A Philosopher's Perspective on Bitcoin (#3)

Bubbles Aren't Bad When You Are Drinking Champagne.

Not a few people have declined to invest in cryptocurrency having come to the conclusion that they would only be investing in a bubble that is going to collapse and leave them holding the bag.

We hear that the time for making money in cryptocurrency is in the past and that only the very few who got in early will really make any money.

You can't beat arguments like that because there is an element of truth to them. No one knows the future of cryptocurrencies and the whole thing could collapse at any time.

That said each day people are making (and losing) money in the cryptocurrency markets around the world. The world capitalization is currently around $600 billion. Three months ago it was well under $200 billion. It may reach $1 trillion in the not too distant future. While new initial coin offerings (ICO's) are springing up almost every day there are a limited number of projects trying out new ideas to be implemented on the blockchain. Money continues to poor into the cryptocurrency market chasing value. As a result prices continue to rise.

When new money stops entering the crypto market there will be less upward pressure on prices and there will be a great crypto recession in which unproven projects will see their coin values plummet.

So yes, some day there will be a crypto recession. All markets suffer recessions. The dot.com bust of the 1990's is a good recent example with many similarities to the current situation.

However, the near term smart money evaluation is that this bull market has a long way to go. Certainly a couple of years if not longer. So the question is do you want to be ultimately right and sit back and when the bubble bursts say to people 'I told you so' or do you want to invest and grow your investment for the next two or more years and pile up big earnings that can always be moved to more conservative investments.

For those of us who have entered the crypto market the taste of champagne is sweet as are the earnings that daily dwarf what can be gotten in other investments such as real estate or the stock market. So yes there is a bubble growing that some day will pop. That is always the case in any market. Is this market overheated? Currently, it is and will be going through a temporary recalibration for a little while. Nevertheless, it will regroup and power on to new heights.

For the present, the bubbles are like the bubbles in champagne and part of the pleasure of investing in cryptocurrencies. That will remain the case for some time to come. Pour yourself a glass if you dare!