5 Reasons Bitcoin Is Not A Bubble

[Hydrogen]

The digital currency bitcoin rallied by over 300 percent since the start of the year and has recently surpassed the $4,000 mark. Unsurprisingly, many financial markets pundits consider such a sharp rally the creation of an asset bubble.

In all fairness, the returns that bitcoin and its digital peers in the crypto assets space are experiencing have not been seen since the day and age of the internet bubble in the late 1990s. However, Bitcoin has very different fundamentals than early internet stocks and a much more promising growth trajectory.

1. The Growing Acceptance of Bitcoin as Legal Tender
One of Bitcoin’s biggest challenges so far has been acceptance by lawmakers and financial regulators due to its decentralized nature and its unfortunate association with criminal activities carried out on the dark web. However, Bitcoin’s “official” acceptance is on the rise.
 
In April 2017, Japan announced that it would officially begin accepting Bitcoin as a legal payment method, which immediately boosted the price of bitcoin and has led to a substantial increase in merchant adoption across Japan.
 
In the Philippines, citizens have been increasingly using Bitcoin to send and receive low-cost remittances. This has not gone unnoticed by the country’s central bank, which announced in February 2017 that it will regulate Bitcoin so that the digital currency can be used as an officially accepted remittance system and, thereby, granting it full legal status.
 
Countries such as Australia and Russia have recently made similar statements that could lead to Bitcoin becoming a fully accepted medium of exchange in their respective countries. This is a trend that is likely to continue, given the growing demand for Bitcoin as an investment as well as an online payment system.
 
2. Increasing Merchant Adoption
In the early years of Bitcoin, merchant adoption was limited to a few brave ecommerce stores, usually run by early-stage Bitcoin enthusiasts. This, however, has changed substantially as leading tech companies and ecommerce platforms have chosen to accept Bitcoin as a payment method. Microsoft, Rakuten and Overstock are three of the largest companies to accept Bitcoin payments.
 
With bitcoin’s sharp price rally, increased media coverage and newfound acceptance in places such as Japan, Bitcoin merchant adoption is on the rise and this trend will likely continue.
 
The arguments for online merchants to accept Bitcoin are actually very strong; fees are lower than for credit card payments, chargeback fraud is entirely eliminated, new customers can be reached in underbanked regions and a new, tech-savvy consumer base can be attracted.
 
The more that merchant adoption increases globally, the more there will be regular and stable demand for the digital currency. And given the current low rate of merchant adoption, there is a substantial room for upside.
 
3. Bitcoin Is Increasingly Acting as a Store of Wealth in Distressed Economies
Another reason why Bitcoin is most likely not a bubble is that is has a much-need real world application in economically distressed countries. In places such as Venezuela, Bolivia and Zimbabwe, for example, bitcoin has been acting as a store of wealth and as an alternative spending currency as local currencies are weakening into worthlessness. This can be witnessed by increasing bitcoin trading volumes that are negatively correlated with the performance of local currencies and economic growth in distressed regions.
 
Bitcoin also allows individuals and businesses in countries with strict capital controls, such as Venezuela, to receive much-needed remittances to stay financially afloat. In other words, wherever there is economic distress, Bitcoin demand will likely rise and Bitcoin adoption will grow.
 
4. Bitcoin Has Only Just Gone Mainstream
You could say that 2017 has been the year in which Bitcoin has finally gone mainstream. Five years ago, if you would have asked the average person on the street what Bitcoin is, they would have most likely given you a bewildered look. Today, most people have at least heard of Bitcoin and many even know that one bitcoin is worth more than an ounce of gold.
 
Now that Bitcoin has become mainstream, the buying potential from new investors is immense, especially as institutional investors have started to open up to the idea of investing in bitcoin and other digital currencies.
 
5. Bitcoin’s Supply Is Limited
Finally, one of the key reason why Bitcoin has become so valuable is that its increasing demand is met with a fixed limited supply.
 
Because of the way Bitcoin was created, only 21 million coins can ever be mined. Furthermore, the rate at which new coins are created slows down over time, which means the increasing demand for the digital currency is not only met with a limited total supply but also with a continuously slowing supply.
 
