Why We Need Bubbles

in LeoFinance2 months ago

Hey Jesspeculators

I've spoken about bubbles a fair bit in my posts; lol some would think I'm obsessed with bubbles, well I'm not; I'm not 5 years old okay? Bubbles don't excite me that much! Okay, maybe they do a little bit.

I've looked at the crypto bubble, the ICO bubble, the notcom bubbe and recently the NFT bubble and as I learn more about finance and how this all works, I feel like bubbles are part of the cyclical nature of markets.

My only real experience has been in the ICO bubble, where I, too, got caught up in the shitcoin mania, and it's easy to see why it can become such an infectious rally sucking in bright-eyed investors thinking they've struck gold.

Eventually, what goes up really fast rips down faster, which was true with the ICO bubble. Eventually, all assets must be repriced to fair value, and sometimes fair value is 0.

The ICO bubble burst cost investors billions as opportunists take advantage of rampant speculation and try to siphon some of the capital into scams and projects with zero "product-market fit".

Post bubble sentiment

People then write off the sector that had the bubble, and those that believe in it continue in the bear markets. The investors that made out like bandits leave in search of new yield while the bag holders lick their wounds, vowing never to make the same mistakes again, often they do.

Memories are short, and FOMO and greed are powerful human emotions.

So why do we need bubbles?

Well, as far as I can tell, it's the hivemind of human nature and how we build and discover things as a species.

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The tulip bubble

Bitcoin is often compared to the Tulip mania of 1967, a period during the Dutch Golden Age when contract prices for some bulbs of the recently introduced and fashionable tulip reached extraordinarily high levels. Yes, believe it or not, but Holland had stupid money to blow in those days like the US has today, and as money looks for a home, it found one in Tulips.

Yes, it got out of hand where people were willing to offer entire towns for a Tulip. It did correct in a major way but what it left Neterhaldns with is still today's market leader in flower markets.

The railway bubble

The Railway Mania was an instance of a stock market bubble in the United Kingdom of Great Britain and Ireland in the 1840s.

Yes, it blew up spectacularly, but it left Britain with a pretty robust railway system that still works to this day.

The dot com bubble

The dot-com bubble was a stock market bubble caused by excessive speculation of Internet-related companies in the late 1990s, a period of massive growth in the use and adoption of the Internet. Yes, it left many people broken and struggling to recover, with the likes of Pets.com failing bit time and taking a host of dot com business with it.

But out of the ashes came sites like Amazon and Google, and we all know how that ended up.

Bubblenomics

Bubbles bring much-needed capital, talent and users; they all flood in providing money to build infrastructure.

Developers create new codebases and add to existing code; They bring users that promote the service and provide user data and feedback to improve the service.

Once bubbles leave, so do the users and the capital, but what they leave behind is often valuable products that may need refinement but will grow into something far more robust.

Bubbles also offer a stress test for the sector to see how far it can scale and gives the market an idea of where this could go once they are ready to scale.

Have your say

What do you good people of HIVE think?

So have at it, my Jessies! If you don't have something to comment, "I am a Jessie."

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A typical Bubble is when People say " But this time it is different..."
Remember it strong in 2017.

Lol and there are going to be a lot more bubbles in the future so you better get used to it and learn to find the gems in the bubbles and not overpay

Best way - just hodl.

Trading is obviosly not My thing....

HODL'ing has worked so well for me, why would I stop now

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Bubbles will always happen and many people will be hurt. However most of them outside the Tulip bubble did end up creating some very nice things. Though I wonder if the next bubble to pop will be the NFT bubble, housing bubble or stock market bubble.

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I think it’s the NFt market that blows up, real estate and stocks are systematic to the economy so to me it’s more likely that we see a crash up in real estate and stocks than a correction

Yea I think the NFT market is the most likely to blow up since it is the one talked about the most in the news.

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Bubbles definitely bring the eyeballs. If only it were possible to let some of the air out without bursting the bubble.

I think that’s just how we are wired we cannot find our equilibrium without pushing things to their breaking point

thank you very much for the post,have a great day and good mood

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thank you very much for sharing, have a nice day

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I remember a well-known proverb that says: "Every day a fool goes out into the street, whoever finds him is his" and certainly in these financial and commercial matters there is always someone who applies this axiom to make a profit. Seeing your pragmatic and somewhat Machiavellian language I see that you are quite right, it is evident that only the most intelligent managed to get out of the bubbles, however, they only represent a small portion of humanity, the vast majority still feel attracted to buy chickens with the crazy hope that someday will give golden eggs, that is as sad as believing that investing in NFTs is the best option for the future, my father always says: "who lives on dreams ends up dying of deceptions".

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Lol you got some great lines there, yes these bubbles are easy to get caught up in, people see someone like them make it rich, and think they can replicate it but for everyone that strikes it lucky there's a few who had to pay the price.

Bubbles are a part of life and I think if you have the get rich quick mindset you'll probably be hurt. Bubbles create jobs, they allow you to develop new skills in a new sector, earn a healthy income for a short period. It's not only about making a big bet and hoping it pays off.

Most people just want wealth without work and then end up without either

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and FOMO and greed are powerful human emotions.

I think they're powerful emotions to emotionally immature, and the weak of mind....for the rest us, not so much...