At the beginning of its appearance in 2009, cryptocurrency based on the world's first Blockchain technology, Bitcoin, was greeted with skepticism by market participants and Bitcoin was only valued at less than $ 3 per piece. But after knowing that the amount of Bitcoin will only be made as many as 21 million pieces and predicted will replace the function of money in the future, coupled with curiosity and greed that tends to over-confidence from market participants, the price of Bitcoin continues to rise to the level which can be said to make no sense, which is more than 10,000% at the beginning of 2018.
Over time, other cryptocurrency based blockchain technologies have also sprung up like Ethereum coin, Ripple coin, Waves coin, NXT coin and many more have experienced extraordinary price increases like bitcoin since it was first launched.
The blockchain technology system is an open source technology, where everyone can use and modify it freely and for free. By being open source, everyone can create their own cryptocurrency or in other words, everyone can create their own currency like bitcoin, even using a well established blockchain system like ethereum, we can create our own currency using ethereum's blockchain network in minutes and pay a fee of around 250 thousand to 2.5 million rupiah and determine subjectively the value of the piece of digital currency we just created and then sell it to the public through the Initial Coin Offering (ICO) scheme.
The unique thing about getting money by selling our own currency is much easier compared to the IPO process on the stock exchange, this is because cryptocurrency market participants assume that every digital currency will be the same as bitcoin, which has skyrocketed even though there have been many cryptocurrency launches that led to a scam like DogeCoin.
In simple terms we can understand the blockchain technology system as a revolutionary technology that records decentralization, which is a technology that allows the process of recording each transaction no longer requires a central server to record it, in addition transaction costs can be reduced to much lower. Blockchain involves every computer / gadget from every user connected to the internet network to record every transaction that occurs.
Each transaction unit on the blockchain system is referred to as a token and this token is referred to as cryptocurrency. Blockchain tokens don't have to be called cryptocurrency, but they can also be called inventory reserves if we use a blockchain system in manufacturing companies, so we can define tokens as any depending on the need to use the blockchain system itself.
With its open source nature, everyone can create their own tokens at any time and can freely call these tokens as anything including calling them a currency that has value. On uses other than cryptocurrency, Royal Bank of Canada has used blockchain technology in its banking system, and made blockchain tokens made by themselves as balances of customers and companies to implement decentralized transaction recording.
Understanding blockchain and cryptocurrency technology is nothing but a token blockchain that is subjectively referred to as a currency that can be made at any time and by anyone, so we can conclude that cryptocurrency like bitcoin is nothing more than blank paper rated subjective without the underlying asset being the fundamental value. Significantly higher prices for bitcoin and cryptocurrency today are due to a lack of in-depth understanding of cryptocurrency and the desire to speculate in order to get quick profits.
Lack of in-depth understanding of cryptocurrency causes market participants to assume that the cryptocurrency has a really limited amount that must be given a high value even though the reality is the opposite. With its open source nature, anyone will be able to make their own currency, so as time goes by there will be more and more new cryptocurrency to be offered which will result in the cryptocurrency ecosystem being over supply. When such conditions occur, the price of cryptocurrency will decrease slowly until in the end it has no value at all.
We can predict the price of cyrptocurrency will end, such as the incidence of tulip flower bubbles in the Netherlands in the 17th century where at that time tulips were originally imported from the Ottoman Empire, were quickly appreciated as high as cryptocurrency today. Over time, the Dutch people at that time saw the opportunity to get high profits competing to plant tulip flowers in their country, so that the tulip flowers slowly reached the point of over supply and tulip flowers which were once valued very high suddenly experienced a decline in value sharp to no value at all.
The conditions in the 17th century are very relevant to the current inflated cryptocurrency price, where as at this time everyone can make their own cryptocurrency, one day (most likely in the near future) they will find a point of over supply that causes the cryptocurrency price bubble to break automatically.
When a cryptocurrency price bubble like bitcoin breaks, it will leave a revolutionary technology called Blockchain. Blockchain was created by the same person as the creator of bitcoin, namely Satoshi Nakamoto, someone who uses a pseudonym whose original identity is unknown. Blockchain will be widely used in the future in various types of industries to reduce costs, improve data security records and transactions, and be used by central banks of each country to convert currency that we use today into digital money with clear underlying assets.
If we draw conclusions, cryptocurrency such as bitcoin and other coins that only have a subjective value without the existence of underlying assets are clearly likely to experience crashes in the near future, but the main technology, blockchain, will be a valuable relic in the future as the incident of the dotcom bubble in the early 2000s which caused the economic crisis, especially in the United States left an extraordinary innovation in the field of the Internet that we can enjoy today.
If a cryptocurrency crash really happens, then the history circle theory proves for the umpteenth time about the truth, and we should be able as economic actors to take advantage of the continuous historical cycle.