The concept behind Bitcoin and what it's meant to do all make plenty of sense. For one, there's a limited number of Bitcoin in existence, which means it can't be endlessly printed like Federal Reserve Note fiat currency, and thus will maintain some kind of fixed value. It's also transparent in the sense that it's tied to a blockchain, which serves as a digital ledger of all transactions that are made using it.
By and large, Bitcoin has the potential to function far better than what we commonly think of as money because it can't be manipulated by private elite bankers and truly embodies a decentralized medium of exchange. But the problem right now is that many people are buying and selling Bitcoin not to necessarily use it for its intended purpose, but rather to try to get rich off of it. Because of this, the value of Bitcoin is extremely volatile and unpredictable.
Our own Mike Adams warned about this in a recent article about the so-called Bitcoin "endgame." Even though Bitcoin seems to be increasing in value with no end in sight, there are certain mathematical limitations to its growth that, if you don't know what you're doing with it, could catch you with your pants down.
Bitcoin is a lot like tulip mania, which was only fun while it lasted
The whole situation is eerily similar to what happened during "Tulip Mania." If you've never heard of it, Tulip Mania was when, long before the days of computers and cryptocurrencies, people speculated in tulip flowers, believing them to hold an intrinsic value far higher than they actually did.
It all began in 1559 when Swiss scientist Conrad Gesner was on holiday in southern Bavaria. He spotted a flower in the garden of a diplomat in Augsburg that piqued his interest – this flower turned out to be a tulip. He was told it came from modern-day Istanbul, and after telling others about his discovery it quickly gained in popularity.
Soon everyone wanted tulips, and the prices for tulips soared. Some species of tulips gained so much value that people were paying more for them than they were houses and land. Those who actually specialized in growing tulips were outpaced by greedy speculators who simply wanted to trade tulips to make a quick buck.
It was mass insanity, to put it plainly. And while a lot of people did get rich, the gravy train eventually came to a grinding halt when the tulip bubble burst, resulting in a massive devaluation of tulips. It's not that tulips were no longer valuable. It's that they were severely corrected in their value, which had been overly inflated as a result of wild speculation.
Unfortunately, the same thing seems to be taking place with Bitcoin. While it has incredible potential to replace failing fiat currencies and hold a stronger store of value, it's become the target of the same type of speculation that swept tulips back during the 16th century. And just like tulips, Bitcoin is showing all the classic signs of a bubble, meaning a massive correction is likely soon on the way.
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