Courtesy of Mish.
Of all the topics that readers have pleaded me to write about for months but I never did until now, “bitcoins” are at the top of the list.
In private emails, I stated on many occasions “bitcoins are a scam”. I now take that back, “scam” is not the correct word. Others whose opinions I highly respect, state the same thing.
For example, Geoff Turk at GoldMoney stated in an email response:
“I have spent quite a bit of time researching Bitcoins and have not found anything scam-like about them. Price volatility is another matter, and that is a result of an increasing demand for a relatively scarce resource. There may be individuals attempting to manipulate the price in some way, which we know is possible in any small (or even not-so-small) market. However, in my opinion the Bitcoin protocol itself is quite sound, and it creates an interesting hybrid of a commodity without corporeal existence that is nonetheless limited in supply.“
That was not an endorsement of bitcoin, rather it was a statement that my labeling of bitcoin as a scam was incorrect. I agree, with apologies offered to bitcoin.
OK But What Is Bitcoin
If bitcoin isn’t a scam, then what is it? I have struggled with that question, which explains why I never have written about it.
Wikipedia offers a history and description of bitcoin that is rather fascinating.
Who Accepts Bitcoins?
For months I would search for companies accepting bitcoins as payment and found scant offerings. The same could be said for gold.
Yet, the total value of gold at a price of $1,600/oz would be something like $7.9 trillion. The total value of bitcoins is extremely volatile, fluctuating around $1 billion. Simply put, there is no comparison in terms of total price or volatility.
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