Bitcoin will never function as a convenient currency. It is slow and expensive to use, and will for that reason be replaced by something faster, cheaper and better.
That means that Bitcoin will have no utility at all in a not too distant future. Since value requires both scarcity AND utility, its value will be null, and its price will quickly go to zero.
This has been known since Bitcoin traded at 3 dollars a coin. Bitcoin's technical drawbacks as a currency has never been a big secret. Yet, here we are a few years later, and Bitcoin is trading at 8000.
The reason for Bitcoin's success, despite its known technical weaknesses, must be attributed to a rather naive belief that software upgrades and technological advances would fix the problems.
Those speaking against Bitcoin, warning about its limited utility, have been viewed at cranky skeptics, reactionaries and anti-technology. Bitcoin buyers have ignored the skeptics in favor of the rosy picture painted by enthusiasts.
However, the technical problems with Bitcoin are now so obvious that even the proponents have to admit that the skeptics were right. Prominent Bitcoin promoters have stated in plain English that Bitcoin will never function as originally intended.
There has been an announcement, so to speak. Everybody now knows that Bitcoin will not be a widely used currency.
Yet, apart from a flash crash a week and a half ago, nothing has happened.
The reason for this is that there is always a short period of calm after an announcement. Apart from a few that immediately get the message and leave (the flash crash), everybody are looking around to reassess their position. Did they really hear what they heard? How many got the message? What does this mean?
People are grasping with the significance of the announcement. Many are clueless about what Bitcoin actually is. They are invested in it to get a part of the action, but have little insight into what they have bought. Others are better informed. None of them are completely sure how to interpret the message.
Some left immediately after the announcement. But were these well informed or badly informed? There's confusion and an eerie calm.
The calm can last for weeks. However, once the announcement has been made, it will inevitably lead to a collapse. This is how bubbles burst. Someone that the manics believe and trust makes a statement that is so glaringly obvious that even the most enthusiastic must admit it to be so.
It remains to be seen if the announcement from a week and a half ago was clear and concise enough to lead to a collapse. Those still invested in Bitcoin are clearly hoping and believing that it will have no future impact. However, sentiments appear to have changed. There is much less enthusiasm. The mania may already be over. If so, there will be no stopping the collapse when it arrives.
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