Many people are wondering when the Bitcoin bubble will burst. Some say it’s already happened, while others believe it’s still to come.
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It’s been called a “bubble” by some, while others see it as the future of money. But what is Bitcoin, and why all the fuss? Here’s everything you need to know about Bitcoin.
Bitcoin is a digital currency, also known as a cryptocurrency, that was created in 2009 by an anonymous person or group of people using the pseudonym Satoshi Nakamoto. Bitcoins are not regulated by governments or financial institutions, and can be used to buy goods and services online anonymously.
Transactions are recorded on a digital ledger called a blockchain, which is maintained by a network of computers around the world. Bitcoin is not backed by any physical commodity, such as gold or silver, and there is no central authority that issues or controls it. The supply of bitcoins is limited to 21 million, with about 16 million in circulation.
Bitcoin has been subject to some volatility over the years, but its price has skyrocketed in recent months. As of January 2018, one bitcoin is worth over $13,000. This rise in price has led some to believe that we are in the midst of a Bitcoin bubble that could soon burst.
What is Bitcoin?
Bitcoin is a cryptocurrency, a digital asset designed to work as a medium of exchange that uses cryptography to control its creation and management, rather than relying on central authorities. The presumed pseudonymous Satoshi Nakamoto integrated many existing ideas from the cypherpunk community when creating bitcoin. Over the course of bitcoin’s history, it has undergone rapid growth to become a significant currency both on- and offline.
Bitcoin’s Price History
Bitcoin’s price is often described as volatile. A popular way to gauge Bitcoin’s volatility is to compare its price with the volatility of gold. Gold is widely considered a safe haven asset and its price is more stable than Bitcoin’s. In other words, Bitcoin’s price is more volatile than gold.
The price of Bitcoin has been volatile since it was first created in 2009. The digital currency has had several large swings in value, with the most recent being a sharp drop in early 2018.
Bitcoin’s price is not the only thing that has been volatile. The number of Bitcoin transactions per day (measured in US dollars) has also been volatile. The number of daily transactions has ranged from as low as about 4,000 to as high as 500,000.
Volatility can be a good thing or a bad thing depending on your perspective. For some, volatility creates opportunities for profit. For others, it introduces too much risk.
Bitcoin’s Price Drivers
Bitcoin’s price is driven by a number of different factors, including demand from buyers and sellers, trading activity on exchanges, and news affecting the crypto market. While it’s impossible to predict exactly when the Bitcoin bubble will burst, there are a few things that could trigger a price crash.
1. Increased regulation of Bitcoin and other cryptocurrencies.
As Bitcoin becomes more mainstream, governments around the world are starting to take notice. Some countries have already implemented strict regulations on crypto trading, and more could follow suit. This could lead to a decrease in demand for Bitcoin, which could trigger a price crash.
2. Hackers target major exchanges.
Exchanges are one of the most vulnerable points in the crypto ecosystem, and they’ve been targets of major attacks in the past. If hackers were to successfully target a major exchange again, it could lead to a loss of confidence in Bitcoin and other cryptocurrencies, causing prices to drop.
3. The emergence of superior alternatives to Bitcoin.
Bitcoin is not the only cryptocurrency on the market, and there are already several alternatives that offer advantages over BTC. If one of these altcoins were to gain mainstream adoption, it could lead to a decrease in demand for Bitcoin, triggering a price crash.
When Will the Bitcoin Bubble Burst?
No one can definitively say when the Bitcoin bubble will burst, but there are a few factors that could play a role in its demise. First, the price of Bitcoin is incredibly volatile and has been known to drop suddenly and without warning. This could cause investors to lose confidence in the currency and pull their money out, leading to a sharp decrease in value.
Another possibility is that government regulation could hamper the growth of Bitcoin. Currently, there is very little regulation surrounding the currency, but if governments decide to crack down on it, this could have a negative impact on its value.
Finally, it’s possible that the Bitcoin bubble will simply burst due to natural market forces. Bubbles are typically followed by a period of stagnation or even decline, so it’s possible that this is what will happen with Bitcoin. Only time will tell for sure.
The most likely scenario is that the bitcoin bubble will burst within the next few years. While it is possible that the price of bitcoin could continue to rise in the short term, it is more likely that it will fall, at least in the medium term. This is because the current price of bitcoin is not supported by any fundamental value, and is instead driven purely by speculation. Eventually, this speculation will stop, and the price of bitcoin will fall back down to its true fundamental value, which is likely to be much lower than its current price.