Is Bitcoin Going To Zero?
In my opinion, bitcoin is dead.
It won’t go quietly, but the recent precipitous drop may be the beginning of its inevitable and inexorable death spiral. Or there could be a dead cat bounce. Either way, I see bitcoin as a dead man walking. Future generations may read about bitcoin in a finance textbook as a curiosity and wonder what all the fuss was about. There are still some die-hard adherents espousing the virtues of bitcoin, desperate to make a silk purse out of a sow’s ear. Unfortunately for them, the end may not be pretty when it comes. Proponents of bitcoin tend to focus on the impact of the blockchain technology that drives it, and make no mistake, blockchain is the real deal. Blockchain is fundamentally changing the way industries do business, from traditional banking to supply chain management. But just because blockchain technology is creating a new paradigm doesn’t mean that bitcoin shares that same distinction. Television fundamentally changed the way the world received news and entertainment. However, it also gave us the likes of Manimal and My Mother the Car. For those who purchase bitcoin, there are serious headwinds that make it unlikely they will enjoy any profits over the long term. Most cryptocurrency transactions are purely speculative. There are no real fundamentals to evaluate; bitcoin doesn’t produce any products or services, hire any employees or pay any dividends. The only way profits are generated is when the owner is lucky enough to find someone else who will pay more for the thing. If you are getting into the bitcoin game now, you are paying the higher price that makes this whole scheme work. That’s not a distinction you want.
