Bitcoin - What do you think?

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MetroplexJim
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2018/01/01 11:32:27 (permalink)

Bitcoin - What do you think?

This will be a shock to many of you, but I really do not know what to "think" about it.
 
As an economist I am clear about what is - and is not - "money". 
And, I have taught monetary theory and banking as a professor.
 
Frankly, I have taken this whole crypto-currency with the same jaundiced eye I had about the 'dot.coms' in the late nineties and NINJA loans and the irrationally steep run-up in residential real estate prior to the Crash of 2008.  In both cases I went to the cashier's window of those casinos and cashed-in while the suckers were still playing with frenzy, totally oblivious to economic principles, history, and reality.
 
I looked at the whole crypto-currency "thing" with intellectual curiosity and amusement until the venerable Chicago Board of Exchange recently took the decision to list them and facilitate speculative trading in them. 
 
To those who would play in this shiny, new casino I hereby give fair notice about the CBOE: "just because" they also, inter alia, trade wheat, pork bellies, and gold does not mean that crypto-currencies have any intrinsic value.  The CBOE makes its living from exchange volume - much like a casino makes its money from the volume of gambling going on under its auspices.
 
Please know that, had the CBOE been in business in 1619 they surely would have been trading tulip bulbs.  
 
In sum:  Caveat emptor
 
 
 
 
#1

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    Root-Beer Man
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    Re: Bitcoin - What do you think? 2018/01/01 12:30:40 (permalink)
    Meh. Bitcoin has the same intrinsic value as all fiat currencies. If people have faith in it it has value. If not, then no value is accorded.  Bitcoin certainly has more current value than the paper the Federal Reserve is printing like mad. Caveat emptor, indeed.
    #2
    scrumptiouschef
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    Re: Bitcoin - What do you think? 2018/01/02 13:03:28 (permalink)
    MetroplexJim
    This will be a shock to many of you, but I really do not know what to "think" about it.
     
    As an economist I am clear about what is - and is not - "money". 
    And, I have taught monetary theory and banking as a professor.
     
    Frankly, I have taken this whole crypto-currency with the same jaundiced eye I had about the 'dot.coms' in the late nineties and NINJA loans and the irrationally steep run-up in residential real estate prior to the Crash of 2008.  In both cases I went to the cashier's window of those casinos and cashed-in while the suckers were still playing with frenzy, totally oblivious to economic principles, history, and reality.
     
    I looked at the whole crypto-currency "thing" with intellectual curiosity and amusement until the venerable Chicago Board of Exchange recently took the decision to list them and facilitate speculative trading in them. 
     
    To those who would play in this shiny, new casino I hereby give fair notice about the CBOE: "just because" they also, inter alia, trade wheat, pork bellies, and gold does not mean that crypto-currencies have any intrinsic value.  The CBOE makes its living from exchange volume - much like a casino makes its money from the volume of gambling going on under its auspices.
     
    Please know that, had the CBOE been in business in 1619 they surely would have been trading tulip bulbs.  
     
    In sum:  Caveat emptor
     
     
     
     


    Someone called it "make-believe internet money" Best description I've read so far.
    #3
    WarToad
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    Re: Bitcoin - What do you think? 2018/01/02 13:44:52 (permalink)
    Too turbulent for my investment needs.  Is there value there?  As much as penny stocks.   You always hear about "that one person" who made a mint.  Little about the legions who made nothing or lost their shorts.  I consider it fiscal Russian roulette at this young stage.  Pass.
    #4
    MetroplexJim
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    Re: Bitcoin - What do you think? 2018/01/02 16:57:02 (permalink)
    Root-Beer Man
    Bitcoin has the same intrinsic value as all fiat currencies. 

     
    Yes and no.
     
    The U.S. Dollar is 'backed' by the value of the collective debt - public and private - in the United States.  However, should a considerable portion of that debt "go bad", we would have 2008 (or worse) happen again.  The average person does not know how close we came to a collapse of the banking system, nor do they appreciate the truly heroic actions of Ben Bernanke and Hank Paulson - and, yes, even of the politicians.  This speaks for itself in that regard:
     
     
     
    Throw a paper dollar into a fire and it's gone; melt a double eagle gold piece and you have (almost!) an ounce of gold.  However, along with representing the value of debt, the Dollar is also "Legal Tender"; refuse payment in dollars and the debt can no longer be legally enforced.
     
    In contrast, however, Bitcoin is 'backed' only by its originators' non-contractual promise to 'keep it scarce' and is nowhere Legal Tender.
      
    WarToad
    Is there value there?  



    Only what a willing buyer will pay a willing seller.
     
    It fails the #1 test for money: being universally accepted as a medium of exchange.
    #5
    kellyon
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    Re: Bitcoin - What do you think? 2018/01/05 05:49:15 (permalink)
    I think it's an interesting new phenomena in the investing world, but bitcoin will collapse. Other currencies will pop up, but bitcoin will go down in flames after many make millions/billions and many lose everything. The comparison to the tulip fever will hold.
    #6
    tmiles
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    Re: Bitcoin - What do you think? 2018/01/05 20:33:59 (permalink)
    A guy on the radio said that one of the reasons that a bitcoin is "worth" $20k, is because it takes that much electricity to "mine" one. Early coins were easy to mine, but now it is hard.("mines" exist inside computers). 
     
    Do I "wish" that I'd invested $25k a few years ago to have hundreds of millions today,,,,,,,,,,,,,,,,,yeah but I know that I wouldn't have. IMO it will crash when the US Govt makes it not legal to own. And why would they do that? Only to cut back on tax evasion, to stop NoKo  from using it as a "banking system", and to take funding from hackers and other unsavory people. I expect that very smart people in DC are looking at bitcoin at this very time.
     
    But then again, I stopped my father from investing in Google, after a news story about the new company about to go public. I assured him that he could get it cheaper after the initial excitement died down.    I realize that Google has an actual product line and that bitcoin is just a store of value.................I only use the example to show how wrong I can be.
    #7
    SteveHalloway
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    Re: Bitcoin - What do you think? 2018/01/09 04:32:48 (permalink)
    tmiles
    Do I "wish" that I'd invested $25k a few years ago to have hundreds of millions today,,,,,,,,,,,,,,,,,yeah but I know that I wouldn't have. IMO it will crash when the US Govt makes it not legal to own. And why would they do that? Only to cut back on tax evasion, to stop NoKo  from using it as a "banking system", and to take funding from hackers and other unsavory people. I expect that very smart people in DC are looking at bitcoin at this very time.

    Good point!
    #8
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