Bitcoin is the fastest growing assets in the world. The recent spike in the valuation of Bitcoin in 2017 has led economists to think about its future growth. They have started to compare this volatile growth with an economic bubble which is expected to burst soon or in near future. The value of a single Bitcoin has rocketed from around $300 to more than $13000. Such high valuation of a single digital currency that has surged by more than 900% in 2017 has caught the attention of both investors and financial experts. Before moving further, let us have a close look at what is Bitcoin?
Bitcoin is a digital cryptocurrency that has emerged after the financial crisis and is not underpinned by any central regulatory bank. It allows people to bypass banks and traditional methods of payment to buy and sell goods and services. It is one of the highest traded virtual currencies among Etherum, Pascal, LiteCoin, and Monero etc. Though its existence is created by a Japanese programmer Satoshi, but his existence is still untraceable and has created a mystery among Bitcoin users. Bitcoin created by “Bitcoin miners” – who uses a high powered GPU enabled computer to solve highly complex mathematical problems, must be stored in a digital wallet and can be bought and sold by using exchanges such as Bitstamp, Bithumb, and Kraken.
But as Bitcoin’s meteoric growth are hitting the layers of Stratosphere, there are fears of an economic bubble is forming among its users as it is less treated like money and more treated like a store of value. Economists have compared this meteoric growth with past bubbles – such as tulip mania of 17th century and dotcom, the most recent burst, that had started in the late 90s with Nasdaq index in New York exchange and had busted in 2000. Both examples are pointing out of the future of a currency that has no intrinsic value for its holders.
Experts are also pointing out that the tech stock in dotcom bubble before its crash in 2000 was worth of $2.9 trillion, whereas the market cap of Bitcoin bubble currently stands at $170 billion. They are saying that current market cap of Bitcoin are signaling that volatile bubble will grow little more before its painful crash.
The intrigued growth of Bitcoin is attracting common people but at the same time, it is creating more stress on government and regulators. Bitcoin disciples are arguing that growth in valuation will continue further. But the libertine dream of its creator of having a currency outside this traditional world has come to a stack. People those are holding Bitcoin knew that its intrinsic value is zero when this economic bubble will burst. At the same time, as this bubble is expanding, it is providing more room for CMEs which will ultimately help investors in losing their money and will provide a path for regulators to intervene.