Why Bitcoin is Neither a Financial Pyramid Nor a "Bubble"

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Why Bitcoin is Neither a Financial Pyramid Nor a

Almost every statement criticizing Bitcoin and the cryptocurrency in general contains the words "bubble" and "pyramid". Many people from the financial and economic world, even the most famous and intelligent ones, unanimously say that the "Bitcoin bubble will soon burst," and "the cryptocurrency pyramid will fall apart". But is it really so?

The founders of financial pyramids convince their investors that they will receive profit and wealth. Bitcoin does not guarantee anything like this. There is no central legal entity in the bitcoin network, there are only individuals building the economy. In the financial pyramid, the first participants receive, or rather can receive, profits only from those who came after them. Bitcoin, though, offers a few possible win-win outcomes. The first participants benefit from the growth of the exchange rate itself, from the increase in the currency price, and the subsequent participants benefit from "stability" and the recognition of the digital currency as such. Indeed, as in the case of pyramids, the first investors in the digital currency have managed to make a fortune, but this is natural. For example, the first investors in Apple have also become much wealthier than those who came later. Bitcoin is no financial pyramid.

Concerning the "bubble", the situation is much more interesting. Definitely, yes, Bitcoin is a "bubble" ... The same bubble as the euro and dollar. These three currencies are valuable only as a means of exchange, they do not have any value while being used. If tomorrow Bitcoin suddenly stops being taken and traded, it will burst. However, absolutely the same thing can be said about the more conventional money. Moreover, in a sense, the dollar is a bigger "bubble" than Bitcoin. After all, it is not supported by anything, in contrast to the cryptocurrency which is backed by mathematics and algorithms.