Super Investation or Tulip Bubble
Tulipomania is a period in the Dutch Golden Age (at that time the Netherlands was United provinces) when the contract prices for newly formed tulip bulbs reached extremely high levels, and then suddenly collapsed. At the peak of the tulipomania in February 1637, the contracts for the sale of tulips were more than 10 times higher than the annual income of a skilled craftsman. Usually considered the first fixed speculative bubble (or economic bubble). The term “tulipomania” is now often used as a metaphor for any big economic bubble (when asset prices deviate from true value).
Information about the event has become widespread through the book of 1841. The extraordinary Popular Delusions and the Madness of Crowds, written by the British journalist Charles McCayy, are extremely popular. According to McKay, there were cases when 12 acres (5 hectares) of land were offered in exchange for the bulb Semper Augustus Mackay claims that many of these investors went bankrupt as a result of falling prices, and the Dutch trade suffered a severe blow. Although McCoy’s book is a classic, her claim is now in doubt. Many modern scholars believe that mania was not as strong as McKay described, and some claim that price changes may not have inflated a bubble.
The study of the tulip is complicated by the limited amount of data on the events of the 1630s, much of the information comes from biased and anti-speculative sources. Although not universally accepted, some modern economists have proposed rational explanations of takeoff and falling prices instead of speculative bubbles. For example, other flowers, such as hyacinths, were also sold at high prices after the appearance, but then quickly dropped in price. High prices can also be explained by expectations for a parliamentary decree that contracts can be canceled at a low cost – thus reducing the risk to the buyer.
Skeptics analyzing Bitcoin behavior on the market often resorted to analogies of the tulip bubble, since they are impressed with the pace of enrichment of the owners of this “currency.” The question naturally arises whether the Bitcoins are reliable, whether it is possible to invest in his savings with relatively low risk, and so on. How likely is the bitcoin’s future, will not it become a bigger failure for the tulip fever. We tried to analyze the thoughts of economists and analysts and give you an idea of his future.
Bitcoin course is growing at a fantastic rate, and now you are asking yourself – maybe it’s also worth joining bitcoin-fever. Investing in bitcoins is quite risky. For example, on June 14, this cryptic currency was worth $ 2,340, and on July 16, the price did not exceed $ 2,000. Or vice versa – on August 10 bitcoin cost $ 3,300, and on August 15 its value jumped to $ 4,200. The bitcoin course may vary by several hundred dollars in a few minutes. Such variability in the financial world is called volatility. However, today, Laszlo Kanech, who in 2010 bought 2 pizza for 10,000 bitcoins, 100% bites his elbows.
In short, Bitcoins are files that have become the new global digital currency. There are currently no holders available for this currency, no central bank, which would affect the course. Bitcoin users can send each other a digital currency directly, without intermediaries, and even without knowing the names. The transaction history is stored in the system of each user bitcoin. This chain can trace each one – the system does not conceal information anywhere. Blocks in chains have limited memory, so you need to create new blocks. Creating a new block resembles a difficult task – to think up the code name of the block, having fulfilled all the conditions of the system. This is what the carriers are dealing with – criminals. For each “solved” task the system rewards the mainland by bitinoinom.
The remuneration is halved every 4 years. The total number of bitcoins is limited – they can not be more than 21 million. The last bitcoin will be extracted in 2140. And here you are buying bitcoins when in your opinion its price is not so high and trying to sell it as soon as you notice a slight increase in the rate. But you can remain at a loss – until you decide to sell, Bitcoin has time to change its value several times.
At the moment, the course is replaced by completely speculative flows, which is a speculative bubble that grows and began to grow somewhere a year ago. The Chinese gave the first sharp push to bitcoin, they imposed restrictions on the withdrawal of capital, and bitcoin in many respects answered the question – how to get out this money.
Indeed, starting in 2016, bitcoin’s course began to grow steadily, largely due to China. According to Business Insider, practically all bitcoin trading is carried out in China. And if in 2012, only 10% of bitcoin operations took place in China, then in 2016, the number of transactions increased to almost 99%. But if the bitcoin price is now falling, then the attitude towards it will be negative. Also, the bitcoin rate may differ on different exchanges, as there is no single market for this crippling currency or central bank. Difficult to calculate the future value of Bitcoin. Numerous analysts give different assessments. For example, one of the system’s investors, a Harvard academic, Dennis Porto, is sure that Bitcoin’s course is obeyed by Moore’s law. Moore’s law suggests that the number of transistors placed on the schemes doubles every 24 months. That is, every two years, computer processors become more powerful. Although Moore’s law refers to transistors, Porto believes that it can be applied to any digital technology. Someone believes that the course develops on a domino basis – the more noise, the more investment gets creep foreign currency. The Outline published an investigation in which he suggested that media workers have accounts in bitcoins, so they are actively covering this topic, creating additional excitement.
