This is my first encounter with cryto currency and I’ve ensued some conversation about with my friend who’s major is finance who introduced the “bubble theory”. She didn’t really explain the whole theory to me in a point of finance but with analogies. To me the concept is related to kingdoms and their rise and fall.
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She pointed out that the “bubble” is meant to be popped. Anyone care to comment and explain the concept to me. I would like someone to elaborate.
I think there may be some ICO bubbles yeah.. But each currency have a unique way to handle their economy, some have a limit of coins ever to be issued, others don't, they have different ways to deal with inflation, and a host of other factors.
You can't just say this is a bubble without taking the time to see each case differently, for example the Housing bubble popped in the US it didn't pop in Switzerland.. so it's not the housing market as a whole that was a bubble, some people mis-managed their economy and created a bubble, others did not.
A clear example would be what people call "the internet bubble" in 2000, there were many start ups that raised money and didn't deliver and they failed.. But the internet didn't fail.. In fact if you had stocks of Amazon for example you would've made a killing.
So the closest thing to a bubble one can see in crypto is that some ICOs raise money and they don't deliver so their price of course will tank.
But in the end, no one knows what happens.
Thank you so much for the explanation, this brings a lot more context to the conversation and to my knowledge.