So is it this all a speculative bubble? Yes, but not in the way that you think.
So why, you might ask, do I still have money invested in Bitcoin when I know this bubble isn’t sustainable and the value will eventually crash? I’m sticking with Bitcoin because we’ve only seen the tip of the iceberg for Bitcoin’s potential.
Merchants are only just now starting to discover the merits of Bitcoin for their businesses. Companies like BitPay offer solutions where customers can pay in Bitcoin, and the merchant will receive the equivalent dollar amount immediately, without having to worry about Bitcoin price volatility. With these kinds of services, it’s only a matter of time before the gym or coffee shop down the street from you lets you pay in Bitcoin too.
Bitcoin payment processors offer fees comparable to or lower than those of credit card companies. Billions of dollars are lost annually in credit card charge backs, and the credit companies predicate their business model on encouraging American’s to take on unmanageable debt. Bitcoin allows users and merchants to exchange digital money without supporting these credit card companies and propping up the cycle of predatory debt.
I really think Bitcoin could be the socially responsible, easy and anonymous currency of the future. It’s an outlet for those weary of large financial institutions, be they national banks or private investment leviathans, and it carries appeal for socialists and crypto-anarchists alike. By itself it’s rough and far too complex for most people, but in a free market we’re sure to see new businesses pop up to bridge the technological divide, and make Bitcoin accessible even for a lay-user.
But, a crash doesn’t mean the end of Bitcoin. Like I said, the long term value of Bitcoin lies in it’s potential to buy goods and services. Speculators will come and go but as more people start trading in Bitcoin, whether it’s to split up a bar tab, donate to their favorite website, purchase illegal goods, gamble online, or just buy a cup of coffee, the market will thicken and grow resistant to the whims of sentimental investors trying to make a quick buck.