How a bubble in bitcoin could lead to hyperinflation

“The wealth transfer that bitcoin threatens to produce is definitely not one any government wants to see”

The volume of central-bank warnings about the rise of private cryptocurrencies – and the potential impact on the ability of central banks to conduct monetary policy – has become ear-splitting. This criticism only serves further to convince libertarians that reducing the power of central banks and governments is desirable. Certainly, the hostility of China’s authorities towards private cryptocurrencies can be presented as evidence that they are viewed by the state as a defence against intrusive social control. But whether that point of view is correct, or – where it concerns monetary control rather than social control – it is dangerously naïve, there is another, undeniably serious problem with cryptocurrencies. It’s a problem so far only hinted at by central banks, but about which libertarians should be the most worried. The problem is about bubbles.

There are now many bubbles in the world but they differ in nature