Bitcoin - here's what just happened, and what could happen next.

As we watch the world economic markets sink steeply into the red, it's a good time to reflect on what exactly happened here, and why so many people were taken by surprise (myself included) despite the many warnings of a correction.

Bitcoin as a bubble.

Lets run with the bubble comparison, and the popping of it. Many people seem to compare bitcoins life cycle with that of the tulips or dotcom era. But it's more interesting right now, to understand this crash, to highlight the glaring difference between major crashes and this one.

When dotcom busted, multi-million dollar IPO companies were using investor money to buy aeron chairs, foozeball tables and fancy offices and had zero product to speak of. Companies existed that mooned purely from removing a vowel in their brand name and the number of business models that didn't even mention monetization was... let's just say high, if not the majority.

Likening the crypto industry to the tulip craze is ridiculous. Tulips weren't technology. They provided no utility to society, and the run-up was pure FOMO-fuelled craze. They died when futures failed to stabilise an already tenuous and useless market - and yes, tulips and the industry are still around today, but adjusted to their actual value, which is obviously low.

The difference is - we are looking at an emergent economy tied into a treasure chest of useful tech that is immediately useful right now and will only grow in its utility. While some cryptocurrencies were speculative crazes (TRON mooned purely off a white paper), by far most of the tech in the top30 is very, very useful, and there's no mismanagement or foozeball tables because nobody owns a decentralised blockchain (except maybe in case of ripple).

Most of the cryptocurrencies have a very clear and obvious business plan complete with monetisation model at their core, instead of a hand-wavey plan at some point in the future.

The DAO is an exciting new model of business that competes directly with centrally controlled corporations - it's just a series of self-running ideas that anyone can use and participate in. At the moment we are just seeing the beginnings of this, and while we just left a generation of computers and the internet replacing whole industries, cryptocurrency stands to close that gap and fully decentralise the corporation, and most likely, vast areas of government. This is its real, true power, and why it is of deep concern to governments and institutional money.

Nothing logical about the industry itself explains a bubble pop, unless you look outside the industry. At who might have blown a bubble intentionally to pop it, possibly in addition to a sign of a turning economic climate.

This bubble collapsed not because of peoples misunderstanding of the market and purchasing low-utility tech - it was caused by government, media, and institutional money pressuring the price down forcing everyone to capitulate (sell) so they can own it. All in a time where their own abuse of the fiat system has caused systematic economic decline.

Sounds conspiracy theory enough? Look at what our governments and corporates have done to us over the last few decades, and really question if you still believe it's out of their grasp to manipulate and move to own a major threat to their power.

Will it reach $1?

Answering this is simple. Can you imagine Bitcoin at $1 right now? How many would you buy? Would you go crazy and buy it all? Can you imagine millions thinking that? Well there's not enough for all of you to buy at $1, and bitcoin has a supply and demand curve.

If you can bend your mind to a situation where you would NOT pay $1 per bitcoin, then that's what it'd take to actually get there. Now go up from there, and you can imagine that it's not going to fall through the floor without some amazing media FUD that completely breaks any faith in it - a hack that removes its core utility, or all countries legalising against it simultaneously with no recourse or debate.

What next?

Think for yourselves here, do you think blockchain has no merit? That it won't change the world? Or is the more logical explanation that this is an attempt at a power grab of what will be the most important technological movement of our generation?

There is legitimately no reason behind this crash except for a precise, timed assault of media FUD, every day, perfectly timed during potential breakouts, trying to teach you a lesson for screwing with their powerful system of control. The end result is that you capitulate (sell), and they ultimately buy it, meaning you've held their investment bags this entire time.

Could you honestly say you could just "go back" to fiat at this point, knowing how hard they worked to manipulate you? I think most crypto people feel the same way. They'll use it regardless of regulation, law, or price at this point. Not everyone is like this, but their next move will likely be to buy in. If you buy before them, you'll be taking their bags - and next time, be ready for the pullback.

Can this be not a shining example of the exact reasons we need cryptocurrency, now more than any time in history?

I'm watching carefully for the bottom, and buying what I can.

Just remember: it is much, much harder to push out crypto-specific FUD when the entire financial industry is on fire.