• Home  / 
  • on wealth
  •  /  Understanding Bitcoin Part 1: bITcrASh! Suck it Up Buttercup

Be ready for the Reboot. Subscribe to new articles via email... »

Understanding Bitcoin Part 1: bITcrASh! Suck it Up Buttercup

Mark Jeftovic
By Mark Jeftovic / April 11, 2013

After a parabolic rise that can only be described as “meteoric”,  in a matter of hours today, Bitcoin crashed and lost somewhere between 40% and 60% of it’s value. The crypto-currency settled somewhere in the Btc160/USD range, cutting it’s gains since it’s 2009 launch to a meager 21,104% and returning it to levels not seen since …last week. (If I didn’t know better, I’d think we were talking about the price of gold).

There was palpable panic in the Btc communities, which were visible via the Bitcoin subreddit. I can’t find them now but when I looked I saw some calls for “freezing the exchanges” when the market sells off like this, etc.

It amazes me how people see nothing out of place with an asset (any asset) going parabolic yet they think a crime against humanity is underway when these blow-offs inevitably correct.

When the gold bubble burst in 1980, gold went up 52% from January 1st until the high on January 20, when the dotCOM bubble blew in 2000 the Nasdaq had doubled in roughly one year.

Yesterday, the price of Btc in USD rose 21% in a single day! Nobody complained about that. If it were up to them, Btc would go up 21% every day!

But maybe even the hardcore fanboys admit that’s unrealistic, perhaps if Btc went up a respectable 7% per day, every day, all the time, and never went down, all would be well. At that rate it would only take 167 days before the value of the aggregate Btc money supply exceeded the value of all financial assets in the United States (approx. 76 Trillion).

Clearly, that isn’t going to happen, so when you see something going parabolic like that rule number one would be DON’T CHASE METEORS.

Has “the bitcoin bubble” popped? God I hope so, and the reason why isn’t because I dislike Bitcoin, in fact I welcome it with open arms. Tomorrow my main business will be announcing that we will be henceforth accepting Bitcoin as a payment option.

Bitcoin is here to stay, and in Part II I’ll explain why. But for Bitcoin to stick around it needs to be less volatile, and for that to happen we need crashes like this to run their course.

Face it, if you want an honest-to-god crypto-currency immune from government shutdown and jerry-rigging, then (especially in the early days) this comes with the territory (Freedom is a Double Edged Sword).

Next up Part II: Bitcoin as an Evolutionary Monetary Response to Calvinball Finance

About the author

Mark Jeftovic

Mark Jeftovic is the creator of Wealth.net, founder and CEO of Canadian domain registrar and DNS provider easyDNS.com and member of the indie rock sensations The Parkdale Hookers.

His personal blog is at markable.com

2 comments
Understanding Bitcoin Part 2: An Evolutionary Monetary Response to Calvinball Finance | rebootingcapitalism.com - April 12, 2013

[…] past few months was a bubble, few can deny now. That bubble has probably popped, and as I said in Part 1 yesterday, that would be a good thing for the currency […]

Reply
Bitcoin Part 3: Why “This Time It Really Is Different” | rebootingcapitalism.com - May 16, 2013

[…] is the third article in my introductory exploration of Bitcoin here on Wealth.net. Part 1 and Part 2 were written in the wake of the big Bitcrash and it is interesting to observe that rather […]

Reply
Click here to add a comment

Leave a comment:


Google Analytics Alternative