Defining a Bubble

From Charlie Bilello’s post on when a bubble becomes a bubble, specifically looking at Bitcoin in this case:

The textbook definition (from Wikipedia) is “an asset at a price range that strongly exceeds the asset’s intrinsic value. It also could be described as a situation in which asset prices appear to be based on implausible views about the future.”

Does Bitcoin’s price exceed its intrinsic value? Are the views about its future implausible?

He correctly points out that bitcoin produces no cashflow and therefore has no intrinsic value, thus coming the conclusion it’s like other anything else without intrinsic value:

If you are of the belief that Bitcoin has no intrinsic value and therefore has to be a bubble, then you must call anything without intrinsic value a bubble, including fine art, stamp collections, coin collections, wine collections, etc.

Somewhat related to George Soros’ theory of reflexivity:

As long as people believe Bitcoin has value, it will have value. If that sounds crazy, ask yourself why a Picasso or a Rembrandt has any value. At the end of the day, market prices are the result of our collective belief in a story. And right now, the story of Bitcoin appears to be good one.