Bitcoin is currently at the price of about 8000$, meaning that the market capitalization of all the bitcoins in the world right now is around 144 billion dollars more than the GDP of Zimbabwe, and Kuwait. The bitcoin network has gained a lot of value in just a few years. The value doesn’t show the whole picture, bitcoin has also given rise to other industries as well, bitcoin was the starting point, the main idea that brought blockchain to the world, it started the cryptocurrency and digital currency revolution. In just a few years bitcoin has created more than a trillion dollars worth of value. However, people seem to be worried about the sudden rise of bitcoin and economists are considering the sudden rise of bitcoin as a bubble.
A financial bubble is a condition in which the price of a certain asset increases, beyond its true value, even such that the price of the asset goes way beyond the actual value. This is the concept that brought down the global financial markets in 2008. A financial analyst that predicted the 2008 crisis has even called it a bubble on steroids while talking about other offshoot cryptos he said:
Most of them are even worse [than bitcoin] and don’t have any intrinsic value like bitcoin. So if bitcoin is a bubble, it’s a bubble to the power of two or three.
Critics have warned that bitcoin has all the ingredients of a classic bitcoin bubble, it gained more than 900% in 2017 showing an unprecedented increase in price when the value was still stagnant. Then it all came crashing down at the end of the year as well. However, considering bitcoin a bubble based on these factors is stupid. Bitcoin is a technology that is in its nascent stage. All the backlash that the currency is getting is not due to the lack of value, but due to the lack of education of people. If people were educated enough to know what true value bitcoin holds, the price would not be volatile, and it would serve as a regular stock trading on the floor of a stock exchange.