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What is driving up the Bitcoin Price (and why it’s not a bubble)?

Simply put – Supply and Demand

I have a friend who when I mentioned Bitcoin went into a bit of a fit and launched into the “It’s a Bubble”, basically where the price goes up and up and then drops massively.

Bitcoin Price increase is NOT a Bubble and here’s why.

Unlike conventional currencies which are produced and printed on a mass rate, where demand fluctuates greatly, Bitcoin is becoming more in demand, people are excited about the bandwagon they are getting on. Japan taking a more than healthy interest in the currency increases demand a huge amount, but guess what, as the currency is not based on debt, or “printing money” in the same way as fiat currencies the amount of Bitcoin only increases slowly in comparison to the demand for this wonderful intangible currency.

So the price of Bitcoin can ONLY go up because there is more demand and less Bitcoin (remembering there will be no more coins produced after 2020 and miners will just get transaction fees).

Further increase to demand is also happening from a surprising quarter, the third world, where a stable currency is sadly lacking, where a government like India can make notes from a currency worthless overnight. No one can do that with Bitcoin.

Bitcoin and other cryptocurrencies do not play by the rules of fiat, debt based currencies and we must not expect them to behave as such.

I was having a chat with a salesman from IQ Option yesterday, to be honest I think I scared him off simply by explaining that I’m just mining as much Bitcoin as I can because in my view even a small amount will be worth a fortune soon.

What about Volatility?

Bitcoin is not driven by debt or loans, so volatility is largely based purely on confidence in it and market movement.

Be a saver not a spender be

I enjoy a high risk environment (hence this website!). I do not enjoy losing money, I work on the principle from the book, “The Richest Man in Babylon” which  I highly recommend, that you should put a small portion of your money to work, happily to say, even just holding Bitcoins in a wallet at the moment is putting it to work. Saying that, as I am into technology my little mining Rig at home brings me so much joy. Watching it working to make the world a better place. Because that’s what a world with no debt or interest would be. A better, more stable place.

 

 

2 Comments

    • Paul C Paul C Post author | December 2, 2017

      This article was written a while ago in fact so I wonder if estimates have changed. Whatever happens, I am still convinced Bitcoin is not a bubble because it’s not based on debt and interest. (although there are people offering loans), it’s not based on fractional reserve banking.

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