Rantings and tirades of a frustrated economist.
Interesting thoughts, why humans gravitated towards precious metals as currency has puzzled me too, like you said you can't eat them. It's a good hypothesis to assume we did so because of their usefulness as currency, but I have also wondered if perhaps it was some instinctual reverence we hold for them - a cross cultural signifier of status when worn and perhaps more importantly items of (potential) beauty in themselves. Wearing a £20000 paper note of currency would not have the same effect as a £20000 gold watch I fear. If it is the latter perhaps these metals do have "true" intrinsic value beyond being useful currency. I think even men can appreciate the natural beauty of certain gems or finely crafted and polished gold and silver, while perhaps drawing the line at adorning themselves with it like Liberace. Of course you can turn that around and say we only consider certain items beautiful because our herd instincts tell us what is valuable is desired by our peer group and visa versa - I don't doubt that is part of it looking at the garbage that passes for modern art these days. Whether there is such a thing as universal beauty is an interesting topic.With regards to bitcoin, if a useful currency with "true" intrinsic value exists, then it should be obvious that bitcoin is not it. If the intrinsic value is only in an item's usefulness as currency, then in my opinion it's still not the time to gamble on a longterm bitcoin investment, if ever. I think it will hit double digits before too long.Bitcoin is overvalued at the moment. The current exchange rates are so far removed from faith in the technology. The vast majority of investors just jumped on the bandwagon blind. It will correct itself eventually as all bubbles do. The current value represents faith built on faith built on out-and-out mania, not the technology itself, which is not only free to use but has and is still being refined by others.Many altcoins that have popped up recently did so in order to solve _bitcoin's_ problems such as transaction times, more accessible mining (helps avoid the dreaded 51% attack) and even more desired - better anonymity. Yet bitcoin remains the leader.Compounding that problem is that the bitcoins currently changing hands are a fraction of the total bitcoins ever mined. Most bitcoins sit in cold storage, forgotten, or are slowly being microsold by large holders (who fear crashing the market and the interest along with it). Scarcity within a currency of designed scarcity has pushed prices much higher than they should be. In fact that volume issue seems to have a much larger effect on the market than good or bad publicity does for bitcoin.At best I see bitcoin as a proof of concept currency, good only for a bit of day trading fun. Its technologies may well influence future currency (perhaps one backed by more tradtional gold, who knows), but bitcoin itself won't weather the storm as anything more than a footnote in the history of money.Apologies for the wall of text. To sum up, the clumsy point I'm trying to make is if the technology is what gives bitcoin its value as a future currency, it has already lost the race. Bitcoin is not the "next gold", it is to that currency what sacks of rice are to gold coin.
"Why Bitcoin Has Value"Because other people are willing to pay for it.
The intrinsic value of gold/silver is irrelevant compared to its monetary value. That's why bitcoin is the perfect money: no intrinsic value necessary.
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