Mainstream economists and political leaders always point at Bitcoin’s volatility as its main undoing. Needless to say, similarities can be drawn from past events that shaped modern tech companies. In 2000-2001 when the dot-com bubble popped, the likes of Amazon, Yahoo, and Priceline fell by 96% before minting millionaires in subsequent years.
Many people try to talk negatively about Bitcoin volatility, meanwhile Amazon, Yahoo, and Priceline all COLLAPSED over 96% back in 2000 before minting millionaires.
Early tech volatility is natural. Long term upwards volatility is the holy grail.
Get used to it. pic.twitter.com/JuCWMd1RKA
— Riggs (@RiggsBTC) December 15, 2019
While Bitcoin is volatile thanks in part to its low level of liquidity, it remains a high potential digital asset that is indispensable in any modern portfolios.
Yale economics professor:
“BTC should occupy about 6% of every portfolio in order to achieve optimal construction. Even those who are strong Bitcoin skeptics should maintain at least 4% BTC allocation."https://t.co/kQfJFJFJ3p
— Dan Hedl (@danheld) December 14, 2019
Also, despite falling by 75% at the deep of 2018 winter, the coin has spectacularly recovered.
At spot rates, Amazon (AMZN) is an 873.07B giant and its share trades at 1,760.94 at pixel time. For those who held their shares, believing in what the company stood for, they are now millionaires.
The same can be extend to Bitcoin and cryptocurrency projects that purpose to serve a specific niche.
Bitcoin Is Backed By the Masses
Bitcoin, even as central backed digital currencies sprout, has the backing of the community and has evolved to be not only a medium of exchange but a store of value. A shield during economic crises or political turbulence, the network is censorship resistant yet transparent enough to the joy of law enforcement.
The Bitcoin network’s main value proposition is its high level of decentralization meaning it cannot be shut off easily due to investment in the space. The Proof of Work consensus algorithm means miners expend electricity, a utility which isn’t cheap.
Although Bitcoin exists in the digital ether and cannot be used for other purposes as gold for example, it is far much better to hold it because of its advantages over fiat, or bananas—despite its edibility as Mark Cuban argues.
Amazon market cap is 4.5X Bitcoin’s
Going forward, HODLers stand to benefit. The total market cap of cryptocurrencies is a quarter of Amazon’s and 4.5X that of Bitcoin.
If Bitcoin adoption increases, chances are BTC is grossly undervalued at spot rates. Time is the only ingredient.
The same ingredient that Amazon, Google, and all those mega-billion companies that rose to prominence from the dot-com ashes needed to be what they are worth in 2019.
Disclaimer The views, opinions, positions or strategies expressed by the authors and those providing comments are theirs alone, and do not necessarily reflect the views, opinions, positions or strategies of CoinGape. Do your market research before investing in cryptocurrencies. The author or publication does not hold any responsibility for your personal financial loss.
Dalmas is a very active cryptocurrency content creator and highly regarded technical analyst. He’s passionate about blockchain technology and the futuristic potential of cryptocurrencies and enjoys the opportunity to help educate bitcoin enthusiasts through his writing insights and coin price chart analysis. Follow him at @dalmas_ngetich