There are a couple of reasons why the bubble is sure to burst. The first is just that it’s a bubble, and any chart which looks like the one at the top of this post is bound to end in tears at some point. But there’s a deeper reason, too — which is that bitcoins are an uncomfortable combination of commodity and currency. The commodity value of bitcoins is rooted in their currency value, but the more of a commodity they become, the less useful they are as a currency.
via The Bitcoin Bubble and the Future of Currency — Money & Banking — Medium.
Definitely one of the best articles I’ve read on Bitcoin. I think the idea of bitcoin as commodity actually makes a lot more sense, given that it’s an artificially constrained resource that’s “mined”.
It's always more complicated 
Great article. That said, there were a few points I didn’t agree with.
That said, my main problem with the article is the contention that this is a bubble. People love to say this stuff all the time, but there is absolutely no guarantee the the price won’t hold or continue to go up. The main “proof” the article offers for this being a bubble is “because it’s a bubble,” which holds no water whatsoever. Granted, I tend to agree, but by itself this is not a good argument. If the author really believes this 100% he should be shorting the currency. Which I highly doubt he is doing.
The second proof offered by the article is that somehow the fact that bitcoins enter the market through a mining process that they are devalued. All currencies are also commodities, at least in the important aspects that they are traded and valued relative to each other. The entrance of new currency in to the market via mining should not effect the value of the currency, as it is a known rate, so the value of the currency at a given point in time should already reflect this expected inflation. In this sense it’s actually more predictable and stable that government administrated money, because there are no random easing actions (printing money to fight stagflation).
The final aspect of the article is very interesting, which makes the claim that bitcoins in their current form will not gain mainstream traction. Quite possibly the author is correct, and I agree with much of what he says, but I find his tone much too confident. I think the future is much too unclear.
LikeLike