In today’s amazing world you may have missed this or misunderstood it. It has had me mystified until recently.
Bitcoin is the brain child of several unknown Japanese computer geniuses who use the pseudonym “Satoshi Nakamoto”. Bitcoin employs block-chain software (a recent invention) and allows for private, cheap (free), and invisible transfers of “money”. Bitcoins are unregulated. The theoretical maximum number of bitcoins is 21 million, and there are believed to be 16.4 million in circulation now. It is also believed that they are primarily used to evade taxes of various sorts and to buy illegal goods. They are found by “mining” which requires a bitcoin “wallet” and a very powerful computer.
If that does not confuse you what follows will.
Bitcoins are now selling for in excess of $15,000, up from under $100 just months ago.
To the best available reports bitcoins do NOT convey to any owner of coins any interest in the possibly valuable underlying software that enables it.
Many of the leading financial minds in the US—like Buffett, Dimon, Bogle and Greenspan—have dismissed bitcoin because it was created out of nothing and has no real value—other than that given by an artificial a shortage of notional coins that have been promoted cleverly to attract innocent sheep as buyers.
The block-chain software may yet have some utility in financial transactions but must be seen as completely separate and distinct from bitcoins.
Currencies like the dollar, yen, and euro exist in essentially unlimited numbers thanks to the banking systems that regulate their use. Their fluctuating values relate to comparisons to other currencies and rare things like gold and silver. Their real value—if it is real?—is purely notional and ultimately based on confidence in the national issuers and their countries’ economies.
Consequently, bitcoins are simply nothing but a clever scam and the only winners will be those who sell theirs before the price ultimately and surely falls.
Bitcoins will be remembered in history the way the name Ponzi is remembered.
But block-chain technology may yet develop into something worth remembering.