One of the large motivating factors that brought people to bitcoin is that we cannot trust the government nor the currencies that they back. They’re painted as a group that have driven our monetary system into the ground.
And while there is some truth to that, the advocates for Bitcoin aren’t that different with their proposed new system.
One investor stated Bitcoin is “a gift from God to help humanity sort out the mess it has made with its money.”
A PayPal director predicts that within 5 to 10 years, Bitcoin will reach $1 million.
Others call Bitcoin the new gold.
That doesn’t make any sense whatsoever.
Ever since Bitcoin and other cryptocurrencies have been around, financial investors have determined that the price of a cryptocurrency as:
Circulating Supply × Price
Circulating Supply is alright as there is a certain limit to how many coins can be around.
Price however is purely speculative. The only tangible data we have to evaluate cryptocurrencies is transaction speeds and a ledger noting various amounts.
It’s not concrete data and so the only explanation is the price is purely speculative.
That this is the price people wish for it to be evaluated at.
It creates a scenario where people can effortlessly inflate the price based around recent events only for key players to drop the price down dramatically.
This is known as pumping-and-dumping and we’ve already seen a little bit thanks to a key player: Elon Musk.
Aside from that, Bitcoin is staying at a prominent price only because people are hearing more and more stories of people doubling or tripling their money in a short period of time. People don’t want to miss out and so jump in, hoping to make it work.
But again, since Bitcoin is purely speculative, the coin could easily be useless in a matter of weeks or months once the big players have left if they wish to do that.
