How Human Psychology Affects Bitcoin?

Here's the part 2 of my blog. In case you missed the part 1 here's the link:
https://steemit.com/bitcoin/@rigormortiz/the-psychology-of-money-markets-and-bitcoins

As discussed, Money and the Stock Market are controlled by emotions. Yep. Even expert market technicians do: even if they say that their actions are based on "logic," they would arguably agree that, still, stock market is largely fueled by emotions (and greed).

Supply and Demand

You know the good old classic lesson in our economics class back in high school? [actually I was a bum in high school. But I was best in math in grade school]. Yeah supply and demand! But the question is: with that basic principle, how can we apply it in our daily everyday lives?

Well here it is:

Most thing about market analysis is that the concept of the forces of supply and demand are treated as secondary to price movement. It's not that these forces are overlooked, but rather they are de-emphasized in favor of some rocket-science techniques or some new tools that appeared on the financial scene.

The factor of demand is — in a sense: pyschological. Generally, positive psychology produces demand. But in the market sense, also the negative psychology on the market produces demand — a negative demand that tends people to sell their shares. And this causes the price to go lower. Again, as we can see, people's sentiment plays a large role on the value of market (whether stock market or bitcoins).

Value

We tackled before the history of currency. Old civilization people exchanged their items for another items that are equal in worth.

For example, Frances wanted a water buffalo (or a carabao) for his farm. Gandalf has a water buffalo, but of course, he is not willing to give his water buffalo for free. Frances offered Gandalf some lumbers. Gandalf needed that lumbers. So, they both agreed to trade their respective items. So for these two people, the items that they had traded have value.

One problem with this kind of trades are that sometimes water buffalos became seasonably got the flu, or that lumbers deteriorate in quality. In order to cope with deteriorating and seasonal tradeable items, they invented coins, along with IOU's, promissory notes, cash, and so on and so forth. . .

But this kind of currency is that the government wanted to intervene with people's transaction. They want a piece of it. Yes, they even want a piece of that coin. Literally. They wanted to "tax" the people, and oh yeah — tax is good enough to build and maintain a civilization.

But people realized that the government became greedy. You know, what things those corrupt officials do?

Also, banks became greedy. How? The banks, among other things, eat-you-alive with these high mortgage and interest rates.

Greed and Fraud

In 2007, the US Stock Market crashes because of banks carelessly lend money to people for their mortgages, while the rating agencies overvalued mortgage bonds that are shitty out of fraud. Because of mortgage bonds' high ratings, people bought into it, but the catch is the ones they bought are real shitty. The banks and ratings agencies are fueled by greed and fraud.

And when the reckoning day came, it was doomsday. Banks declared bankruptcies as one bank stock value became zero. And it was rippled to the crash of the stock market, and eventually the economy. Many people became unemployed.

And you see how the government reacted to this bleeding? The government, through the Fed, bail out the banks by using people's money. Taxpayer's money worth of multi-trillion dollars. The average people suffered into it, and yet, they are the ones who bail the banks?!!! Fuck!

So people wanted a new system to get rid of this banks and government.

The New System

Internet Technology. Today, internet is NOT a want, but a NEED. It is now a necessity to our everyday lives. You know, some countries do not have roads, but they have Internet and Facebook. Things became easier. I remember, in my days (granny voice mode), we will have to go to post office to send some letters that will took a week before the recipient receives it. Now, with just a click and a fraction of a second.

Then people wondered, why can't we use the Internet to create transactions without the interference of the government, or the banks?

Then one unknown brilliant man (or maybe a group) in the alias of Satoshi Nakamoto, came up with an idea.

Bitcoins

Bitcoin is largely affected by psychology market, and for that, this is what makes value to a bitcoin. Remember, bitcoin is not a "tangible" item. It is not like what we saw on pictures that depicts a coin with a "B" in it. Bitcoin is just like a mere software. But it has a value because, upon looking to the Bitcoin's history, some great currency people had been amazed to the Bitcoin system. To them, they accepted the system and in effect, acquiring bitcoins has a value.

During those early days, Papa John's accepted 10,000 Bitcoins in exchange for two boxes of pizza, because Papa John believed that Bitcoins have value.

And so the story goes. . .

Let us now look on how that 10,000 Bitcoins grew from an equal value of 2 boxes of pizza to 1 BTC is equal to $19,000:

Notice that when the government intervenes, for being a killjoy [for lack of a better word], the effect of the sentiment of the people is negative. A good example of this happened on Dec 5, 2013 when the Chinese government bans financial institutions from using Bitcoins, the price plummets to -50% in just a couple of weeks.

But when the government supported, the effect is that positive. It's very discernible that people don't want the government to intervene to the cryptocurrency. Because that is the essence of cryptocurrency: to stay away from intervening third parties such as the banks and the government.

But later on, we just learned to accept the fact that the government intervenes everything under the sun.

Looking back in our history, when automobiles or cars was first invented, the government said that it was too dangerous and tried to ban it. They did this in order to protect the railroad industries wherein the government benefited. Another one is the licensing, publishing bans, taxes, and in some parts of the world, printing was a crime punishable by death. See?

And let's wait until the government strictly regulated the use of Bitcoins and other cryptocurrencies.

You already have an idea how the market will react, right?