The Personal Finance series with Warren Ingram

Bitcoin may (or may not) be a bubble. Check this out before taking the plunge

Is Bitcoin a bubble?

In other words, is the spectacular rise in the value of Bitcoin based in reality, or is it unlikely to last?

That is the question The Money Show’s Bruce Whitfield put to Galileo Capital Personal Financial Advisor Warren Ingram.

Ingram answered the question by comparing the current popularity of investments in Bitcoin to the Tulip Bubble, the Ostrich Feather Bubble and the South Sea Bubble.

Tulip mania

The tulip bubble began in 1633.

At one point tulips increased in value by 20 times in a month!

At the peak of the market you could trade a single tulip for an entire estate!

Every bubble eventually bursts – the tulip bubble popped in 1637 when prices dropped and panic selling began.

It wasn’t long before tulip bulbs were trading for about the same price as a single onion.

Ostrich Feather Bubble

Feathers boomed between 1890 and 1914.

At their peak you could get more money for a kilogram of feathers than a kilogram of gold!

South Sea Bubble

Even Isaac Newton was a victim of a bubble, namely the South Sea Bubble.

The South Sea Bubble was one of the first famous financial bubbles of modern times.

It took place between 1711 and 1720.

Newton bought shares in the South Sea Company - the hottest stock in England.

He sold and made 100% profit.

But he got greedy and reinvested at a price close to the peak.

He held on when the bubble started bursting, only selling once the price completely collapsed to far below what he paid.

This is, according to legend, the event that prompted him to exclaim, “I can calculate the movement of stars, but not the madness of men!”

Stocks in the South Sea Company were traded for 1000 British pounds at their peak (unadjusted for inflation).

By 1720 they were worth nothing.

Is Bitcoin a bubble?

How do you know if Bitcoin is overvalued?

Unlike shares; the digital currency makes no profits.

It’s also not backed by a central bank or government, so you can’t view it as a currency or compare it to other currencies.

Bitcoin is up by about 200% so far in 2017.

For more detail (and an answer to the question); listen to the interview in the audio below.

Click here (then “like” the page) to follow Bruce on Facebook.

Enter your email address in the form below to receive a newsletter containing the most-read articles of the week from Bruce Whitfield’s The Money Show every Friday morning in your inbox.

Subscribe to our Business Wrap Newsletter

702 welcomes all comments that are constructive, contribute to discussions in a meaningful manner and take stories forward.

However, we will NOT condone the following:

  • Racism (including offensive comments based on ethnicity and nationality)
  • Sexism
  • Homophobia
  • Religious intolerance
  • Cyber bullying
  • Hate speech
  • Derogatory language
  • Comments inciting violence.

We ask that your comments remain relevant to the articles they appear on and do not include general banter or conversation as this dilutes the effectiveness of the comments section.

We strive to make the 702 community a safe and welcoming space for all.

702 reserves the right to: 1) remove any comments that do not follow the above guidelines; and, 2) ban users who repeatedly infringe the rules.

Should you find any comments upsetting or offensive you can also flag them and we will assess it against our guidelines.

702 is constantly reviewing its comments policy in order to create an environment conducive to constructive conversations.

Read More
How to survive retrenchment

How to survive retrenchment

Your rights (and their responsibilities) upon retrenchment. Bruce Whitfield interviews Personal Financial Advisor Warren Ingram.

You’re wrong if you think you (or anybody else) can time the market

You’re wrong if you think you (or anybody else) can time the market

Don’t even try, because inflation will eat you for lunch, says personal financial advisor Warren Ingram.

How to manage the income from your investments during retirement

How to manage the income from your investments during retirement

Returns are low, interest rates are dropping and politics are uncertain. Tips from personal finance guru Warren Ingram...

Buy Bitcoin, get rich? Here’s whether you’re missing out on a goldmine…

Buy Bitcoin, get rich? Here’s whether you’re missing out on a goldmine…

The Money Show Bruce Whitfield interviews famed tech commentator Simon Dingle.

Bitcoin bonanza offers SA investors the chance to make a quick buck

Bitcoin bonanza offers SA investors the chance to make a quick buck

On April 2 a Bitcoin was worth $1079. By May 2 it was worth $1428.

How tech is threatening banks in South Africa (and changing money, forever)

How tech is threatening banks in South Africa (and changing money, forever)

Financial institutions, adapt or die! Rand Merchant Investments’ Dominique Collett discusses 2017's major "fintech" developments.

Popular articles
Opinion:  Bishop Lekganyane is right

Opinion: Bishop Lekganyane is right

Stephen Grootes weighs in on comments made by the Zion Christian Church Bishop at the weekend.

So what exactly is radical economic transformation?

So what exactly is radical economic transformation?

Wits associate professor of economics Christopher Malikane speaks to Azania Mosaka about the term that is being bandied about.

Gospel singer Sipho Makhabane explains how Sfiso Ncwane died

Gospel singer Sipho Makhabane explains how Sfiso Ncwane died

Makhabane says Ncwane was feeling weak yesterday and his wife phoned paramedics to check on him.

Who is Advocate Tembeka Ngcukaitobi?

Who is Advocate Tembeka Ngcukaitobi?

The EFF lawyer stole the show during the state capture report court battle.

'Collect experiences, NOT possessions!' - Paul Theron (Vestact MD)

'Collect experiences, NOT possessions!' - Paul Theron (Vestact MD)

Bruce Whitfield interviews the razor-sharp tongued Vestact MD Paul Theron about his money hopes, fears, successes, failures, etc.

3 easy questions could bag you R2000!

3 easy questions could bag you R2000!

WIN R2000! But only if you can prove you're a whiz of the MTN Biz Quiz by answering the following three questions...

Blesserfinder: Matching you with a sugar daddy near you

Blesserfinder: Matching you with a sugar daddy near you

Is social trend Blesserfinder, where girls are allegedly matching up with rich 'benefactors' in exchange for sex, a real thing?