The demise of Bitcoin?

[Ed P]

According to MarketWatch, Bitcoin is close to a death spiral.

I have no personal opinion whether or not this is true, but the value of any currency depends on the confidence that the holder will be able to trade it for desired goods, without such confidence currencies inevitably depreciate.

Topic

[PlaneMan]

Not really surprising, it’s just another form of currency with nothing to back it up, like most currency these days. Long gone are the days of gold (or silver) being used to back currency.

More reading on Fiat money, which like the USD the GBP is now.

[Richard]

It has been no surprise to many who could not see anything behind the craze. It felt too much like many of the old pyramid style games beloved of many. While many paper or Fiat currencies (thank you PM for the link) have a vestige of something behind them such as a government, the lack of such recourse simultaneously attracted some and repelled others. I never worked out how you could value such an ephemeral item, though other paper items do sell and appreciate, just look at e.g. first day covers in the stamp world. Worthless in a postal sense but nearly priceless in a trading market. Was it popular for being popular or was there a real value proposition? I never worked that one out.

[Ed P]

Pity the Wiki did not cover the Reichsmark and the way Germany broke their inflationary spiral by declaring that each Mark was nominally backed by the land used for agriculture and business.   I still have a bundle of the inflated Marks somewhere – just a few billion or what was the price of a loaf of bread! A fascinating period of History that still accounts for many of today’s German attitudes.

[Richard]

Ed, I guess that the world of options for other inflation failed currencies was just too rich to cover them all, that example was a bad one but it has been just one of many. It is interesting that the trading vouchers have not really taken off except perhaps within very limited areas and even then I doubt that they have penetrated very far into trade.

[Bob Williams]

I always had the feeling that this would hit the rocks. As has been said, what actually backs it up?

As for the GBP and what used to back it up, look no further than Moron Broon, who sold off much of our gold shortly before the international price of gold rose like a rocket. I would still like to know what he did with the profit made from that move.

Ed, this is spot on:

” A fascinating period of History that still accounts for many of today’s German attitudes. ”

Many of my German friends in the 60’s and 70’s, spoke about the way parents, grandparents etc., impressed upon them the value of looking after their money and working hard. Their ancestors cited the struggles they had, from the 1920’s and ’30’s, to the massive amount of rebuilding and reconstruction work that West Germans carried out in the 1940’s onward. The few friends I am still in contact with today, still apply those lessons to their lives and have tried hard to instruct their descendants in the same manner. Now a reunited Germany has a Chancellor who grew up in a totalitarian state, with shortages of everything most of the West take for granted, the lesson has been repeated on a national scale.

When the Thought Police arrive at your door, think -
I'm out.

[Richard]

Bob, I am inclined to agree though everywhere tends to fight today’s issue with yesterday’s tools and ideas. Having said that, I do find the current wave of complaints about how high living costs are for renters and would be house buyers a wee bit self serving. They were not that darned easy in my time and we did not have the same ways to spend money that exist today. A mobile phone required a boot filled with electronics and very deep pockets for example. Food was something you ate or you went hungry, rather than photographed and stared at and for a while you needed the right coupons or had Hobson’s choice at the shops.

[The Duke]

As soon as countries started to push to legistalte it it was doomed. As that was its only usp. Also the time it takes to make trades with it is broken, and there have been to many exchange breaches (thefts), so faith was undermind early on.

My BiL last xmas told me of this new great thing, “bit coin” , I laughed and told him he was 5 years too late. Then my tale of choosing to fold over mining. Then they give you a few hundred coins just for starting to mine, and my rig then could of knoch a few a week out. I’d of probably got 1000 before my rig was no longer up to it, and probably upgraded and chased the coins.

I’d of cashed out at the $1000 a coin point peronally. Even though they went up to to about 15k a pop at some point, and are around 4k atm. But I’d of been happy with the 1k a pop for 1k coins. (I hate bit coin), and not impressed with Stamford either. Lol.

[Author]

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