The discussion of whether Bitcoin is a bubble or not will likely continue indefinitely, but the comparison between Bitcoin and early internet stocks does not hold true due to the fundamental differences between the two asset classes.

*  *  *

As CoinTelegraph notes, countering no shortage of criticism from traditional financial circles that Bitcoin’s price had grown too quickly and would inevitably crash, the new-found faith in Bitcoin and its maturing as a medium of exchange has become apparent in its increasing resilience to ‘FUD’ or other bad news.

Mainstream forecasters now predict further upward momentum for prices, with TradingView eyeing a new all-time high of $6,800 for November despite the uncertainty surrounding the SegWit2x hard fork.

http://www.zerohedge.com/news/2017-10-26/bitcoin-spikes-back-6000-five-reasons-why-its-not-bubble

...

This is a good flipside to the "bitcoin is a bubble" stories the media has spammed us with since forever.

Another good case for bitcoin not being a bubble due to its high projected future growth can be found in this thread here:

https://bitcointalk.org/index.php?topic=2281270.msg23152743#msg23152743

I think the article above addresses some of the points economists and finance analysts have glossed over. Bitcoin's growth in relation to its fundamental metrics are what will likely determine whether bitcoin is a bubble. Thus far none of the experts have addressed that topic. There's zero acknowledgement made of bitcoin's adoption in countries like japan, the philippines, russia or australia and crypto's transition towards becoming more mainstream. No commentary on whether those effects on bitcoin's elevated price could be sustainable.

It is possible that we will never see anything resembling legitimate analysis of bitcoin from the media. They have a long history of sweeping relevent and key points under the nearest rug. Out of sight, out of mind. Over the long term this could create opportunities for independent media to rise if indeed nature abhors a vacuum.

Is bitcoin a bubble? What are everyones thoughts on this?   

[DaMut]

in general it's more like bubble and i admit it because the price is very high while not 'really' much people using it,
what i mean is,when we're looking at Gold(for example,i do not compare it one another.it's just an example),
it's a well known item and used in every country and every place,
no matter where you go you can find it and buy it unlike Bitcoin,
it's look like that because people hyping it too much and talking about replacing fiat and other stuff,
in other people,it's like a bubble because it can burst any time soon.
only a few people understand how it works and the majority will not understand it because they do not like a complicated thing.
so it's bubble or not it's all depend on the viewer themself.

[EcoChavCrypto]

Bitcoin is a bubble, it doesnt matter if you or all those websites says that it is not, because in fact, it is, because a lot of people are only hyping it to get profit, and we all are doing the same.
It has been increasing a lot in the last months, from $700 to $6200 ATH in just 10 months, isn't it a signal of a true bubble? It can be compared with the economic chaos of the US on 2008, only that this is digital.
In the moment that everybody decides to sell bitcoin, then the price will collapse, of course.

[digitx]

It depends on your definition of bubble.

If you think about it in a simplistic way that anything with a rapidly appreciating price and lots of volatility is a bubble - then yes - it is a bubble.

But once money was invented lots of things have gone through bubble phases. Gold, houses, stocks. In fact - there isn't really any asset class that isn't in a bubble - and its due to scarcity. Everyone wishes to buy the asset that gives them unlimited return - so any asset that does quickly gets bought up until people are paying more than the return they can ever realistically get back from it..  I think that's where a bubble starts - and by that definition most property in cities is a bubble.

Bitcoin may be a bubble - so what?

[BelieveInBitcoin]

Bitcoin may be a bubble - so what?

It's only a 'so what' if you think you can sell fast enough when the bubble bursts.

[Gozie51]

  . A bubble? Everyone seem to be talking this way. I think it is the economists that classified it so going by the way bitcoin is - what can't be felt, not tangible etc is seen as such in economics.

Meanwhile, I also see it as a bubble. Is it like we are expecting it burst very soon.  . If the burst comes, is either going to see the price up high or down below. I'm still holding though.

[Dobmader]

Bitcoin may be a bubble - so what?

It's only a 'so what' if you think you can sell fast enough when the bubble bursts.

