Quest Bitcoin Bubble Brewing Or Is It Still A Bargain

Quest Bitcoin Bubble Brewing Or Is It Still A Bargain

Once again we spent much of the week looking at bitcoin, as its price roared up and then dropped sharply. Many of us are bemoaning the fact we hadn't invested in this cryptocurrency, while others warned that this could be a bubble waiting to burst.

It's too easy to write off bitcoin as a deregulated scam, a Ponzi scheme, or a modern day version of tulip mania destined to end in tears -- although some of these warnings are probably warranted. Several stocks are surging on bitcoin hype as well.

But having visited a bitcoin mine in Iceland this summer, I saw the thousands of computers racing to authenticate bitcoin transactions. You can't just dismiss this as a fad.


Still, there's another (pardon the pun) side to the bitcoin. We should not just accept the notion that bitcoin is the new source of money for the future, replacing paper currencies and gold. The fact that bitcoin prices roared up to over $11,000 and then just as quickly fell back to $9,300 in a matter of hours shows all the hallmarks of pure speculation. Money is being invested purely on the possibility of making more money because other investors are pouring in and pushing the price higher. This is different from stocks where the price is led by the earnings of the company involved, dividends and other tangible financial measures.

Whatever happens to bitcoin, other cryptocurrencies are gaining ground and more respect. Ethereum, for instance, has far more transparency. So while this week reinforced the fact the crypto revolution is coming, it also showed you can lose your shirt buying and selling bitcoin.



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Dated: December 1st 2017
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