Bitcoin Mania versus Tulip Mania?

Gassner's picture

Dear Reader,

regular readers may remember my critic on bitcoin from an Islamic perspective missing intrinsic value. The former blog entry you find here: http://www.islamicfinance.de/?q=node/7840 - almost two years ago.

So far bitcoin just went up higher and higher, with wild fluctuations but nevertheless.

It reminds on how bubbles work, think about the tulip mania in 1637 a nice piece of economic history. A single tulip bulb was traded and bought on credit. Check the Wiki page on it:

https://en.wikipedia.org/wiki/Tulip_mania

As bitcoin has even less value than a tulip except for payment purposes, it is the payment functionality, which can lead to destruction. What happens if a new alternative currency is becoming en vogue, which has a better usability and faster transaction time? In my view this is most likely trigger to burst the bubble.

FT Alphaville covers now the difficulties coming up with bitcoin's increasing transaction numbers causing inconvenience in using the digital currency:

https://ftalphaville.ft.com/2017/05/17/2188961/the-currency-of-the-futur...

In the same time new open source approaches may lead to new concepts being a superior solution for payment facilitation. Ethereum seems to attract the support of large banking institutions;

https://seekingalpha.com/article/4051934-ethereum-turns-dark-side-banks-...

The tricky thing about bubbles is NOT that they go bust, but the TIMING comes suddenly and unpredictable.

Stay safe!

Best regards,

Michael Gassner

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