During the height of the The Great California Pyramid Scheme of May 1980 (
http://www.vdare.com/posts/the-great-california-pyramid-scheme-mania-of-may-1980), I once walked into a department store to buy some clothes. Ignoring me, the sales clerks huddled behind the counter earnestly discussing their own pyramid they were in the process of setting up. Shortly after, the pyramids went pop and the clerks went back to their customers. Joseph Kennedy famously claimed to have exited the stock market in 1929 when his shoeshine boy gave him some stock tips. Could this kind of real bubble consume Bitcoin? Short answer: No.
Real bubbles -- manias -- require: 1) middlemen who make it easy to buy into it (
https://en.wikipedia.org/wiki/South_Sea_Company#/media/File:Bubble.folly.jpg); and 2) regulation to give the particular investment an implied or explicit imprimatur of government approval (
https://en.wikipedia.org/wiki/South_Sea_Company#/media/File:SouthSeaHouse_Stowe%27sSurveyOfLondon_1754.PNG). The South Sea Company was a fully legal, Parliament approved public-private partnership easy to buy into. The 1980 pyramid bubble was about as easy to buy into but lacked any pretence of government approval, and thus was limited in scope and brief of duration.
The Dot-com and home mortgage bubbles were both products of regulation and themselves easy to buy into via stockbrokers and banks, respectively. Today, although American bitcoin exchanges like Coinbase and Kraken are regulated, bitcoins themselves are not and probably cannot be as a practical matter. And, perhaps fortunately, the feds said
No to a bitcoin ETF but that will probably change. However, as knowledge of bitcoin spreads, so will knowledge of how to buy and hold them yourself. There is a huge psychological difference between giving your money to a broker to spend and giving it to yourself to spend on exactly the same thing. Furthermore, bitcoins will have competition: ethers, ripples, and litecoin are just as easy to buy -- and let's not forget the probable future bubble of prediction markets:
https://www.cryptocoinsnews.com/football-star-luis-suarez-pumps-stox-prediction-market-alpha/. Will they produce a bubble in Augur reps? Again, no, and for the same reasons.
What will more likely become a bubble will be ICOs. They will be increasingly easy to buy into in spite of government warnings (
https://www.sec.gov/oiea/investor-alerts-and-bulletins/ib_coinofferings) because in fact some of the ICO's are and will be registered with the SEC as securities, and thus will be seen as safe in the eyes of a lot of people. So look for a bubble in those, and look for a sharp drop in crypto prices for awhile after the bubble bursts. But the
BTClockchain will no more be an essential working part of the ICO bubble than the U.S. dollar was an essential working part of the Dot-com and mortgage bubbles.
Bitcoins, ethers, rep tokens, ripples will always be volatile. But just don't expect your department-store sales clerk to try to sell you any.
That's a bubble, and
that ain't gonna happen.