What are you saying mate, bitcoin is the most importance and the valuable thing so we will have to be worry about the bitcoin I use the bitcoin and I am very concern about the selling and the buying of the bitcoin. it is time to buy the bitcoin and to hold for the long time I use the bitcoin and I hold the value and the importance for all the people I use the value bitcoin and the income of the bitcoin  so it is  very important for me to be the bitcoin seller at the high price.

[Hydrogen]

Bitcoin may be a bubble - so what?

If bitcoin is a bubble, the price of btc should fall significantly after the bubble pops. There would be a massive bust cycle to compliment the large boom cycle we've witnessed recently. That could be why its a relevent and sometimes hotly debated point.

There are a lot of people were convinced bitcoin was a bubble after it hit $2,500. There's a chance the media is fooling people into believing btc is a bubble when its not, which could cause the price to decrease. Those are some of the main implications and circumstances surrounding it.

To help put things into perspective, the 2008 economic crisis was caused by a housing/derivatives bubble bursting. A btc bubble wouldn't be nearly as damaging. But there could be some damage done. Sometimes it might be worth discussing bubbles, if it means those types of crisis can be averted.

[MikuMiku]

I agree with you, bro. I don't think bitcoin is a bubble. It's kind of like gold in physic world to me. If everyone view gold as a format of property, then it's a property. So as bitcoin.

[jekjekman]

Some people may call it a bubble because of it's nature. Unlike other currency with gold backing it up. But wait why do people always says that bitcoin is just like the "dot com bubble"? Wherein it is way too different from that, from the start bitcoin never promise anything what it did was it just gave an option for people to use as an alternative currency.

More and more people are supporting bitcoin so if it is a bubble those people are avoiding the bubble to burst and I don't think that those people will let it burst.

[HabBear]

Yep, yep, yep, yep, and yep.

I love reading articles, particularly with comments from high finance leaders, that claim Bitcoin is a bubble or bullshit or not worthy of investment while completely ignoring all of the characteristics listed above.

You can't compare Bitcoin to a stock and you can't ignore the characteristics of Bitcoin that make it valuable to the world. Period.

[miyaka26]

When some media and economist comment about bitcoin they always say that it is bubble. well they don't understand how and what bitcoins is and the blockchain technology. They can't accept the fact that it will be a new innovation for the new monetary system. they just want to stick in the old banking system because that's their business actually. Bitcoin is not perfect yet but the blockchain is the new system of managing currency through digital network. It's just like fiat just over the internet. bitcoin is not a bubble not for now.

[krishnapramod]

Bitcoin isn't a bubble, but currently it is used more as a speculative asset. No denying the fact that scarcity, technology, utility, adoption, recognition are the fundamentals, but the market right now is driven more by speculation and that might be good, might not be. There has to be an equilibrium where transactional, reservation, and speculative demand are somewhat same.

If a good number of people adopt Bitcoin and agree that it's money then it can be self-fulfilling prophecy, but this should be based on real rational expectations, Bitcoin as a store of value, unit of account, and medium of exchange, not merely a speculative vehicle which would end up in a self-fulfilling irrational speculative equilibrium which isn't good.

Bitcoin is dualistic in nature, as a currency and a commodity, it is good and bad, speculators make it a too volatile medium of exchange, but for widespread adoption and putting an end to bubble theory, Bitcoin needs to get adopted as a currency. Merchant adoption is the key.

[jokowi]

The digital currency bitcoin rallied by over 300 percent since the start of the year and has recently surpassed the $4,000 mark. Unsurprisingly, many financial markets pundits consider such a sharp rally the creation of an asset bubble.

In all fairness, the returns that bitcoin and its digital peers in the crypto assets space are experiencing have not been seen since the day and age of the internet bubble in the late 1990s. However, Bitcoin has very different fundamentals than early internet stocks and a much more promising growth trajectory.

1. The Growing Acceptance of Bitcoin as Legal Tender
One of Bitcoin’s biggest challenges so far has been acceptance by lawmakers and financial regulators due to its decentralized nature and its unfortunate association with criminal activities carried out on the dark web. However, Bitcoin’s “official” acceptance is on the rise.
 
