Bitcoin: A new South Sea Bubble?

I have to admit I don't "get" Bitcoin and other Crypto currencies.

My concern is that there is nothing "behind" them, and despite the huge growth in the price of crypto currencies, I am reminded of the Dutch craze for tulips, and the South Sea Bubble...



 

cowgoesmoo

Old-Salt
I like the idea of blockchains and currency detached from government interference but yeah its seems a bit wild-west at the moment with rampant fraud and manipulation. OTOH I know of people who've made life-changing sums of money just by speculating on random coins so perhaps there's something to it!

I think there will be another bust in the next couple of years with loads of retail punters losing their shirts, followed by regulation "to protect investors" which will relegate crypos to a niche backwater of investing sadly.
 
I have to admit I don't "get" Bitcoin and other Crypto currencies.

My concern is that there is nothing "behind" them, and despite the huge growth in the price of crypto currencies, I am reminded of the Dutch craze for tulips, and the South Sea Bubble...



Its just a more sophisticated classic pyramid scheme than an average one and eventually, if/when it ever runs out of investors the crash will come.
 
I have to admit I don't "get" Bitcoin and other Crypto currencies.

My concern is that there is nothing "behind" them, and despite the huge growth in the price of crypto currencies, I am reminded of the Dutch craze for tulips, and the South Sea Bubble...



Yes. And no.

It's a fiat currency and has value as long as people can trade in/with it. The crypto part of it is only important because that is the built-in mechanism that makes it artificially scarce - without that it would have no value.

Is it a bubble? That depends. It's not suitable as a currency (rather than an investment) as it stands because of the wide swings in value. Possible realistic options are:

1. value hits a peak, no more money to be made, investors move out and value crashes.
2. people lose interest in it, it fades out of usage.
3. value stabilises, it hangs on as an "anonymous" way to spend (it isn't but people think it is).
4. value stabilises, it gets regulated (or possibly the other way around), it's just another EFT method.
 
I have a chap staying at my place at the moment ( no buggery involved ) who bought a Bitcoin a few years back for £5 and it is now worth £80. ( There have been massive fluctuations between then and now )

Personally , I believe it is mostly Emperors New Clothes type of bullshit investment.

You might get lucky, you might lose everything.
 
That is my concern...
Like any risky investment so long as people understand it could lose 90% of its value then it of itself is technically alright as block chain is pretty secure technology in terms of encryption keys (that said, how safe is it from a state actor is certainly a moot point).
 

Dumbas

Clanker
I own a small amount. Nothing I can't afford to lose, so my gains aren't life changing.... unfortunately...

I have found the process of buying and holding crypto interesting. It has made me question the value of things. It's impossible to value something like Bitcoin, but then what value does a pound coin or an ounce of gold actually have? These things only have value because we all believe they have value. The day we stop believing, then these things have no value.

I also found crypto challenging in that I can't see it, so how can I protect it. But then, I can't see my money in the bank either. I know there are risks in storing crypto, but then physically holding gold, watches and art is risky. As for cash, that's really risky to physically hold. As for cash in the bank, we all just assume that banks are safe.

There are certainly some paradoxes when handling Bitcoin.

1. There's no central bank and no central registry, so governments have no way to track who is paying who. Transactions are 24/7 and nearly instant as there's no middleman. Some see this as a strength, however if you lose your passwords or your hard drive or send the coins to the wrong address, there's no central bank to seek help in resolving the problem. The Bitcoins are lost... Permanently...
2. People believe Bitcoin offers a store of value. But the price is so unstable, it's hard to see how it's a store of value. That might change. But if the price is stable, why own it?
3. Bitcoin is seen as a form of democracy, the play for the small guy as the "rent-takers" are excluded. Anyone with access to the Internet and a means of payment can own Bitcoin and trade with anyone else with no middleman "clipping the ticket". However, the transaction costs are large. It can be 2% in and out, so you need a 4% rise to break even.

If you are interested in crypto, maybe buy a small amount and see what you think.

Happy Dogecoinday420..... Go figure....
 
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