BITCOIN, a heresy?

bitcoin

We hear more and more often about Bitcoin, and the “perfects stories” of buyers from previous years. On the one hand, a majority of financiers say that it is a bubble. On the other hand we can see the CME that will launch futures on Bitcoin and that the Nasdaq is interested in doing the same.

Bitcoin,before being a virtual currency, is a technology called blockchain. This technology can be used for voting, money transfer, electronic signatures. The link between the Bitcoin and the blockchain is the same between Mastercard and the company’s payment cards.  Owning one or 1 million Bitcoins does not make you the owner of the blockchain in the same way a mastercard credit card does not make you the owner of the service. You are only a user. But what does Bitcoin give you the right to? Actually, nothing.

Imagine that Bitcoin was a real currency, it would be disastrous for the economy of the country in question. In view of the volatility and increase in Bitcoin in recent months, the effect would be completely the opposite of the current one on individuals with Bitcoins. This would raise interest rates and lead to huge inflation.

But this Bitcoin makes you dream, to hear the stories of people who bought a few months or a few years ago, and made a fortune “without moving a finger”. Everyone wants to experience this but let’s take the opposite case. Let’s imagine theoretically that you buy Bitcoin today for $11,000. In a month it drops to $8,000. You will think that it is only a passing fad, that you believe in cryptomones, that Bitcoin has already recovered in a few days from a 30% fall. But if 1 month later it falls to $5500, half of your investment is gone. Are you going to buy more? At that level there will no longer be any laudatory articles on Bitcoin, and it will no longer be everywhere in the media. And the social pressure of your loved ones who own them will no longer be the same to push you to buy them. Then the media will reverse itself by telling stories like yours of people who believed in Bitcoin.

People buying Bitcoin today do so for one reason only, the fear of missing an opportunity (FOMO). The problem today is that the unconscious who buy at 11000 hope that others will buy at 12000 and those who buy at 12000 will do the same at 13000. and this fuels the bubble, the demand and therefore the value of Bitcoin.

But where the concept of the Bitcoin is not totally hallucinating, is in its physical value. Today the scriptural value of a Bitcoin is $11,000, that’s a fact. But a Bitcoin has no physical value because you can’t even touch them, so its value is an idea, a common agreement determined by supply and demand. Just like the current currencies, which have no intrinsic value but only fiduciary value, unlike the currencies of the time, which were worth their weight in gold or other precious metals. The value of money these days is as fictitious as Bitcoin. The difference lies in regulation, which remains the most important part of current currencies and anonymity. Buying or selling Bitcoin can be totally anonymous even if some countries ask to remove this anonymity like the USA which asks for all the identities of Americans using the Coinbase platform.
Today some countries accept Bitcoin in shops such as the USA and Switzerland, others offer to buy it in vending machines on the streets such as Dubai, and others ban it completely like China.

But today this article perfectly represents the concept of a bubble, some write that it is the investment of the decade, others that it is a big scam, but in the end no matter if there is a bubble or not, history and finance will remember the beginnings of Bitcoin for a very long time.

Hamza LAHBABI

Sources:

 

Hamza LAHBABI


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