In April 2017, Japan announced that it would officially begin accepting Bitcoin as a legal payment method, which immediately boosted the price of bitcoin and has led to a substantial increase in merchant adoption across Japan.
 
In the Philippines, citizens have been increasingly using Bitcoin to send and receive low-cost remittances. This has not gone unnoticed by the country’s central bank, which announced in February 2017 that it will regulate Bitcoin so that the digital currency can be used as an officially accepted remittance system and, thereby, granting it full legal status.
 
Countries such as Australia and Russia have recently made similar statements that could lead to Bitcoin becoming a fully accepted medium of exchange in their respective countries. This is a trend that is likely to continue, given the growing demand for Bitcoin as an investment as well as an online payment system.
 
2. Increasing Merchant Adoption
In the early years of Bitcoin, merchant adoption was limited to a few brave ecommerce stores, usually run by early-stage Bitcoin enthusiasts. This, however, has changed substantially as leading tech companies and ecommerce platforms have chosen to accept Bitcoin as a payment method. Microsoft, Rakuten and Overstock are three of the largest companies to accept Bitcoin payments.
 
With bitcoin’s sharp price rally, increased media coverage and newfound acceptance in places such as Japan, Bitcoin merchant adoption is on the rise and this trend will likely continue.
 
The arguments for online merchants to accept Bitcoin are actually very strong; fees are lower than for credit card payments, chargeback fraud is entirely eliminated, new customers can be reached in underbanked regions and a new, tech-savvy consumer base can be attracted.
 
The more that merchant adoption increases globally, the more there will be regular and stable demand for the digital currency. And given the current low rate of merchant adoption, there is a substantial room for upside.
 
3. Bitcoin Is Increasingly Acting as a Store of Wealth in Distressed Economies
Another reason why Bitcoin is most likely not a bubble is that is has a much-need real world application in economically distressed countries. In places such as Venezuela, Bolivia and Zimbabwe, for example, bitcoin has been acting as a store of wealth and as an alternative spending currency as local currencies are weakening into worthlessness. This can be witnessed by increasing bitcoin trading volumes that are negatively correlated with the performance of local currencies and economic growth in distressed regions.
 
Bitcoin also allows individuals and businesses in countries with strict capital controls, such as Venezuela, to receive much-needed remittances to stay financially afloat. In other words, wherever there is economic distress, Bitcoin demand will likely rise and Bitcoin adoption will grow.
 
4. Bitcoin Has Only Just Gone Mainstream
You could say that 2017 has been the year in which Bitcoin has finally gone mainstream. Five years ago, if you would have asked the average person on the street what Bitcoin is, they would have most likely given you a bewildered look. Today, most people have at least heard of Bitcoin and many even know that one bitcoin is worth more than an ounce of gold.
 
Now that Bitcoin has become mainstream, the buying potential from new investors is immense, especially as institutional investors have started to open up to the idea of investing in bitcoin and other digital currencies.
 
5. Bitcoin’s Supply Is Limited
Finally, one of the key reason why Bitcoin has become so valuable is that its increasing demand is met with a fixed limited supply.
 
Because of the way Bitcoin was created, only 21 million coins can ever be mined. Furthermore, the rate at which new coins are created slows down over time, which means the increasing demand for the digital currency is not only met with a limited total supply but also with a continuously slowing supply.
 
The discussion of whether Bitcoin is a bubble or not will likely continue indefinitely, but the comparison between Bitcoin and early internet stocks does not hold true due to the fundamental differences between the two asset classes.

*  *  *

As CoinTelegraph notes, countering no shortage of criticism from traditional financial circles that Bitcoin’s price had grown too quickly and would inevitably crash, the new-found faith in Bitcoin and its maturing as a medium of exchange has become apparent in its increasing resilience to ‘FUD’ or other bad news.

Mainstream forecasters now predict further upward momentum for prices, with TradingView eyeing a new all-time high of $6,800 for November despite the uncertainty surrounding the SegWit2x hard fork.

http://www.zerohedge.com/news/2017-10-26/bitcoin-spikes-back-6000-five-reasons-why-its-not-bubble

...

