Evaluating Bitcoin as a bubble, investment, and payment system.

Where to start.   Lets start with the bitcoin as a form of currency.  Fitting adjectives to use to describe bitcoin as a currency are fiat and decentralized.  Bitcoin has no intrinsic value, however it does cost a small amount in energy costs to mine a bitcoin.  The argument that this in itself gives the currency value or that the value should be based upon this is fools logic.  Bitcoin's value is derived from confidence like any fiat currency, and thus bitcoin hardly fits the traditional Austrian value of "money".

So if bitcoin has no intrinsic value, does that automatically make it a bubble?  To be technical (per definition), its a yes..... but an argument can be made that its value is relatively sustainable and thus it seems to fall in a slightly more gray area than more obvious bubbles (US treasury bonds).  Besides, let me remind you that bubbles can form and build successfully over hundreds of years.

This brings me to bitcoin as an investment.  As with all assets with no real intrinsic value there's a bit of risk involved with investing in bitcoin.  More risk than certain high profile tech equities with little to no liquidation value?  Maybe, but its all very tricky to evaluate when you get into the realms of zero intrinsic value and positive expected growth.   First and foremost I would always recommend investments in things like physical silver, gold, commodities and fundamentally sound companies/bonds.  That being said, the bitcoin train shows no sign of slowing and offers some great risk/reward opportunities for investors, and even more for businesses and consumers.

As a currency, or medium of exchange, it has many benefits that make it attractive in comparison to traditional centralized fiat currencies.  It's instantaneous, relatively anonymous, and cannot be controlled by any one entity making it largely corruption proof.  This is a huge advantage over traditional fiat currencies and one can largely contribute bitcoin's success to the combination of those three factors.

In summation,

Bubble?  Yes.
Bullish?  Yes.

This may be contradictory, but the bottom line is that the demand for bitcoin as both an investment and payment system is hard to argue with.  I think this bubble has a very long way to go before dropping dead.