I had written an article about bitcoin, about a year ago, saying it is worth holding some of it with the understanding that it is a volatile asset.

There is a change in that belief.

Being unrealistic about how long it takes for even an exponential technology to take off often leads to a bubble. We had the dot.com bubble due to the period of excessive speculation that occurred roughly from 1997 to 2001, and it looks like we might also have a blockchain bubble thanks to bitcoin.

These bubbles put out the flames of growth, and it will take much longer for the underlying technology to grow back again slowly. In this sense, bitcoin might be doing a big disservice to blockchain technology (first conceptualized in 2008), when it bursts.

“Those Who Do Not Learn History Are Doomed To Repeat It.” – George Santayana

However, history shows that both those who do not learn history and those who do learn history are doomed to repeat it. – It is just human instinct at play.

After repeated 19th century wars between Germany and France, France still demanded that confiscatory terms of surrender be imposed on Germany after the 20th century’s First World War. Then the Second World War happened.

The reasons why I believe the current run of bitcoin will lead to an implosion.

1.Just a handful of people own large chunks.
2. There is nothing regulating insider trading.
3. Small volumes have the significant impact on prices, making it easy to manipulate.
4.The prices can go much higher than they are now as the
5. When the entire world starts speculating, we are still a long way away from the point of no more marginal buyers
6. Bitcoin derivatives possibly are being introduced to provide additional liquidity for an eventual exit of the few guys.

I will conclude with a quote from Ray Dalio: “As a currency, you cannot have the volatility driven by speculation on it – make it a store hold of wealth.”