than half the rise, then a higher floor and then another period of stable price, then $50,000 or $100,000+... that's how this goes.

[Xester]

In general, a bubble creates a feeling of success and prosperity, even though it's only temporary.  Like we saw in bitcoin's 2011 bubble, people overlook reality and give projects and ideas a feeling of success, even though it cannot last because it won't be able to sustain the momentum.  The good projects and ideas ignore this, knowing its temporary; the bad projects do not.  Bad projects become caught up in the bubble, but when it pops and shown to be the fake players they were all along.

The dot com bubble, which people tend to act like was so destructive actually invalidated a lot of bad ideas.  We'll always be richer when bad ideas fail because it makes room for good ideas.  The last thing we want is bad ideas to survive because of low or negative interest rates, or because institutions try to create perfect stability, which keeps bad ideas in existence.  Can bubbles be painful?  Yes, but the pain is only temporary and by removing bad players, it's a temporary pain that increases wealth (Hebrews 12:11).

Bubbles in a sense are seen as a negative situation in the history of bitcoin since the hype was followed by the fall that caused many to lose huge amounts of money. But on the other hand the previous bubbles gives us good experience as to how we should handle bitcoins. This time around we are more conscious and observant on bitcoin trend to avoid big losses.

[fintekneeks]

In general, a bubble creates a feeling of success and prosperity, even though it's only temporary.  Like we saw in bitcoin's 2011 bubble, people overlook reality and give projects and ideas a feeling of success, even though it cannot last because it won't be able to sustain the momentum.  The good projects and ideas ignore this, knowing its temporary; the bad projects do not.  Bad projects become caught up in the bubble, but when it pops and shown to be the fake players they were all along.

The dot com bubble, which people tend to act like was so destructive actually invalidated a lot of bad ideas.  We'll always be richer when bad ideas fail because it makes room for good ideas.  The last thing we want is bad ideas to survive because of low or negative interest rates, or because institutions try to create perfect stability, which keeps bad ideas in existence.  Can bubbles be painful?  Yes, but the pain is only temporary and by removing bad players, it's a temporary pain that increases wealth (Hebrews 12:11).

Bubbles in a sense are seen as a negative situation in the history of bitcoin since the hype was followed by the fall that caused many to lose huge amounts of money. But on the other hand the previous bubbles gives us good experience as to how we should handle bitcoins. This time around we are more conscious and observant on bitcoin trend to avoid big losses.

This is predicated on the assumption that loss and failure don't have value.

The trouble with our society is that we've missed out on the value of both of these.  Working out until failure makes the body stronger.  Experiencing loss or failure is how many of us actually grow as people (some are wise exceptions who can know without losing).  As long as people have an unhealthy attitude toward both of these, you're right, they will see bubbles as bad.

People who cultivate character often recognize that it was failure and loss that instilled the character in them.  This is a major missing message today.  Finally, bitcoin has had 4 bubbles with no interventions of any kind.  And yet, bitcoin is stronger.  The people with character stuck around and built; the people without punched out and gave up.

Welcome to reality.

[stompix]

None of that shit you wrote makes much sense to me.  The internet bubble in the 90s totally allowed stupid ideas to flourish, and HUGE amounts of money to be wasted, money that could otherwise have gone for legitimate things.  Do you even remember that?  Yeah, the sense of euphoria is great, but only in a degenerate drug addict sense.  It's a temporary thing that feels really good, but it's unsustainable and ultimately does harm.

So about this here bitcoin bubble we're inflating.  It is a bubble in the making, but I see this as people playing with monopoly money.  Bitcoin isn't a stock, and hopefully people aren't mortgaging their houses to buy crypto.  If we crash back down to $420 tomorrow, I won't have lost much money and it will have been a good ride.  But if the stock market crashed, I'm a bit screwed, as are millions of people who own stocks or have 401(k)s.

This and this and this.
Bubbles are wasting a lot of money and time and resources for nothing. Just to spread the misery to people who had nothing to do with the bubble.

And what is worse is that people don't learn a damn thing because there are some like the op who sees ponies and rainbows everywhere.

Remember the last crisis?
It was good no? All the business who couldn't survived went bankrupt. And a lot of people with them..
But it was good right?

Let's have another one

[Hydrogen]

Its only a bubble if its significantly overvalued & there's a strong tendency to mistake sentimentality of previous historical patterns for bubbles when considering growth.

Btc holders in 2010 could probably never have envisioned 1 bitcoin being worth $1600. That sentimentality doesn't mean $1600 btc is an overpriced bubble though.

[fundyourself]

There is indeed a lot of money flowing into bitcoin, but is it really a bubble or it is more representative of bitcoin accepting breaking into the mainstream market? Just like any product, there is an exponential growth phase once the product gets widespread acceptance, which is the phase we are in ow.

[veleten]

whoever thinks bitcoin is anything else but a bubble must have his brains checked
if tomorrow the price crashes to 10$ with no apparent reason you would forget it existed very soon
the price fluctuations are usually unpredictable and with no reason behind them
it is manipulated at a higher level and if the manipulators decide that the project has to be closed it will be closed and dusted
but at the moment we all enjoy the "great bitcoin revolution"

[stomachgrowls]

whoever thinks bitcoin is anything else but a bubble must have his brains checked
if tomorrow the price crashes to 10$ with no apparent reason you would forget it existed very soon
the price fluctuations are usually unpredictable and with no reason behind them
it is manipulated at a higher level and if the manipulators decide that the project has to be closed it will be closed and dusted
but at the moment we all enjoy the "great bitcoin revolution"

True,but this is only possible on altcoin not on bitcoin.All prices do really have some bubbles specially on crpyto world it does exist on every coin everytime it tends to go up but theres no assurance anytime that it wouldnt pop-out and crash back again thats why its important for us to see the opportunities either on crash or on a rally.We may see new ATH now but no one knows if it would happen again on the big crash going back on previous years.

[merchantofzeny]

Bubbles are useful in that the price of the commodity plunges, allowing you to buy into it if you haven't yet. House prices down? Good if you have money. Same with bitcoins. I wouldn't say we're riding a bubble but should the price plunge, see that as an opportunity rather than catastrophe.

[DrGuns4Hands]

Fortunately, it's veritable. This is viable only in altcoins but not in bitcoin/cryptocurrency. Especially, in cryptocurrency world all amounts do really have some bubbles. It ensures exist on every coin everytime it inclines to drive up. Nonetheless, bubbles are useful in that price of the product plummets, consenting you to purchase into it if you haven't thus far.