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Response to dixiegrrrrl (Original post)

Wed Jan 22, 2014, 04:36 PM

10. count me as one nerd who isn't transfixed

There are billboards popping up in my area that show a bitcoin logo and say "The revolution has started. Where do you stand?" Where I'm standing is, at a good safe distance from the sign by the cliff that says "watch for falling currencies".

Krugman was right: bitcoin has solved the transactional part of a digital currency, but not the value part. Any value it holds is entirely speculative, with nothing underlying it.

Buying bitcoins is like buying stock in a hot company with no assets or revenue. It's like buying bonds from a popular issuer who never promised repayment. It's like buying commodity shares in neutrinos.

It looks good now because its designed-in scarcity makes it naturally tend to rise in price as people buy in. Considered as a currency, it has built-in deflation (which, by the way, would make it a terrible idea to use it as an economy's primary money). So as soon as anyone pays real money for it, it immediately becomes a bubble. But because of the lack of a base of real value, when this bubble pops, there's nothing to stop the price falling all the way to zero.

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Arrow 24 replies Author Time Post
dixiegrrrrl Jan 2014 OP
tridim Jan 2014 #1
dixiegrrrrl Jan 2014 #2
tridim Jan 2014 #3
caraher Jan 2014 #4
dixiegrrrrl Jan 2014 #6
caraher Jan 2014 #7
dixiegrrrrl Jan 2014 #9
KoKo Jan 2014 #5
wercal Jan 2014 #8
LineReply count me as one nerd who isn't transfixed
paulkienitz Jan 2014 #10
wercal Jan 2014 #12
paulkienitz Jan 2014 #19
wercal Jan 2014 #21
dixiegrrrrl Jan 2014 #22
wercal Jan 2014 #23
bemildred Jan 2014 #11
pscot Jan 2014 #13
truedelphi Jan 2014 #15
dixiegrrrrl Jan 2014 #16
bemildred Jan 2014 #20
truedelphi Jan 2014 #14
dixiegrrrrl Jan 2014 #17
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blkmusclmachine Jan 2014 #18
Mira Jan 2014 #24
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