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Netflix (NASDAQ:NFLX) Can Teach Bitcoin (BTC) Owners A Very Valuable Lesson


Bitcoin's (BTC) yo-yo price has sparked the common debates of whether it's a bubble, how low will it fall, or whether it should even be legal. This is a currency that now sports a market capitalization of $260 billion, more valuable than McDonald's (NYSE:MCD) and General Motors (NYSE:GM) combined, and has fluctuated between $9,500 and $20,000 in the last month alone! Currently, Bitcoin is priced at $15,300 and down another 6% on the day, which means big media is pumping their doomsday prophecy for the world's gold standard of cryptocurrency. 

Although more extreme, the current sentiment with Bitcoin reminds me of Netflix (NASDAQ:NFLX) several years back. Netflix stock had risen from the equivalent of $6 to $40 in just two short years. This was long before original programming and streaming took off. Back then Netflix was a mail-order service, that was just flirting with streaming services, and all hell broke loose when the company decided to raise prices and focus on streaming. It wasn't six months later before NFLX stock was trading at $10/share, and all the doomsday profits were gratified. 

However, Netflix and its wild stock performance taught us something: Mania can cause major price volatility, but in the end, disruption and innovation will trump all when the dust finally settles. 

Bitcoin & Netflix equal disruption and innovation

Since losing 75% of its value and reaching a low below $10/share, Netflix stock has since surged to a peak of $200 and has completely disrupted the Pay-TV model. With unimaginable success in original programming, Netflix now has a target on Hollywood with big budget productions. And as you can see below, Netflix has built an incredible network of subscribers to feed content too. 


So while Netflix stock has always seemed overpriced, one must wonder if an $80 billion valuation is too high for complete, end-to-end disruption and domination of the video industry. Now take Bitcoin, a currency built on blockchain where all transactions are verifiable, which thereby eliminates the potential for fraud. It solves many of the issues with government regulated currencies, even exchange issues. 

Is Bitcoin unconventional, yes, does it have flaws, of course, and does it still have a ways to go, you bet, but the underlying premise and technology to disrupt traditional financial markets is there and will evolve. Bitcoin is very much like Netflix to the video industry, but only the financial industry. And what makes Bitcoin so disruptive and innovating is the underlying blockchain technology, and the fact that it leads a much bigger network of cryptocurrencies like Ethereum that are being used to break competitive barriers and innovate in specific industries. You can read all about that here

The bottom line: Yes, Bitcoin is volatile, and will remain such. Sure, its value is largely tied to the belief that it is valuable. However, so is gold, and unlike gold, you can actually use Bitcoin to make purchases, both everyday purchases and exclusively. While Bitcoin as a currency may be volatile in value, it is still very cheap when compared to the value of other currencies around the world. Thus, don't be surprised if $20,000 is just the start for Bitcoin, long-term, just as $40 was for Netflix stock.