Since the beginning of Bitcoin the press and financial analysts have relentlessly called it a bubble that is bound to crash at any moment. When in 2017 Bitcoin started the year close to $950 and climbed to nearly $20,000 only to crash at $5,800 early in 2018, the so-called experts couldn't help declaring they told us so.
The Bitcoin bull run has been compared to the Tulip Mania bubble hundreds of years ago, the Dot Com bubble of the 90's, and countless others, however, they are some distinct differences that make Bitcoin different than those events.
For starters, unlike the tulip and dot-com bubbles, Bitcoin does not depend on a specific company or shares in a company. The stock market is trying to position itself with talks of creating ETF, short for an exchange-traded fund, on the stock markets that will allow institutional investors to buy bitcoin and unless you are an institutional investor, I recommend you stay away from those entirely and buy invest in actual Bitcoin instead.
There are no governments that control the future of Bitcoin or that can destroy it. Bitcoin works independently from governments and other institutions.
For example, the US Housing bubble was started, in part, with banks loaning money to people to buy houses who were not able to repay those loans. People took on the debt because the government lowered interest rates so low that banks could borrow money for next to nothing and give loans to anyone that walked in the door of their banks, charging interest and fees for those loans that gave the banks huge profits. This created a housing boom that came to a sudden end when people could not pay back their loans, dragging the world's economies down with it.
Bitcoin was created to avoid government fiscal and monetary policies, working as a decentralized network driven by community consensus. Also, it's a deflationary asset that keeps its value if demand increases.
Back in 1720, during The Mississippi Bubble, John Law established a bank that accepted deposits of gold and silver and issued paper money in its place, allowing it to acquire The Mississippi Company, an international trading corporation, that became a government-backed monopoly in French colonies.
Soon, it issued more paper notes than the value of gold and silver it had in deposits creating a bubble and ending with a massive devaluation and price collapse.
There are countless examples throughout history of companies and governments creating bubbles that rip the wealth from the population and pass the debt on to future generations.
This can't happen with Bitcoin. It is impossible to create more than 21 million Bitcoins, giving users certainty about the future of this currency.
The only way that Bitcoin can lose its value is if people stop using it. While that is possible all indicators point to increased use and adoption. In fact, wherever fiat money loses its value because governments inflate their currency by printing more money, crypto use rises.
The math is very simple. More people demanding a currency that is becoming more scarce means the price will rise. You don't have to be a rocket science to figure this out. Contrast that with government-backed money which is continually printed and it's easy to see where this is headed.
Inflation is often misunderstood so let me break it down to its simplest terms for you. You may have noticed that no matter what country you live in the cost of buying goods and services continues to rise. Anyone can see that everything is getting more expensive, but the untold truth is just the opposite. What's really happening is not that things are getting more costly, but the money you are using to buy things is losing its value.
Your government is printing money so fast making the currency less scarce. The less scarce something is the less value it has which is why it takes more to buy the same things this year as it did a few years ago giving the appearance that prices are going up.
Your government doesn't want you to know that what's really happening is the money you're working for is losing value because if you knew that you would stop working for it.
One only has to look to countries like Venezuela, Greece, or Kenya, where this is playing out in an exaggerated fashion, to see that crypto use is on the rise in those countries. Why? Because it is obvious to those populations that Bitcoin hold its value better than their own currencies.
Bitcoin, on the other hand, is getting more scarce. Every 4-years half as many Bitcoin will come into existence than the 4-years prior. The only way it can lose value is if people stop using it, so it's in the interest of governments issuing inflationary money to dissuade you from buying or using Bitcoin and that's one of the reasons they keep saying it's a bubble, when the reality is that the fiat money governments issue is the real bubble.
Bitcoin was adopted by regular individuals and investors, but recently institutions are starting to pay attention to this growing market. The very same companies that were calling it a scam only a year ago are now starting to invest their funds in crypto markets and payment gateways, something that could provide stability and more liquidity to Bitcoin.
The spread of FUD (Fear, Uncertainty, Doubt) regarding Bitcoin is the only way governments can slow down the adoption rate long enough to position themselves to profit from it in some way. That's why governments like China, India, U.S., South Korea, and companies like J.P. Morgan, spread negative news about Bitcoin and try to control the on and off ramps, mainly exchanges where crypto is bought and sold with fiat, and eventually find themselves reversing their position and investing in crypto themselves.
The news often claims that Bitcoin is not useful as a means of currency and is more of a digital store of value but I use it all the time. It's true, I don't buy that many things with it directly and have to convert it into whatever fiat currency the country I happen to be in at the time uses, but all the money I earn is crypto and not controlled or inflated by any government. For me personally, it is very useful and allows my income source to be geographically independent.
The main takeaway from this post is Bitcoin cannot experience hyperinflation. It has a controlled supply that does not depend on any other company or government. It is a non-inflationary currency and because it can't be controlled by a government, if the use of it increases to the point of mass adoption, its value will surpass any fiat currency that is controlled by a government, which is why I'm bullish on Bitcoin and Steem no matter what the news says about it.