This is way too good to be passed up. Everyone who is anyone seems to have an opinion on bitcoin. Global game changer? Bubble? Well here is a brilliant explanation of bubbles that points out that the REAL BUBBLE is in people calling things a bubble. Oh, and if bitcoin is a bubble, what is the dollar? Or any fiat currency for that matter? Great read.
(Bill Taylor/Founding Editor)
"IT WOULD BE NICE if people like Mike Novogratz and Yanis Varoufakis (and almost all journalists) knew the definition of a speculative bubble. Because bitcoin is not a bubble, so anyone who calls cryptocurrencies or bitcoin a bubble doesn’t know what a bubble is. Lou Kerner has described it as a Cambrian explosion, which, if you’re looking for a metaphor, is better. To make the concept clear, I’m going to explain it to these two girls, daughters of my Pillar project cofounder Tomer Sofinzon:
"I’ll start by defining bubbles and then work toward what’s really going on?—?volatility.
What is a Bubble? The definition of a bubble is...
After a true bubble pops, there's nothing left - no one wants any part of what popped, or prices go back down to some much lower level and stay there.
Other people have other definitions, but we know this is the right one, because even the twins know that …
BUBBLES don't pop twice.
Most markets are actually ruthlessly efficient, making it impossible to know what will come next. But let’s look at some real bubbles. We all know that tulip prices skyrocketed in the early 17th century:
futures
, not spot (trading) prices.Speculators,
not natural buyers, drove the price of derivatives to an unreal peak.This speculative pattern of buying out-of-the-money options to sell to greater fools later would repeat many times in the years to come.
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