A bitcoin bubble could be good for everyone

BY ADAM L. PENENBERG ON MAY 17, 2013. The president of Western Union scoffed at the invention of the telephone, calling it little more than an “electric toy,” and the company informed Alexander Graham Bell that his brainchild to place one in every home was “utterly out of the question.” A couple of years later, Oxford University professor Erasmus Wilson predicted that when the 1878 Paris Exhibition closed, the electric light would “close with it and no more will be heard of it.” When Henry Ford sought investors for his car company in 1903 a Michigan banker advised his client against it, forecasting that “the horse is here to stay, but the automobile is only a novelty.” In 1946, Darryl Zanuck, president of 20th Century Fox, said, “Television won’t be able to hold on to any market it captures after the first six months. People will soon get tired of staring at a plywood box every night.”

Throughout history, great technological innovations – the sort that fundamentally change business, culture, and life itself – must overcome initial skepticism. Once it does, a pattern emerges. Entrepreneurs recognize its potential for disruption and start businesses, which attract consumers and newcomers who join the party, bringing with them investment. The media writes about it breathlessly. All of this together works to pump air into the bubble as some companies go public and their stocks soar in a speculative frenzy.

Ultimately reality sets in. After burning through cash, companies fold, leaving investors to wonder when and how someone will actually make money. Optimism turns to pessimism. Stock prices crash, investment dries up and this entire sector is given up for dead, until, over time, the core technology is woven into the fabric of life. It’s a cycle of boom, bust, and sustained growth, followed by the inevitable decay when someone figures out how to build a better mousetrap. - Read more here: http://pandodaily.com/2013/05/17/a-bitcoin-bubble-could-be-good-for-everyone-2