Reasons Bitcoin Not "High Above The Bubbles"

In Darryn Pollock's recent post "Bitcoin So High Above the Bubbles They Can't Be Seen" he posted a chart of the Bitcoin price vs other bubbles since 1990. Indeed, as shown, the bubble looks incredibly beyond any contemporary peers.  And while I feel Darryn comes to the right conclusion - that this chart is not very meaningful - I felt his explanation lacking. So I will offer a few thoughts.

Admittedly, I too have asked myself whether it was a bubble many, many, many times (like at 1200, and 2700, and a few other stops along the way). Luckily, I've convinced myself many times that it is not a bubble.  Sometimes it takes quite a bit of mental gymnastics, but I'm still quite flexible after successfully navigating the Internet bubble of the late 1990's as well as the ensuing "pop". 

1. Focus on Market Cap as a guide rather than raw numbers or percentages. If you really want to compare Internet 2.0(Blockchain) to Internet 1.0(1990's) go by Market Cap. 165 Billion (currently) should scare no one. We're just getting warmed up. Wake me up at 2 Trillion. Factor in that Internet 2.0 is global and Internet 1.0 was mostly stocks traded on the Nasdaq (slightly smaller universe - but don't tell them that), why should this bubble not exceed the 3 Trillion that the Nasdaq hit in 2000? Look at the South Korean volume in BTC and ETH, you think they owned that much Yahoo in 1999? Look at Venezuela. They weren't even considering buying shares of Apple as their currency took a dump. I wonder why.  3 Trillion as a market cap for a highly liquid truly global asset with arguably lower transactional friction than the US Dollar? There's no reason this shouldn't leave Internet 1.0 in its dust. (But let's call my "target" 1.5 Trillion because I'm a conservative guy.)

2. Remember this is going to happen faster. Much faster. Actually, excuse me - let me correct myself; Much Much faster. How many fiber optic cables needed to be laid, how many T1 lines had to be installed, how many server rooms had to be built, how many buildings had to be rewired to bring us Internet 1.0? That took years and billions of dollars. You can start a new blockchain, token, currency or whatever with a Github account and an good Twitter following. This is going to enable Internet 2.0 to happen in a fraction of the time of its older sibling. That will mean the price rises of these new assets will rise at a never before seen pace. Ever.

3. Economic Good. When you consider the economic benefit that can come from lowering the cost of all global transactions and trade, adding billions of people to the global economy, and providing a way for not only people, but also machines globally to transact more quickly and easily it doesn't take too much to see that the true economic value of this technology massively exceeds the 165 Billion current market cap. Now, I am certainly not saying that market cap and economic value need to be similar - they absolutely do not. But they offer a useful comparative measuring stick. If the total economic value the blockchain could ever bring was 100 Billion, i'd be hitting bids like the Etrade baby whacked But 'tis not so.

There is so much more, and I will write about it eventually, but I just had to throw 2c worth in on this whole Bubble thing.



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