The problems with Bitcoin as a currency is that it is trying very hard to be a commodity (since there is a fixed maximum quantity of Bitcoin in existence) without actually having any inherent value. Yes, each BTC is unique. However, unlike say, gold or silver, BTC has no real-world use or inherent desirable qualities. If the gold market crashed tomorrow and I owned bars of the stuff, I could still use my gold for manufacturing processes or at least admire it for its shiny yellow hue. Bitcoin offers none of those qualities while having the inherent problems of an unstable commodity—deflation-by-design and random price fluctuations. The only thing going for it at the moment is that people seem willing (for whatever reason) to accept it as a medium of exchange.
The point he makes about there being no FDIC for Bitcoin exchanges also makes sense when you consider that BTC is a commodity much more than a currency; no one will insure the value of a commodity (which is of course why you hedge). That’s one of the reasons that we don’t typically use commodities as currencies anymore. Non-commodity currency has proven to be much more stable. But yes, the comparison to the savings-and-loan failures of the 70s is accurate—it highlights an instability of the market, not the “commodity” itself. —Jack— On Mar 6, 2014, at 5:09 PM, Ken Cornetet <[email protected]<mailto:[email protected]>> wrote: No, because Dave has at some point in the past went from doing what he does best (personal finance) to being an expert on all things financial. This is a good example. He clearly has done zero research into bitcoin, and yet he is an expert on it. Now, I’m not saying bitcoin is a good investment, but I am saying that Dave clearly doesn’t understand what it is, or what makes it valuable. In fact, he gets things exactly 180 degrees wrong. Bitcoin’s strengths are that it doesn’t depend on a government backing it. Like gold or silver, and unlike paper money, bitcoin has an inherit value (a hard to find number with certain cryptographic properties). He also conflates the the failure of MtGox with the bitcoin currency itself. That’s a bit like saying dollars are junk because some savings and loans failed during the 70s (which weren’t FDIC insured and real people lost real money). From: [email protected]<mailto:[email protected]> [mailto:[email protected]] On Behalf Of Webster Sent: Thursday, March 06, 2014 2:17 PM To: [email protected]<mailto:[email protected]> Subject: RE: [NTSysADM] OT:Bitcoin Just because he thinks Bitcoins are a pile of crap and a scam? Webster From: [email protected]<mailto:[email protected]> <[email protected]<mailto:[email protected]>> on behalf of Ken Cornetet <[email protected]<mailto:[email protected]>> Sent: Thursday, March 6, 2014 12:28 PM To: [email protected]<mailto:[email protected]> Subject: RE: [NTSysADM] OT:Bitcoin I have great deal of respect for Dave’s financial philosophy and advice for the most part, but Dave long ago lost the distinction between his opinions and facts. From: [email protected]<mailto:[email protected]> [mailto:[email protected]] On Behalf Of Rod Trent Sent: Thursday, March 06, 2014 12:59 PM To: [email protected]<mailto:[email protected]> Subject: RE: [NTSysADM] OT:Bitcoin Oh, he does. He says it pretty plainly. From: [email protected]<mailto:[email protected]> [mailto:[email protected]] On Behalf Of Tigran K Sent: Thursday, March 6, 2014 12:37 PM To: [email protected]<mailto:[email protected]> Subject: Re: [NTSysADM] OT:Bitcoin He doesn't understand what bitcoin is. On Thu, Mar 6, 2014 at 9:21 AM, Rod Trent <[email protected]<mailto:[email protected]>> wrote: To me…this pretty much explains the whole Bitcoin scam… http://youtu.be/32l1ht1wlLI From: [email protected]<mailto:[email protected]> [mailto:[email protected]<mailto:[email protected]>] On Behalf Of J- P Sent: Thursday, March 6, 2014 12:02 PM To: [email protected]<mailto:[email protected]> Subject: [NTSysADM] OT:Bitcoin http://www.pcworld.com/article/2105280/10-questions-on-the-mt-gox-implosion.html Jean-Paul Natola
