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Random thoughts on Bitcoin

Nov 19, 2018   [permalink]

So, on a forum some guy posted saying, "wow, check out BTC's growth chart!" plus a referral link to a Bitcoin trading site (presumably one from which he gets a referral fee). :}

Putting on my Computer Science professor hat for a moment, my thought was...

Yep, check out that chart -- a classic bubble. Like "Tulip-mania" in the 1600s, except once the value cratered, you could at least plant the tulip bulbs and get a flower. :)

Bitcoin is backed by nothing, and has no intrinsic value. It's basically just a number.

It may be useful for instantaneous transactions where the value doesn't change, e.g. a low-fee, instant exchange from USD to EUR using BTC as the intermediary at an agreed-upon rate[Update: But wait! It's now very slow, and costly, so scratch this idea...] (but even then you'd have to be sure the liquidity is there; see the Zimbabwe example for where it isn't; and this purpose isn't related to the amount 1 BTC is worth -- it could be worth $15,000 or a penny, so long as it doesn't change during the USD->EUR transaction). Not to be confused with the blockchain concept, which is entirely separate from bitcoin; it has potential uses (but isn't something you can buy).

As for bitcoin as an "investment", good luck with that (luck being the operative word; unless you have a time machine).

So, hey, psssst, I got this random number in my head... I'll sell it to you for $15,000 -- maybe you can sell it to some sucker for $30,000! :) :)


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