This is a good flipside to the "bitcoin is a bubble" stories the media has spammed us with since forever.

Another good case for bitcoin not being a bubble due to its high projected future growth can be found in this thread here:

https://bitcointalk.org/index.php?topic=2281270.msg23152743#msg23152743

I think the article above addresses some of the points economists and finance analysts have glossed over. Bitcoin's growth in relation to its fundamental metrics are what will likely determine whether bitcoin is a bubble. Thus far none of the experts have addressed that topic. There's zero acknowledgement made of bitcoin's adoption in countries like japan, the philippines, russia or australia and crypto's transition towards becoming more mainstream. No commentary on whether those effects on bitcoin's elevated price could be sustainable.

It is possible that we will never see anything resembling legitimate analysis of bitcoin from the media. They have a long history of sweeping relevent and key points under the nearest rug. Out of sight, out of mind. Over the long term this could create opportunities for independent media to rise if indeed nature abhors a vacuum.

Is bitcoin a bubble? What are everyones thoughts on this?   

Bitcoin is not a bubble. Because the bubble can explode and fly in a short time.
1. Bitcoin is a valuable currency.
2. Anyone who wants to own a bitcoin.
3. The profit of bitcoin is very high.
4. Bitcoin does not explode fast and does not go away.
5. All countries use and invest bitcoin.

[MinMan]

. A bubble? Everyone seem to be talking this way. I think it is the economists that classified it so going by the way bitcoin is - what can't be felt, not tangible etc is seen as such in economics.

Meanwhile, I also see it as a bubble. Is it like we are expecting it burst very soon.  . If the burst comes, is either going to see the price up high or down below. I'm still holding though.

You don’t get why people call it a bubble, do you? The name bubble is just being used as a slang for Bitcoin and that’s due to its high rate of volatility. Yes you’re seeing it as a bubble when the price is increasing, and what really happens when it bursts? Price will immediately run down to the lowest amount.

[bubblebit]

That’s interesting to read and obviously worth reading than those members replies claiming it was a bubble without giving much information other than it goes from this price to that. This is just my two satoshi about this narrative. I think those are the ones who badly need to buy bitcoin but hesitant at this price and the only solution is giving panic atmosphere to drop the price and that’s it.

[BillCoin]

The main reason bitcoin is not mainstream yet is because his circulating supply doesn't show the real amount of bitcoins that are in circulation. there are about 4 Milliion lost bitcoins(Estimated), which means that the market cap is not 100M$ as it claims to be, it is much less then that.

Also, bitcoin hasn't gone mainstream yet, and once it goes the price will significantly increase, much more then the levels of 5000-6000$ at the moment.

Bitcoin future is very bright in my opinion.
 

[Granxis]

The main reason bitcoin is not mainstream yet is because his circulating supply doesn't show the real amount of bitcoins that are in circulation. there are about 4 Milliion lost bitcoins(Estimated), which means that the market cap is not 100M$ as it claims to be, it is much less then that.

Also, bitcoin hasn't gone mainstream yet, and once it goes the price will significantly increase, much more then the levels of 5000-6000$ at the moment.

Bitcoin future is very bright in my opinion.
 

Lost Bitcoins will not add value to Bitcoin because the missing Bitcoins are not on the market, so they do not create any transaction traffic.

[atc1-REAL]

Its not a bubble in the sense that it was called a bubble in 2013-14 because of wider adoption of btc. The market rates, while high, do not indicate any attempt by any party/ies to pump and dump. In so far as that argument is concerned, btc isn't a bubble.

[sunsilk]

Lost Bitcoins will not add value to Bitcoin because the missing Bitcoins are not on the market, so they do not create any transaction traffic.

They will add value to bitcoin in terms of limiting the supply in the circulation of it's market. And this is why law of supply and demand is what bitcoin depending in.

The lesser supply of bitcoin in the circulation it means that there will be bigger demand and that results to the price to increase.

And those lost bitcoins will be lost forever, that's why though they are lost forever they still add value to bitcoin.