Bitcoin is one of the most controversial subjects in the media these days. A year ago, the average person in western society hadn’t even heard it mentioned and had no idea what it was.
That all changed rapidly throughout 2017 as Bitcoin shocked the masses and grew exponentially at 15 times in value over the year. With that kind of growth, the media and business pundits could no longer ignore or avoid the subject and Bitcoin moved into the mass markets for the first time ever.
For most people, the assumption was that it was a new technology or passing craze. That however is far from the truth and Bitcoin will very soon celebrate its 10-year birthday.
While the majority of the financial sector is convinced Bitcoin is a bubble, similar to the dotcom bubble of the mid 90’s, others remain highly bullish on both its value and the blockchain technology that drives it. Companies like Dell and Microsoft accept BTC payments, universities around the world take student fees in Bitcoin and many sports and gambling sites use the cryptocurrency openly. So much so that Bitcoin-exclusive casinos are a real thing, with provably fair games and <a href=”http://bitcoinplay.net/bitcoin-poker“>Bitcoin poker</a> being their main attraction.
The “Bitcoin bubble”, as the mass media has taken to calling it, was expected to pop any minute and, in January of 2018, it looked like it was about to happen. Bitcoin lost nearly 30% of its value from its historical high and the cryptocurrency sector in general lost over 40%.
Though the crash seemed imminent, it never came and Bitcoin, since the second week of January, has clawed back rising 10% from its lows. Many people are likely wondering why this so-called bubble simply doesn’t completely die or why it was able to bounce back against the financial sector’s predictions.
Here are the people that are the reason behind why Bitcoin and its so-called bubble won’t pop, and why it bounces back with vigor after any perceived crash.
The term “hodl” refers to the Bitcoin believer that would rather hold through all the Bitcoin turmoil and crashes. These are the people who make up the core of Bitcoin’s user base. Though large amounts of capital have poured into the sector, it still represents just a fraction of the holdings of this group of Bitcoin’s earliest adopters.
The hodl’er is a person who believes so profusely in the future of Bitcoin that they would rather buy more when the market dips and will not sell at a loss, perhaps never. This means that though Bitcoins newest adopters are influenced by threats of government intervention, crackdowns or potential capital losses, the hodl’ers simply buy the coins being sold by the new adopters, strengthening their positions and steadying the market. This in turn means that the market, when crashing, actually looks great to this group who prefer to buy more Bitcoin at a discount when the markets are low.
The Developing Countries
In developing economies, the average person has to deal with what in economics is known as hyperinflation. This means that a unit of currency in their native fiat loses buying power and Bitcoin has become a lifeline for this segment of the global population.
In countries like Venezuela and Zimbabwe, a dollar can sometimes go up 10-20% against the local currencies and keeping their wealth and money in Bitcoin is the only way to protect their small shrinking nest eggs. These people are another group that, through a crash, have no choice but to continue using Bitcoin and storing their capital in the cryptocurrency sector.
As Bitcoin’s value crashes, the majority of these people convert more of their own fiat currencies to Bitcoin in the hopes that it will be a hedge against the hyperinflation that runs rampant in their local economies.
The millennials and young people in the western world are so disenfranchised by their financial and social situation that they see Bitcoin as a lifeline to actually finding prosperity. They are drowning in student debt, can barely find a decent paying job and, in most cases, have lost trust in their elected governments and the financial sector. This group is the final group that makes a Bitcoin crash nearly impossible.
As the market crashes, these tech-savvy, educated youngsters put their capital into Bitcoin in hopes of it getting a return and building their net worth. They actually understand the technology, believe in the decentralized nature of the network, and would rather take the risk of investing in Bitcoin, over-staying in their current, seemingly hopeless situation.
As the market crashes, these young people put their money into the sector and this inevitably makes Bitcoin bounce back.
In countries like South Korea, where youth unemployment is especially high, this sector is the biggest in the cryptocurrency space. Until their fears for the future are addressed, they will continue to jump on the Bitcoin wagon making the Bitcoin bubble impregnable and unable to pop.
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