In July 2010, Bitcoin was trading at 5 cents. By February 2011 it was trading at $1.10. That’s a 2,100% return in 7 months. This is what the chart looked like at the time.

What’s the first word that comes to mind? Bubble.

Indeed, and over the next two months that bubble would burst, as Bitcoin declined nearly 50% to a low of 56 cents. And then, this happened: Bitcoin came right back, advancing another 2,801% above its February 2011 peak to $31.91 by June 2011.

What does that chart look like to you? An even bigger bubble, and by this point the media was starting taking notice.

Bitcoin would crash 94% from its peak in June 2011 and the Economist did a postmortem: “the currency’s rise was the result of a speculative bubble.”

And then, this happened: Bitcoin recovered its 94% loss and advanced another 734% above its June 2011 peak to reach a new high of $266 in April 2013.

What does that chart look like to you? A colossal bubble, and by this point the mainstream media was having a field day pointing it out.

Bitcoin would crash 76% from its April 2011 peak to a low of $63 in July 2013. Here’s a headline at the time from The Atlantic:

The article goes on to explain the recent decline as the result of a “speculative bubble,” saying “it’s not clear why anybody would want Bitcoins.”

And then, of course, this happened: Bitcoin recovered its 76% loss and advanced another 734% above its April 2013 peak to reach a new high of $1,166 in November 2013.

What does that chart look like? The biggest bubble in human history, and the media was all over it.

Bitcoin would crash 85% from that peak to a low of $170 in January 2015. The “bubble/Ponzi scheme” seemed to have burst once and for all.

And then, right on cue, this happened: Bitcoin recovered from its 85% loss and advanced another 419% to where it stands today – above $6,000. This chart, like the others before it, screams “bubble.”

So is Bitcoin a bubble?

Many people seem to think so, including Ray Dalio, Howard Marks, Robert Shiller, Ken Rogoff, Jamie Dimon, Peter Schiff, and Warren Buffett. The list of prominent investors and economists that have called Bitcon a bubble, a fraud, a mirage, or a Ponzi scheme could go on for pages. That list would even include those who call Bitcoin a bubble but still advocate investing in it, most notably Mark Cuban and Mike Novogratz.

Bubble, it seems, is in the eye of the beholder. One person’s bubble is another person’s undervalued asset.  A recent poll I conducted on twitter bears that out, with 33% of respondents saying Bitcoin was undervalued while 39% called it a bubble.

I conducted the same poll a few months earlier when Bitcoin was trading 58% lower, and more than half of the respondents called it a bubble.

How can you have more people calling it a bubble at a lower price and more people saying it’s undervalued at a higher price?

It’s not immediately intuitive, but if you consider psychology it makes some sense. The higher the price of Bitcoin, the more attention it gets, and the higher the adoption. If you own something or are considering owning something or know someone who owns something, you’re probably less inclined to call it a bubble. Conceivably, if Bitcoin continues to rise, less and less people may consider it a bubble.

But what is a bubble anyway?

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?

Unlike a stock or bond, there is no stream of future cash flows to value. Bitcoin’s value is predicated solely on the collective beliefs by market participants that it has value. In that respect it is not all that different from physical Gold, which has limited intrinsic value in industrial uses. As far as the future, is it implausible to believe that there will be a digital competitor to paper money, one with a fixed supply that cannot be debased?

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

The most expensive painting in history sold for over $300 million (Willem de Kooning’s “Interchange”). How is that possible, with no intrinsic value? Someone thought it was worth that much.

If we look at a price chart of that painting, it would undoubtedly resemble Bitcoin, which is to say that it looks like a bubble.

But when did it become a bubble? When does any bubble become a bubble? This is not an easy question to answer, particularly for an asset with no intrinsic value. As we have seen, Bitcoin looked like a bubble in 2011 at $1. It looked like a bubble in 2013 at $200. And looks like a bubble today at $6,000.

Which one of these is the right starting date for the bubble? Or are none of them right? We can only answer such questions in the distant future, with the benefit of hindsight. No one rings a bell at the start of a bubble.

If Bitcoin crashes from here, will that be enough to prove it was a bubble? Not necessarily, as we have seen it crash and recover many times over the past seven years.

When people call Bitcoin a bubble, the implication is that it’s worthless. People assume that when bubbles burst they go to 0. But that doesn’t have to be the case, as we’ve seen with the Nasdaq and the housing bubbles which both crashed and have since recovered to hit new highs.

If Bitcoin is trading at the same value a few years from now, but crashes many in between, was it a bubble? How much does it need to go down and how long does it need to stay down to meet the definition?

No one knows, which is why the bubble moniker is less than helpful. There’s simple or unified formula for identifying a bubble, even in hindsight.

The best we can say here and now is money will probably look different in the future than it does today. Everything evolves, including money. It seems likely that Bitcoin and other cryptocurrencies will be a part of that of that future, but at what price per coin is anyone’s guess.

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 the story of Bitcoin is good one.