Will Bitcoin Become Worthless After the Bubble Pops?
Tom Kerr writing about bitcoin…
As the price of bitcoin soars, “tulipmania” is making headlines for the first time since the 1630s.
That’s when speculative investors bought contracts for tulip bulbs. They each hoped that their particular bulbs or species would wind up gorgeous winners, worth big bucks to the international flower industry.
That’s not a totally lame idea. Even today, you pay top dollar for the kinds of bulbs that blossom into exotic colors.
What is crazy, though, is that many folks in the 1600s bet their life savings on un-sprouted tulips. They didn’t even know what color those flowers would be…or if they’d even bloom.
People traded entire herds of sheep and pigs for a few dozen untested bulbs. A ton of butter might be worth a paper sandwich bag full, or you might get 50 bulbs for a few ounces of silver.
Needless to say, tulip maniacs lost their shirts when the market crashed.
Naturally, the current bitcoin frenzy is attracting lots of legitimate comparisons to that tulip fiasco. And in the mainstream media, it’s the sizzle that sells the steak. But if you’re trying to make an informed decision about bitcoin and other cryptocurrencies, you need more to chew on than sizzle.
What you probably haven’t heard people talking much about is what happened after those 17th-century investors went broke.
Yeah, the tulip bubble burst. But that didn’t put a nail in the coffin of Holland’s tulip industry.
Today the bulbs are one of the nation’s most exported products, and the industry contributes more than a billion dollars a year to Holland’s economy.
That historical and economic context is important, because it highlights the fact that the value of tulips is not based on speculative trading of futures contracts.
Similarly, the essential, sustainable value of bitcoin is not the money you can make from it as a vehicle for currency futures speculation.
Long after the speculation around the price of bitcoin fades, the underlying premise of bitcoin – the blockchain – will be exponentially valuable to you…and to the rest of the world.
Bitcoin relies on a transparent, open-sourced, highly-encrypted network and rock-solid accounting ledger system that is impossible to hack. That kind of sophisticated technological platform has the potential to eliminate costly middlemen in virtually every sector of the economy.
Cryptocurrency’s underlying blockchain technology can make it cheaper, easier, faster, and safer to launch and run your business…sell real estate…manage your finances and medical care…buy health insurance…the list goes on.
Fire your banker and start your own bank, with nothing more than a smartphone. Make Wall Street wolves and perverted politicians fully accountable…and more dispensable. Or just have more fun because blockchain technology will save you oodles of time and money.
Even if you never invest in them, high-quality digital currencies are extremely valuable to you. That’s because the technologies they represent have the power to free you from systems that unfairly manipulate, cheat, restrict, or nickel-and-dime you at every turn. That’s priceless to anyone who values fairness, financial autonomy, self-reliance, and independence.
The technology behind bitcoin is revolutionary. That alone is enough to stimulate your attention and imagination as an investor. You might get rich beyond your wildest dreams, and fast.
But please heed my advice…which echoes the advice of experts much smarter than me. Don’t buy into the current bubble with a penny more than you are willing to lose.
The harsh fact of the matter is that you could potentially lose everything you invest…overnight.
P.S. Discover how you can enjoy a more laidback, authentic, independent way of life in The Savvy Retiree Daily. Sign up below to have it delivered – free of charge – to your email inbox.