Might Just Break the Bank
I wrote on this subject recently but then overlooked an important point which might be decisive to understanding the subject.
The meaning of money just might be on the brink of a disaster.
Hundreds of years ago people figured out that it was too difficult and complicated to pay for a cow with tens of thousands of peas. Out of that came metal coins worth their value as metal. Finally came what we still use successfully today –various currencies –dollars, pounds and now euros – which governments recognize and accept at stipulated values.
NOW so-called Bitcoins have been CREATED and on their own have multiplied in value simply because their issuers have promised they will always be limited in number and therefore hard to get. Just because a cow turd may be hard to get does not change even its smell, much less its value!
Bitcoin is designed so that there will allegedly never be more than x number of coins issued. Artificial rareness is intended to create a premium over any underlying value – and, surprisingly, has succeeded amazingly.
When something with a unique and intrinsic value – say a Rembrandt painting – gets older and rarer, its price WILL rise because demand for unique, rare and irreproducible objects grows faster than the fixed number of such objects. So, the bitcoin ‘evil genius’ appears to be that simply if an object is in limited supply, its value also will automatically rise.
BUT why would/should a canvas with nothing on it change in value at all?
A Bitcoin is truly just a canvas with nothing on it.
Consequently, any increase in the value of such a canvas can only be based on pure imagination, hope and illusion.
Have we gone NUTS?