Right now the total market cap for cryptocurrencies is pushing $700B. Soon enough we'll be enjoying a crypto market of over $1T. And sure enough, we'll continue hearing folks like Krugman say Bitcoin is a bubble and Bitcoin is evil.

Now, even though I disagree with him, Krugman isn't a dummy. And he isn't the only one saying that Bitcoin (and cryptocurrencies in general) is a bubble.

But I disagree.

In fact, I'm not sure it's possible for there to be a currency bubble.

That doesn't mean the price of some cryptocurrency (or even all cryptocurrencies) can't rise and then fall to zero. But that's not what a bubble means. A bubble is when the price of some asset is driven up by speculative market behavior, and most importantly, the price surge is unable to be explained by the fundamentals of the asset.

It's hard to talk about bubbles without thinking of the dot-com bubble of the late 90's, and it's a perfect example. Speculators drove the price of tech stocks up far beyond what was warranted by their financial statements. This is, by definition, a bubble. The fundamentals of many of the tech assets did not justify the rise in stock price. At some point, investors were no longer willing to buy, and then a selloff took place.

There are two things to note regarding cryptocurrencies in comparison to the dot-com bubble.

First, the fundamentals of cryptocurrencies are entirely different than the fundamentals of tech stocks. With Bitcoin, there is no balance sheet or income statement to refer to. If a public company is operating at a loss year after year and revenue is declining, you assign the company a dollar value. If the stock price is still rising, it is objectively senseless. But the value of a cryptocurrency (or any currency) is based simply on whether humans are confident that it will be useful in the future.

Bitcoin in particular has caused many commentators to discuss the nature of money, and a variety of definitions and explanations have been offered up - many of which are not in agreement. But I think the definition is very simple. If I've got an asset that will hold value until future me is ready to consume, and that asset can be used for consumption, then I've got money. I don't care if it's gold, dollars, Bitcoin, or dirt.

Second, if the dot-com bubble tells us one thing it's this: the speculators were right. Of course, there were plenty of foolish investors who poured their money into dumb companies hoping for an absurd ROI, but strong companies weren't that hard to spot, and many of the strong companies survived the crash even after investors had pulled their money out. If you look at Amazon's stock price today, 1999 looks like a tiny blip. Investors were right to pour their money into tech, but they should've been willing to hold on.

Cryptocurrencies are no different, in my opinion. Investors are right to move money out of fiat and into crypto. And the crypto market may "crash" or it may not. It doesn't really matter. Cryptocurrency is the future of money, and I think everyone knows it at this point.