Of the many criticisms of Bitcoin a persistent one is the volatility in price. There are many key factors that have historically caused or have been correlated to the volatility in price; one that is largely not given enough consideration is the fact that for the first time in history a technology was born with price tag directly attached to it.
When investing in ‘the internet’ you had to buy shares in Cisco or IBM, you couldn’t invest directly in the internet itself but in business that were internet based or used it as a point of sale. So money was thrown at all this ventures as it was the new digital frontier. It was this hype that led to the cot.com bubble and bust in 2000/2001. But out of that business such Amazon, Apple and Google survived and prospered.
We had an ICO bubble and crash where Bitcoin also made global headlines as it skyrocketed to US$20,000 and then crashed to just above US$3,000. But these volatility swings are synonymous with bitcoin because it is still a largely misunderstood asset class and store of value.
In the 1800’s you couldn’t invest in the railroad itself. You had to invest in companies that made the rails or the trains. Imagine that instead of investing in Apple or Samsung you could buy a product that’s value was directly correlated to global smartphone adoption? Bitcoin is a new global currency and store of value where anyone around the wold can participate in. All they require is access to a 3G network, and with over 7 billion smartphones out there, the world is Bitcoin’s oyster.
Bitcoin’s price volatility is because we are still at the early stage of bitcoin adoption. What stage do you think we are in the evolution of Bitcoin.
- Early adopters
- Early majority
- Late majority