There are is no question that bitcoin’s value is rising, but has it created a systematic threat?
Probably not. The total value of global real estate during the peak of the property boom in 2007 was roughly $217 trillion (give or take a couple of trillion - its only trillions)
The market cap of bitcoin today is $330 bn.
657 times less.
I do not know how big bitcoin needs to get to morph into a threat for the global economy, but it’s a long way of the size of the global real estate market, whose collapse brought everything down with it in 2008.
You see a lot of institutions such as Goldman, or JP Morgan saying Bitcoin follows a classic pattern of speculative mania. And this may be true.
But its not written in stone. It strikes me as a little funny that these companies could not detect the speculative mania occurring in their own banks during the 2000s property bubble?
Financial institutions have a very poor record of forecasting the future. The IMF, Goldman, Morgan Stanley, ERSI - they all have very poor records of forecasting future economic crashes. It is for this reason that John Maynard Keynes said:
"If economists could manage to get themselves thought of as humble, competent people on a level with dentists, that would be splendid."
Bitcoin’s Potential - Store Of Value
Bitcoin could have an edge as a global store of value on par with gold. The volumes of bitcoin used in e-commerce say that bitcoin is not being used as a currency. But it could easily be used as a form of digital gold if the next financial crash de-value the Chinese yuan, or the American dollar significantly.
There are many reasons why bitcoin would work as a digital form of gold. It’s:
• Doesn’t need require help from third parties (Banks)
I believe I am not the only person who is saying this:
The truth is…
I do not know whether its a bubble. No one else does either. I have never seen people lose out significantly by avoiding the latest hot trends (flipping houses, buying internet stocks). But I have seen people lose a lot chasing them (see 2008 great recession for more)
Is it worth it?