Author Of “Lightning Strikes” John F. Wasik Does Bitcoin Bubble Check
Bitcoin, is it a bubble or for real? This question does come back again and again for all the rightful reasons and John F. Wasik, the author of Lightning Strike, discusses the reasons why this happens. Earlier bubbles have busted (dot-com bust, economic bust in 2008) quite all of a sudden leaving masses completely aghast with the repercussions.
The bitter reality is that BTC industry still remains regulated and full of risks. There is an absence of any Federal Reserve as a backing and there is no authority which is guaranteeing its value.
Bitcoins enjoy massive following and its users are excited about the valuations going up. Wasik points that the rules that apply to Bitcoin can apply to any other market and reviews the bitcoin economy on the basis of the most fundamental rules of behavioral economics.
The marketing voices of a bubble are a solid hard sell. They confuse consumers who flow emotionally without looking at the risk of speculation. Here, Wasik even quotes, Prof. Robert Shiller, a Yale economist, who is a noted expert in bubbles. The economist says that Bitcoin was a perfect example of a bubble in the year 2014.
The second point Wasik raises is similar to the first. He talks of the Keynesian logic of called “Animal Spirits” dominating the speculation play of Bitcoin. It rarely becomes an investment, remains more of an opportunity.Billionaire Investors such as Warren Buffett stick on to their investments for real returns of dividends.
Third point he made was on valuation models. He says the traditional valuation models are not applicable to the bitcoin industry. Fourthly, there is an absence of transparency as it is a game of lottery for most.
Wasik finally concluded saying that Bitcoin can’t be directly compared to the stock market. However, there is heavy speculation that rules the Bitcoin market, while the rules of the game are still under wraps. That’s the scary part, he says.