It is a matter of values rather than beliefs. If people stopped valuing flowers, the tulip bulb would cease to have value. Likewise if people stopped valuing computer science, bit coins would cease to have value.
Harry On Wed, Feb 26, 2014 at 1:55 PM, Jed Rothwell <jedrothw...@gmail.com> wrote: > Jones Beene <jone...@pacbell.net> wrote: > > >> The real problem with Bitcoins is not really security. Instead it is >> that there is "nothing there, there" nothing but speculative fever. >> >> >> >> Anyone contemplating any renegade currency should read up on the Dutch >> Tulip bubble of 1619 and beyond. . . . >> > > See the book "Extraordinary Popular Delusions and the Madness of Crowds" > by Charles Mackay, 1841. This covers tulipmania, the South Sea bubble, and > in later chapters the Crusades and witch mania, and various other incidents. > > Sometimes the objects of a bubble do have value, but they are valued all > out of proportion during the bubble. There is "something there, there" with > tulips. They are still a major source of income in the Netherlands, and > still popular. But you do not find one bulb worth as much as a mansion. The > 2008 crash was caused by overvalued real estate and by crazy schemes that > supposedly eliminated risk. Overvalued did not mean that real estate has no > intrinsic value at all. > > Bitcoins, on the other hand, will have no value at all if people stop > believing in them. > > Sometimes things have intrinsic value but technology comes along and > reduces the value. In 1917, Morton Plant traded a Fifth Avenue brownstone > mansion for a string of pearls worth $1 million. Around 1900, Mikimoto was > developing ways to culture pearls. By the 1920s this was eroding the value > of pearl necklaces. Today a pearl necklace is worth nowhere near as much as > a brownstone mansion in New York City. > > - Jed > >
