The price of Bitcoin leaped 128% in one month from mid-July to mid-August 17, 2017, on no news! Despite price fell to $3,200 from its all-time high of $5,000 after China banned initial coin offerings (ICOs) and exchanges, it’s back over $4,100 now. Two years ago, it was only $225. Another popular cryptocurrency, Ethereum, is even more amazing. It has outshined Bitcoin’s big gain with a year-to-date performance of over 37-fold at times. Many other cryptos have achieved at least 100% gain this year. We are undoubtedly witnessing a bubble.

Bitcoin enthusiasts claim that bitcoin is real money like gold and silver. But what is money?

Aristotle defined four characteristics for good money:

1. It must be durable, and its value should be reasonably stable over time. Bitcoin can hardly satisfy the requirement of durability because the coins would be nowhere to be found if there is a long-term power or Internet outage. Even if the power grid is not disturbed, its violent fluctuations in price make it unusable for savings and hence borrowing or lending.

2. It must be portable, which is a plus for Bitcoin.

3. It must be divisible. Again, bitcoin fully satisfies this requirement.

4. It must have intrinsic value, and cannot be created out of thin air like what Central Banks do nowadays. Like gold, bitcoin has a limited and finite supply.

Even if Bitcoin processes all the above essential features, I still don’t believe it can become legal tender. The reason is very simple: no government will voluntarily hand over the power of their monopoly on the issuance of money to another party. They need the power to print money out of think air to inflate away the mountain of debts they have accumulated over the years. Like it or not, regulation is coming, defeating the very purpose Bitcoin is created for.

Risk is most dangerous when it is least apparent, and least dangerous when it is most apparent.- JIM GRANT

 

免責聲明

 

本文乃作者個人意見並不構成任何投資建議。

作者不承擔任何因使用本文章所提供的資訊內容或資料所產生的直接、間接、附帶的、特別的、衍生性或懲罰性賠償,包括收入、利潤、經營、商譽等損失或其他無形損失。作者不負責任何因下載本文章所引致的電腦病毒感染、通訊系統故障或其他故障、越權存取、資料刪改、遺漏或其他錯誤、資料被盜或毀滅所導致的損失。

如本協定的中、英文本出現分歧,以英文文本為准。

 

This newsletter represents only the opinions of the author. Any views expressed should not be construed in any way as an offer, an endorsement, or inducement to invest.

In no event shall the author be liable for any direct, indirect, incidental, special, consequential or exemplary damages including damages for loss of revenue, anticipated profits, loss of business, goodwill, or other tangible or intangible losses resulting from the use of any data or information provided in this article.

The author disclaims any liability and losses consequent upon the downloading of this article which results in computer virus infections, communication network failures and other failures, unauthorized access of all types, data alterations and omissions and other data errors, and data theft or destruction of records.

In case of discrepancies in the Chinese and English versions of this agreement, the English version shall prevail.

 

版權所有,不得轉載。