Not so long ago, bitcoin reached a $6240.69 mark!! and, despite unavoidable price fluctuations, at that time it seemed like this remarkable growth won’t stop in the nearest future. Although currently the price has dropped significantly, Bitcoin has taken the market as the most remarkable example in the trading history. Those who sold their bitcoins earlier were definitely in despair while those who saved them are extremely reach now. Everyone wants to know more about BTC and all social and media platforms can’t stop talking about it.
We believe that big investors devote money to bitcoin because they think that this is the currency of the future. Also, cryptocurrency is a perfect tool for those who run an illegal business, since it provides decentralization and safety, so the government cannot regulate this money.
However, bitcoin has received wide public acceptance that goes far beyond dark web users and drug dealers. Today there are millions of regular people, who won’t stop talking about cryptocurrency, perceiving it as a potential get-rich-quick option. They are looking for opportunities to invest or to mine it and the large percent of BTC’s popularity is caused by them. The main reason for that is psychological – people are following what everyone else is doing, and this is how we evolved to act.
The price for BTC has fluctuated hugely over the time. However, the general tendency of its price is growth. Growing price attracts the attention of the media and creates a buzz within the community. In December 2017, one of the most popular cryptocurrency exchanges, Coinbase, published a post warning users to invest responsibly because the website fails to process all operations they are trying to make. Despite the fact that a plenty of financial experts claim that BTC is a bubble and the price will fall very soon, people continue investing their money, because the growing price makes people believe that it will continue to rise.
Bitcoin as an alternative financial system
The original aim of Bitcoin was to create an alternative to the traditional currencies and to encourage sellers and buyers use it to exchange goods and services. Bitcoin is valuable, since it may become an alternative to the existing currency, they say.
However, this sounds too simple and looks more like an attractive narrative rather than reality. Current bitcoin’s boom makes it hard to use it as a currency, because of its high fees and volatility. Rising prices are good for investors, but they don’t make bitcoin any closer to being used widely.
The price for bitcoin depends on its popularity and vice versa. However, once the coin becomes too expensive, people won’t be able to use it for transactions.
Psychology of the majority
The most relevant reason behind bitcoin’s popularity may be connected with the psychology of the majority. People are interested in it just because everyone else is.
It is natural for human beings to adopt everything that everyone else is doing. Media evokes the feeling that we are missing something that everyone else does and when we hear that more and more people invest in cryptocurrency, it seems less risky to us.
People are influenced by the environment and therefore value bitcoin because the others do and this is a social phenomenon.
In case if bitcoins will crash down some day, everything we have discussed above will happen in the reverse order. The psychology of the majority will make people sell instead of buying and most BTC holders will give their coins away because everyone around them will do so. However, nobody really knows if or when Bitcoin will crash. You never know it was a bubble until it bursts.