Crypto Not In A Bubble – Bitcoin is the Pin That’s Going to Pop The Bubble

Amidst recent doubts and fears (both from the general market and central bank regulators), a senior bitcoin advocate assures that the cryptocurrency market is not in a bubble. Rather, it is the global bond and stock markets that are in a bubble – since they are allegedly artificially inflated by central banks worldwide.

Skeptics argue that the surge of Bitcoin to $20,000 per coin at the end of 2017 and its sudden drop to $7,000 recently, is a huge sign that the cryptocurrency market is simply a bubble that’s going to pop anytime soon.

John Matonis, executive director of Bitcoin Foundation, disagrees and dismisses this fear. He told Business Insider that Bitcoin is not in a bubble, but it is the insane bond and fake equity markets that are supported by central banks worldwide. Bitcoin, on the other hand, is the pin that will burst the bubble, he added.

During the Innovate Finance Conference in London, Mantonis told Business Insider his belief that the world is entering the “post-legal-tender age” which is not dictated by the central banks. The shift to this post-legal-tender age will be powered by decentralized cryptocurrencies such as Bitcoin (of course).

Matonis is also delighted that a big bank such as Goldman Sachs, is already supporting the cryptosystem. He believes this will bring new liquidity to the market, reduce its volatility, and eventually help it mature. This means that cryptos might develop more optional markets such as those on an interest-rate basis. Matonis adds that Bibor (the index for Bitcoin’s interest rates) may even match LIBOR (London Inter-Bank Offered Rate).

The support of a well-known financial institution such as Goldman Sachs is a huge boost in terms of trust and security among potential buyers (and existing ones). This move might encourage more individuals to invest in Bitcoin since its unpredictability could be reduced.

Regulators all over the world are trying to lay their hands into cryptocurrencies, determining how they should be treated, monitored, and regulated. Just recently, the UK created a task force to scrutinize the industry. However, despite recent efforts by Bitcoin investors, governments and central banks remain hesitant to accept and regulate the cryptosystem.

However, Matonis has a different view – believing that crypto should not be regulated at all. He thinks crypto should keep operating in a caveat emptor (buyer’s beware) environment like it is today.

He thinks it is best for investors to do their research first, for no one is pressuring them to invest in an Initial Coin Offering (ICO) anyway. Matonis adds that if the buyer is worried about the risks, then they can simply walk away.

Matonis also understands why central banks are hesitant and confused to accept and regulate the cryptosystem such as Bitcoin. It is because the system does not fall into its traditional fundraising model which relies on selling debt or equity.

In addition, Matonis claims that Bitcoin is actually a third model for startups to raise funds. Basically, it is an alternative for aspiring entrepreneurs to get funding or capital for a startup business. This is done via negotiable utility tokens that are linked to the company’s success. Being negotiable tokens, these do not represent equity or debt, unlike in the case of traditional banks and hedge fund investors.