Some thoughts on Bitcoin (and why I don’t buy it).
What is the value? → can send something of some value from A to B without official intermediaries. It’s decentralized.
- Is this appealing to the average person going through their days? Maybe, but not really. All that they want is to buy and sell goods, send money, etc. without hassle and as cheaply as possible.
Who seems to care about Bitcoin?
- People interested in preserving and/or increasing their wealth.
- Concerned about currency fluctuations making their wealth worth less over time.
- Looking for a safe heaven where their wealth remains the same, or increases, relative to some spending power unit they will later use it in or pass it on as inheritance (be is USD or something else.)
- Hobbyists
- Central bank haters
A main problem with Bitcoin is that some people are going into it thinking of it as an investment, while others say that it is meant to be a currency. It is trying to have two jobs: an efficient means of goods exchange and a way to increase wealth passively. I don’t think that the two are necessarliy compatible. Price fluctuations, which are normal in investments meant to grow and produce wealth, are not good for something trying to be a currency — a way to efficiency exchange value at a predictable cost.
Why has the valuation continued to go up?
- More of the people in the above buckets (who cares about it) have jumped into it based on a promise for the digital currency to deliver on their wishes.
- Most people that have bought bitcoin want to make money off of holding bitcoin. They are treating Bitcoin as an MLM company, profitting from being in first and convincing others to get on after.
- No currency as volatile and de-regulated as Bitcoin would be considered a safe heaven for anyone’s wealth or savings.
Last Updated on January 22, 2023 by Omar Eduardo