Bitcoin just won’t go away. The original cryptocurrency once again had reporters eating their words in 2020 – yours is included. Now is the time to accept that he is here to stay.
Like Black Knight Monty Python, Bitcoin believers treat near-lethal volatility like flesh-only wounds. Dropouts of 80 percent are welcomed as lucky buying opportunities. But far from being a weakness, this is evidence of the longevity of the asset class. The cryptocurrency accumulated 224 percent this year, recalling the wild advances in 2017 as it climbed to higher levels.
While the supply side of the board is algorithmically defined, I was caught off guard by the ability of the application side to resist volatility. I went into more detail about how my thinking about this asset class came up in this YouTube podcast:
Supply of the digital tokens is limited to a maximum of 21 million and is expected to reach 2140, with occasional reductions in the reward for the network of business-proven computers. But supply dynamics are not enough to guarantee a future. Many assets have limited supply: Baseball cards, limited edition printed artwork, and several historical Ponzi schemes are in this area.
What makes a difference to success is how investors deal with accidents. In most cases, when a vehicle designed just falls around the larger theory, it never recovers. Bitcoin as a unit of exchange has not been significantly improved. It is far from widely used as a frontier currency.
Since Bitcoin market capitalization reached $ 1 billion in March 2013, there have been two rounds of spikes to record highs, followed by drawdowns of more than 80 percent. Before each of these rounds was put down by half of the block prize. The first circle could be dismissed as an anomaly, the second as a coincidence. But half happened again in May, and the circle is repeating before our eyes with the cryptocurrency coming in inside whiskey from the full-time peak last week. Avoiding this now is the removal of historical evidence.
Like social networks, cryptocurrencies get their value from the number of users. I could build a platform with the same attributes at, and even some improvements over, Facebook, but gaining mass is a must.
The cryptocurrency remains a speculative asset and more needs to happen to claim it to retain wealth over time. Volatility had to decline, and a reliable link to inflation had to emerge. But to bet against Bitcoin recovering from the next crash he wants to bet against experience. And living with a bloody mind is what will ultimately give him the best chance of being the ultimate source of value.
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