Lingham: As long as Bitcoin does not exceed $2,000 before March, there is no bubble

Last Wednesday, Vinny Lingham, co-founder and CEO of Civic.com, a well-known Bitcoin prediction expert, published an article titled "How far is the skyrocketing Bitcoin from becoming a currency?" He divided Bitcoin into three stages of development.

The crypto entrepreneur and expert believes that the success of the first two phases will drive the explosion of the third phase. He also believes that no cryptocurrency will surpass Bitcoin anytime soon.

When asked why he thinks this, he attributes it to Metcalfe's Law ^[1] , which states that the importance of a network is equal to the number of connected users in it. Lingham writes, "Bitcoin has a massive network effect, similar to Facebook."

Satoshi Nakamoto’s ideas were misunderstood

Lingham believes that many people have misunderstood the definition of Bitcoin in the Satoshi white paper as "a peer-to-peer electronic cash system." However, he admits that Bitcoin is a long-term vision and must be developed step by step.

From 2008 to 2016, Bitcoin believers have gone through many stages of Bitcoin experimentation, experiencing volatility, doubts, and repression from the authorities, and then to almost being accepted by the authorities. For the past 8 years, Lingham has insisted that Bitcoin is still immature as a currency:

“I think of Bitcoin as a commodity that can be traded for goods and services. It may become a currency in the future, but it is not yet. It is a scarce digital commodity — and the transactions on exchanges reflect the market sentiment around the value of this digital currency.”

Vinny added in his blog, “Commodities are basic goods in the economy and society that can be classified into different grades, such as grade A, grade B, grade C, etc., are essentially homogeneous and can be easily used for trading, such as gold, silver and other precious metals, as well as wheat, corn, pork bellies, etc.”

Making Bitcoin Boring Again

There is no doubt that stability is an important part of the Bitcoin ecosystem and is key to becoming the number one store of value digital asset. Lingham admitted that Bitcoin’s current volatility is not conducive to Bitcoin as a store of value:

Vinny said:

“Yes, the point of my last article was to dampen people’s enthusiasm for Bitcoin. Bitcoin’s current price level needs to consolidate for a while, and we should expect Bitcoin to develop slowly and steadily. If the steps are too big, the volatility will also increase.”

Bitcoin Bubble

Despite the encouragement of Bitcoin adoption, Bitcoin is still making slow progress in developing countries, where Bitcoin could bring economic freedom. Lingham said the more people who like to store Bitcoin, the more merchants will accept Bitcoin for payment of goods and services. According to reports, there are already 100,000 merchants in Nigeria that accept Bitcoin as a payment method.

Bitcoin’s recent bull run has also sparked talk of a Bitcoin bubble. When asked if Bitcoin is entering a bubble if the current trend continues, Lingham responded:

“I think if Bitcoin surges to $4,000 in 2017, then we may be facing a Bitcoin bubble. Bitcoin should grow slowly and steadily to $3,000. The best we can hope for is that Bitcoin can stay below $2,000 for at least the next three months.

Gold vs Bitcoin

A few days ago, the price of Bitcoin briefly surpassed the price of gold per ounce, becoming the first currency to do so. Lingham thoughtfully said that this was no big deal, mainly because gold was overvalued:

“When the euro plummets, countries like Italy and France will sell a lot of gold to cover their fiscal deficits. The price of gold will fall, and then the dollar will rise and the euro will fall.”

Notes (↵ returns to text)

1. Metcalfe's Law is often mentioned in the same breath with Moore's Law. If Moore's Law is the law of development of information science, then Metcalfe's Law is the law of development of network technology. That is, the so-called externality effect of the network: the more users there are, the less effect it will have on the original users (the more people share, the less), but the greater its utility will be. ↵