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Thursday, June 8, 2023

The Bitcoin Paradox: When A Financial Bubble Turns Into An Epistemic Bubble

Patrick Thompson mentioned in a recent article that the Bitcoin bubble would surely pop soon. This basically entails that the market bubble around cryptocurrency is coming to an abrupt end- and most markets will have just one single pump left in them. Interestingly, this isn’t the first time Bitcoin has met its supposed demise- it’s been going on for far too long. What people need to understand that what critics consider a bubble, is actually a pin. And this entire construct is simply a Bitcoin Paradox. 

How Is The Bitcoin Paradox Applicable?

The previous year saw the cryptocurrency go completely institutional. Ruffer had previously announced that the company had invested around $700 million in the cryptocurrency. According to them, this was considered to be a safe move- made against monetary inflation. Also BlackRock, a world-renowned asset manager recently joined Bitcoin- and started authorizing its two-valued funds to invest further in bitcoin. But, what seems to be the Bitcoin paradox? Well, the easiest way to describe it would be to state that Bitcoin is not a financial bubble, but an epistemic bubble. What does that mean?

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An epistemic bubble is all about involving individuals who are gaining information in a manner that is pretty biased. They would also end up accepting every single thing that they would want to hear- while conveniently disagreeing with anything bad- no matter how accurate it may be.

The Bitcoin paradox, then, becomes this innate power that Bitcoin controls. Bitcoin might have a lot of power, but it goes without saying that it could get intoxicating in a little while. Most believe that Bitcoin has no competition, but that is just not true- Bitcoin’s main competition is Ethereum. The Bitcoin paradox might work if both the cryptocurrencies start working in tandem, but there is also a possibility of Ethereum taking on the helm and dethroning Bitcoin from its position.

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