Simply put, Bitcoin is a virtual currency. Through Bitcoin, users are able to transfer Bitcoins anonymously by the use of a main ledger called the Blockchain. With the use of this system, users are able to move Bitcoin from one user to another and remain anonymous.
Bitcoin is a bubble ready to explode and here’s why:
At first, you must realize that Bitcoin has no physical entity and it has market value just because people believe it has value. This is a key reason why many have called the currency a bubble waiting to pop.At its core, the Bitcoin is just a cryptographic protocol designed for people to believe they have something valuable. Bitcoin boasts an ironic blend of anonymity and transparency. People can track a Bitcoin from its inception, but there is no way to verify the origins of the Bitcoin itself.
Much of the Bitcoin’s success can be attributed to its volatility – so much that it has been deemed as an impractical currency. However, people are getting into Bitcoin not because of the ability to transfer money, but to hoard Bitcoin under the pretense that it would be worth more. After you purchase your Bitcoin, there’s nothing much that you can do with it. It’s impossible to put a price tag for a commodity in Bitcoins not knowing how much the Bitcoin would be worth in a set time in the future.
Bitcoin has three major things going for it -total anonymity, total security, and rarity. With Bitcoin, there would be no use for large vaults and ledgers thanks to the Blockchain. The security is virtually impenetrable. In addition, the Bitcoin ledger is available to the public. You can’t steal Bitcoins, you can’t create Bitcoins, and you can’t counterfeit Bitcoins.
Just imagine a world where people can openly trade without having any third-party executor that takes a part of the profit. The terrible part of this notion is that Bitcoin does not have any physical entity and the whole system is not regulated by any form of government. That means that there is a HUGE opportunity to manipulate the value of the Bitcoin, and the opportunists would not be accountable to anything.
It is also important to consider that Bitcoin’s impenetrable security is only secure because the current technology is not yet able to brute force its way into the hash-cash of Bitcoin. Bitcoin is a crypto-currency in essence, based on the mathematical discipline of cryptography, and uses the same techniques used in modern encryption systems such as RSA.
For your knowledge, modern computing power is unable to crack such systems, due to their mathematical complexity (prime factorization) in addition to the computational unfeasibility of today. Eventually, the technology would catch up and Bitcoin’s security will be kaput. There’s no telling how, or when the technology would be made, but it is certain that it would happen in the near future. So Bitcoin is not sustainable, how can we consider it as a currency?
The whole hype for Bitcoin is because the value skyrocketed 4000% in the past year. It’s like the unregulated, intangible version of gold in the market. Since the trading is unregulated, it is fair to speculate some sort of manipulation in trading Bitcoins. According to CNBC, the surge is attributed to an increased interest in the Chinese market. Since the trading is not regulated, and the transactions are anonymous, it is virtually impossible to prove that Bitcoins are being manipulated. As impenetrable as Bitcoin may be, the people trading them are not. Until the Bitcoin is declared by a government as a legal tender, the value of the Bitcoin is just a collective opinion.
When will the Bitcoin bubble burst?
It’s tough to tell, but with the Chinese clamping down on Bitcoin transactions, we may have seen the tip of the blade that punctured Bitcoin. On December 18, 2013, the People’s bank of China, asked the 10 largest online third-party payment institutions to stop dealing in Bitcoin. Prior to the move by the Chinese government, 1BTC (Bitcoin) was worth as much as 1200 USD. After the announcement made by the Chinese government, the prices for the Bitcoin plummeted – as much as 50%.
The Chinese government is worried that the Bitcoin would take their local currency (yuan) out of the country. The confidence in the currency started to plummet and it is most notable in its pricing. Experts believe that this would be the start of the downfall for the crypto-currency. If the other countries follow suit, it would spell the end of Bitcoin – leaving Bitcoin traders with literally nothing to show for it. So, are you still interested in getting those Bitcoins? Let us know in the comments.
About Ali Gajani
Hi. I am Ali Gajani. I started Mr. Geek in early 2012 as a result of my growing enthusiasm and passion for technology. I love sharing my knowledge and helping out the community by creating useful, engaging and compelling content. If you want to write for Mr. Geek, just PM me on my Facebook profile.
FAQs
A crypto bubble is when cryptocurrency prices shoot up fast because people are excited and guessing they'll make a lot of money. But then, just as quickly, the prices crash back down to where they started or even lower.
Is it safe to invest in Bitcoin or is it just a bubble? ›
This research shows that there are significant coincidences between the behavior of Bitcoin prices and that of previous well-known bubbles. Therefore, thanks to this study, the idea that Bitcoin is an asset that tends to behave in the form of a bubble is reinforced.
