The Bitcoin Bubble Myth-sanewnetworks
In early 2021, the rise in the price of Bitcoin prompted the usual comment that has plagued the digital money project for a decade that it is nothing more than a bubble caused by market manipulation and euphoria. But for those who have spent years studying this phenomenon, charts are the latest sign of another reality that Bitcoin, a true monetary invention, outperforms government money in natural competition in a free market.
As opposed to how you might see Bitcoin being discussed elsewhere, the claim of this article is that there is ample evidence that software has created a real, albeit misunderstood, economy, and that this economy, albeit slowly , approved by the global monetary policy. order. Indeed, in the coming year, it is likely that one of the biggest criticisms leveled at Bitcoin for being irrational and speculative will be proven by inaccuracies in data that better describe it as cyclical and predictable.
If this opportunity sounds surprising at first, we only need to look back at the history of Bitcoin to verify this claim. After the market euphoria of 2017, skeptics and supporters were divided over one question: how do we sort out assets that range from zero to $ 20,000?
Both groups came up with different hypotheses, and as the market cooled, they came to different conclusions about why the price declined again. For the mainstream, the answer was the simplest model. The rapid growth of new cryptoassets and the proliferation of marketplaces (some of which are of dubious legal status) have once again fueled a market overly driven by inexperienced investors.
Bitcoin enthusiasts were skeptical about this conclusion. After all, a new monetary technology had to be reckoned with, the economy of which was just over a decade old.They asked different questions – how did it happen that prices fell again, despite the attention of investors and the media? Why was his 2017 chart so reminiscent of the 2013 bubble? And why did the fall in prices in 2019 and 2020 stop at levels well above the levels seen years earlier?
To answer these questions, a new hypothesis emerged: What if Bitcoin’s price bubbles are a product of Bitcoin’s programming?
Bitcoin is not the price of Bitcoin
Understandably, the idea that Bitcoin may be the cause, and not the effect, of its price booms and busts may require an initial suspension of distrust. However, for the purposes of this article, I would like to invite the reader to do just that while we go over the basics of this vanity.
Let’s start with the obvious: Bitcoin has no price. That is, from the point of view of the code, bitcoins are just finite pieces of data. It is a marketplace for global buyers and sellers of this data that estimates and applies the price we usually see.
From here we can see where the idea that speculative manias is driving the price of bitcoin comes from. The market always sets the price of bitcoin, so how can bitcoin software affect this activity? The answer lies in the programming of Bitcoin and how it defines the availability of Bitcoin in its economy. As stated in the code created by Satoshi Nakamoto and released in 2009, Bitcoin has three qualities that set it apart from almost all other world economies.
It has a fixed stock of 21 million units (divisible by 21 quadrillion units).
It reduces the rate at which these new units are introduced into the economy on a programmatic schedule (every 10 minutes).
It does not have a central operator and is instead served by thousands of computers that run its software.
Recently, much attention has been paid to the third value proposition.
Following government intervention in markets in response to the COVID-19 pandemic, the mainstream has become interested in alternatives that protect value from political influence.
The Bitcoin Bubble Myth-sanewnetworks