Big players in the Bitcoin community

With a market cap of one billion, we should not be surprised when the market moves in any way. As a matter of fact, publications about Bitcoin have a tendency to talk of Bitcoin like it is a multi-billion market. This has two possible implications:

  1. Bitcoin will become a market facilitated with Bitcoin worth tens of billions of dollars. This in combination with the 21 million Bitcoin limit makes that Bitcoin would eventually be worth thousands of dollars (and later maybe even tens of thousands).
  2. The price will increase faster than trust in Bitcoin will, making place for a Bitcoin Bubble. This bubble will do more harm than necessary, since trust in Bitcoin’s real potential will not be findable in the mess of the collapse. At this point, a collapse of the Bitcoin market will cause thousands of people to lose a lot of money.

So we should tell an honest story to those reporters that are willing to educate themselves before writing stories about Bitcoin, so that newcomers know what they’re getting into.

But even with well-informed reporters on our side, there is a Big thread to Bitcoin. Eleven million Bitcoin is not much, and there are a lot of big players out there. The pizza guy, Kim Dotcom, Butterfly labs, Max Keiser, Satoshi Nakamoto and probably early adopters we haven’t even heard of. Some of these people are able to drive the Bitcoin economy in their preferred direction. And even if there isn’t a bad intention, suppose you’ve sold a pizza back in 2010 to some computer fanatics, and they gave you 10.000 of some strange internet-money. And years later you hear these ‘Bitcoins’ are worth a hundred bucks, what would you do? Indeed, you would sell the things and buy a car, a house and some pizza. This can have devastating effects the Bitcoin economy. On March 28th, two fivethousand Bitcoin trades were completed in a few minutes, causing excitement that dropped the price with 15 dollars, almost 20%. That time, the price recovered in two hours, which is a great sign for the Bitcoin community. However, we cannot know what will happen if twenty thousand Bitcoin would be dumped into the market, and there is a real risk this will happen before Bitcoin is stable enough.

Let’s hope that the Bitcoin millionaires and maybe the Bitcoin Billionaires won’t go on a selling mania as soon as times get rough.

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Posted in Opinion & Bitcoin

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