Is the Bitcoin bubble bursting? ›
One thing seems almost certain - if Bitcoin is a bubble, it hasn't burst yet. The coin's price has stopped falling and is now slowly but surely climbing up again. Various global events dictate Bitcoin's price fluctuations - while some governments ban cryptocurrencies, others embrace them.
Who owns the most Bitcoin? ›
So, who are the top holders of BTC? According to the Bitcoin research and analysis firm River Intelligence, Satoshi Nakamoto, the anonymous creator behind Bitcoin, is listed as the top BTC holder as of 2024. The company notes that Satoshi Nakamoto holds about 1.1m BTC tokens in about 22,000 different addresses.
Can Bitcoin go to zero? ›
Over the span of many decades, anything can go to zero. Amazon and Google can go to zero. But sooner than that, the chance of Bitcoin going to zero … is zero.
Is Bitcoin a good investment? ›
Is bitcoin or cryptocurrency a good investment? Bitcoin tends to be incredibly volatile compared to other investment options, experiencing significant run-ups in value, followed by quick decreases in value.
What happens if you invest $100 in Bitcoin today? ›
Investing $100 in Bitcoin alone is not likely to make you wealthy. The price of Bitcoin is highly volatile and can fluctuate significantly in short periods. While it is possible to see significant returns in a short time, it is also possible to lose a substantial amount just as quickly.
Can you cash out Bitcoin? ›
One of the easiest ways to cash out your cryptocurrency or Bitcoin is to use a centralized exchange such as Coinbase. Coinbase has an easy-to-use “buy/sell” button and you can choose which cryptocurrency you want to sell and the amount.
Is there a downside to Bitcoin? ›
Investing in Bitcoin cryptocurrency has its pros and cons. While its transactions are relatively secure, it's also prone to volatility, with large dips and spikes in price.
What year will Bitcoin end? ›
It's estimated that all bitcoins will be mined by the year 2140, at which point the last block reward will be released. If a Bitcoin is lost or destroyed, it cannot be recovered, which can decrease the total supply of Bitcoins and increase their overall value.
It is quite likely that a bitcoin price crash will result in a correction in their prices as well. It is also certain that the vast majority of cryptocurrencies that populate the current listings will disappear.
Will Bitcoin get shut down? ›
As Bitcoin is decentralised, the network as such cannot be shut down by one government. However, governments have attempted to ban cryptocurrencies before, or at least to restrict their use in their respective jurisdiction. Governments could still try to jointly ban Bitcoin.
How much bitcoin does Elon Musk own? ›
revealed on Twitter that he owns only a tiny fraction of one bitcoin token. "I literally own zero cryptocurrency, apart from . 25 BTC that a friend sent me many years ago," Musk confessed. Using today's bitcoin price of about $10,000 a coin, that translates to $2,500.
How many millionaires own bitcoin? ›
Over the course of its 15-year history, Bitcoin (CRYPTO: BTC) has made plenty of millionaires. In fact, data from the blockchain analytics platform Glassnode shows roughly 115,000 wallet addresses with a balance of more than $1 million today.
Who really runs bitcoin? ›
Bitcoin is not controlled by any single group or person. Instead, it is governed by multiple stakeholders — including developers, miners, and users. Developers write the code that makes Bitcoin run; miners validate transactions; and users put the software to work by trading, transacting, holding, and more.
Why is Bitcoin so inflated? ›
Because it is in demand by investors (realistically, they are speculators because they are hoping for returns), Bitcoin commands a very high price, as demonstrated by the exchange rates it has experienced in the past.
Why is Bitcoin sinking? ›
More recently, however, bitcoin has fallen alongside other assets including global equities in a broad selloff as investors fear a U.S. recession could be on the horizon, with rising geopolitical worries also weighing. It has lost over a third of its value since hitting a record high in March.
What caused Bitcoin to skyrocket? ›
Specifically, bitcoin has moved like a speculative asset: a high-risk class of investments that draw interest for their potential to greatly increase, as opposed to their underlying utility. When interest rates shrank during the pandemic, allowing people to borrow and invest money more easily, bitcoin boomed.
Why is Bitcoin bouncing? ›
BTC price bounces from moving average support
Daily price chart technicals show BTC's price jumped after testing its 50-day exponential moving average (50-day EMA; the red wave) as support. This wave support has capped BTC's downside attempts multiple times in recent history.
