In the business media, coverage has been bitcoin, bitcoin, and bitcoin. That one crypto-currency began trading in the futures market yesterday, and the world did not end. In fact, bitcoin was up nicely but only on low volume. It is a triumph for the “true-believers” of bitcoin. For myself, it is just one step closer to a potential financial crisis. The total value of bitcoins is now about $300 billion and rising.
So many questions, so much hype:
1. Bitcoin solves what problem? That’s assuming you are not a criminal needing money that cannot be traced.
2. Doesn’t the world have too many currencies already?
3. Money can already be wired around the world in minutes, without the wild price fluctuations of bitcoin.
4. While there are a finite number of bitcoins, there is no limit on the number of other crypto-currencies. (There are already a hundred such currencies.)
5. It is not like gold, that you can touch. There is no collateral.
6. It is not backed by or guaranteed by any government anywhere.
If you desperately want the “cocktail party” bragging rights of owning bitcoin, I wouldn’t buy more than one.
The accounting behind bitcoin is called blockchain and may have great value, but must first demonstrate some ability to be audited. Patience is recommended.
Tomorrow, my prediction is that business media coverage will still be bitcoin, bitcoin, and bitcoin. Of course, I’m praying for an election- ANYTHING – to silence the constant, breathless coverage of bitcoin?