As a rule, journalists can not invest in the company they are writing about. However, this did not stop the journalist from the American site VOX Timothy B. Lee to write the text “Why I invest in Bitcoins.” Interestingly, the bitcoin rate fell at that time, but after the release of the article, the course stopped falling. The editor-in-chief of VOX forced Timothy B. Lee to sell his bitcoins and put profit on charity. There are no such rules among the specialized editions specializing in cryptography. The most popular site about crypto-currency CoinDesk editorial policy indicates that no specific cryptographic site is supported by the site. And the authors of the articles are required to provide information on all their digital contributions, the amount of which exceeds $ 500. However, smaller sites do not declare editorial policies. Also, some editions are already paid to their authors in bitcoins. Journalists violate professional ethics, causing conflicts of interest between owners, advertisers, investors, and sources.
There is an explicit criterion for calculating a speculative bubble. Before the Great Depression in the United States, in 1928, Rockefeller, and maybe someone else from the big “dealers” went to clean shoes. The shoe cleaner recognized a millionaire and decided to ask him advice: should he sell the shares of company X?
That Rockefeller replied – the legend is silent. However, coming to his office, the businessman gave orders to sell all the shares of X. Millionaire figured that if the stock market is already a sweeper shoe, then he was there to do nothing. And it’s not a matter of disgust for an entrepreneur, but in such circumstances, it is impossible to estimate the real value of shares. In the process, people involved are far from trading. Bank of America (BofA), although engaged in the sale and purchase of bitcoins, is also suspicious of the current state of this cyber currency. “There are many great risks in digital currencies, such as fraud, scrapping, theft, adoption of a new protocol, limited acceptance and the fact that it is illegal to trade,” writes Francisco Blanche, head of the global research and development of commodities and derivatives of BofA products. Therefore, it is difficult to predict when the bitcoin bubble scales. “If you want to play, go in and get on time in time – please.” Some people have earned a Gold Rush in California, but much more has been earned by people who supplied them with shovels or picked up food. Now more people are earning bitcoins for supply. equipment “, – considers Fursa.
Bryan Rich, a specialist in micro-investment, also believes that the prospects for the bitcoin rate growth are rather vague. “If you own them, then be careful. The last time the price of the bitcoins jumped in 2013. It took about 11 days to reach the peak and about 18 days so that bitcoin’s value fell to its former level. It’s hard to predict what can provoke it. like a bubble, and it’s even harder to see connections that can lead to more market instability, “writes in a blog post on Forbes. Because this is the first open financial network. The bitcoin network serves the same purpose as the major payment networks, such as Visa or Western Union. But there is an important difference – the Visa and Western Union networks are owned and operated by commercial companies. If you want to build a business based on one of these networks, you must obtain permission from them. And it’s not always easy. For example, to use the Visa network you have to adhere to hundreds of rules pages. The Visa network, besides having a high fee, has some things that the company will not allow you to do in your network at all.
Bitcoin is different. Since nobody owns or controls the network, there is no limit to how people can use it. Some bitcoin holders have used this freedom to engage in illegal activities such as buying drugs or gambling on the Internet. But it also means that there is a low barrier to entry and the creation of new financial services based on bitcoins. At the same time, bitcoin admirers do not deny the riskiness of the system, although they continue to remain optimists.
“I think the world is starting to realize that just as gold is reliable insurance, bitcoin is great protection from the system because it is out of the system,” said Bobby Lee, CEO, and co-founder of BTCC for Business Insider. one of the three largest bitcoin platforms in China. Like gold, the cryptic currency is not controlled by any central bank or country. Instead, the network is guided by a distributed network of computers that run the office. However, the work to earn 1 bitcoin is becoming more complex and complex, requiring more and more computing power. “The bitcoin philosophy is that it is a limited digital asset. There are only 21 million bitcoins. The smallest amount you can get is not bitcoin, but it’s a small part. But if you have 1 bitcoin or 0.1 bitcoin, you will have this percentage of the world offer forever, “says Lee. In general, the behavior of the bitcoins in some resemblance to the events of the tulip fever, but to conclude its indispensable similar participation, in our opinion, are premature. However, on the other hand, with the growth of its price, its reliability decreases as a means of saving its savings. Perhaps this is the currency of the future, and in our doubts reflects our frozen conservatism, and perhaps we are quite right when we doubt the reliability of this miracle.