Purpose of Bitcoin is to launder drug and other illegal money, to avoid paying taxes, etc. underlying objective is to undermine US dollar, which is why promoters often most visible are Chinese.
The US dollar mostly exists as a cryptocurrency.
Sure crypto-$ makes sense. It makes electrons a commodity with value.
Yes, I said ‘electrons’. Value is pegged to their scarcity in the market.
Crypto currencies are payment for work done, calculations completed successfully on a computer, and rewarded in a “script” of sorts, all notated in a “block chain”, or a distributed, decentralized spreadsheet.
There are a finite number of “coins” in a given crypto currency, and so as more work is done, each new coin that is earned via calculations takes longer and is worth more in conversion to dollars.
There is much more to the whole scheme, wherein lies weaknesses and hackability, notably with “wallet accounts” where earned coins are accounted for. I don’t pretend to completely understand the entire concept, nor commit to defend its viability, and I am sure others can explain it all with more accuracy and comprehensiveness. My two cents.
They are not currencies, and the crypto part is there only to make it sound like they can be hidden. (crypto = hidden, in Greek.).
You are not going to be able to hide money from the government with bitcoin. It is a payment system. Some businesses accept it as money. There is no FDIC insurance on it.
It is an investment as long as most people think it is, and they keep buying it, jacking up the price.
It can all disappear in a flash, and you will have no recourse. Don’t expect the government to track down the source of the loss.
Then don’t buy them. Its pretty simple.
Regards,
facilitating transactions;
a store of value;
lending of last resort.
Any form of money should be evaluated according to those criteria.
Here's one of many articles that can be found on the Internet that better explain money's required properties (by the way: "Lending of Last Resort" is not among them):
https://www.milesfranklin.com/the-seven-characteristics-of-money/
Regards,
“It is only valuable because the government guarantees it is”
Uh, the government doesn’t. WE DO.
The power to tax people (using guns) is the “intrinsic value” behind fiat currencies. That’s the function of Treasury bonds: a credit is created to fund the currency issued.
In other words, the government uses the future labor of the citizens as collateral when it prints money (or changes a balance in a computer).
And ya know what that means, kiddies?
We’re their slaves. Literally.
IMHO cryptocurrencies most resemble stocks. Stocks also are limited in quantity by the directors, who stand to lose by irresponsible expansion of the quantity of the stock outstanding.The other thing a cryptocurrency is is a brand. Cryptocurrency software is, AFAIK, public domain. And that means that you could create your own cryptocurrency which would be exactly as good ay Bitcoin excepting only the branding problem you would have trying to stand out among the (theoretically infinite number of) competing cryptocurrencies.
Bitcoin is the first and most famous cryptocurrency, and therefore is the strongest brand. I get the willies thinking of investing in any other cryptocurrency - not that I have invested in Bitcoin, either.
This sentence is the tell.
He's a keynesian, so deflationary-money haters are gonna hate.
No you don't. You cannot be convinced, no matter what. You are a central-bank loving Keynesian.
Hayek's plan is described in his book Denationalisation of Money (free PDF). In this scheme, banks issuing their own currency would be forced by market pressure to keep the buying power of their currencies as stable as possible. Cryptocurrencies (unregulated commodities being whipsawed by speculators) are completely different.
The creator of bitcoins seems to have wanted to have something not controlled by central bank; thus everyone gets the blockchain rather than a central clearinghouse. Yea for decentralization!
However, as the difficulties ramp up, the effect is that a very few exchanges are consolidating all the transactions and ‘mining’ with the effect that about 4-6 mega-entities run everything from a trusted position, without even the recourses of physical stability, attachment to a stable political entity, or auditability.
If (when; it’s already happened several times) the people in charge of these exchanges are hacked, ‘hacked,’ or simply let their virtual personae vanish while they walk off with fortunes in cryptocoin, there’s exactly zero to be done about it.
As others noted, a lot of the traffic is gray or dark, and so there’s a very good chance some or all of the hubs are controlled / strongly influenced by the bad people on the planet.
Overall, definitely not meeting the original, rather worthy, intent at all.
No they don't. And the Lightning Network, a second layer built on top of the bitcoin blockchain, already live on the mainnet, speeds transactions waaaay up (multiple millions per second) with negligible fees (makes micropayments feasible).
The author of this article is uninformed.
“Cryptocurrencies are more like a religion or a cult, not a rational economic phenomena. I await my enlightenment.”
Nope, but ignorance is bliss. If you were truly seeking enlightenment, you would be doing real research instead of writing nonsense clickbait.
That's not correct.
If one holds cryptocurrencies, it is for speculative reasons, not as a store of value.
That's not correct either.
There are many things I don't get, but I have put some effort into understanding the mechanics of cryptocurrencies.
It's not evident from the article. He doesn't understand the aesthetics of various CCs. He thinks it's a Chinese plot to take over. He doesn't understand how CCs store value: it is temporary since the underlying ciphers will be cracked in decades. A CC store of value has to be monitored and managed, can't just throw it in a mattress and forget about it like gold. There will always be better and longer-lasting CCs and it is up to hodlers to figure that out or pay someone else to manage their CCs.
Other points in the article are more correct although exaggerated. The fees about $3-4 although they peaked above $50. I realize bitcoin has not been successful for day-to-day transactions, but real world transactions requiring dollar conversions will fade as virtual world transactions denominated in CC take over.
The author makes some very good points. But this....
“Fiat money issued by a credible modern central bank is vastly superior to money based on real assets like gold, not least because the supply of fiat money can be adjusted to best serve the economy, rather than be dominated by the production of some natural resource.”
This is where he lost credibility.
Who wrote this? some apparatchik at the Federal Reserve?
Bitcoins etc are just made up money like er... our dollar or the yen or the EU funny looking money. The Feds want to control the dollar. I just wish they would do a better job of it. If they did there would be no bitcoin.
They’re to provide some stability and protect us against the ravages of “official” currencies.