Bitcoin price CRASH warning: Top economist says Bitcoin could end up like Tulip Mania
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What is going on? Before getting into the details, I should say that money in general is not a simple topic. Most people have a good understanding of how gold, which is something of a primal money, is mined, refined, and shaped into ingots or coins. Slightly less obvious is why it has a monetary status unlike, say, platinum. But it is rare, pure, easily divisible, and has been highly cherished throughout the ages. Paper money is more complex. From throughthe US dollar was backed by gold, meaning its value was legally defined by a certain weight of the metal.
That ended inwhen Richard Nixon shocked the world by breaking the link to gold and allowing its value to be determined by trading in the foreign exchange markets. Among its many functions, the Federal Reserve is supposed to allow the issuance of just the right quantity of dollars — email of the day on bitcoin and manias to keep the wheels of commerce well-greased, but not so much that things slip off the tracks in a hyper-inflationary crisis.
But Email of the day on bitcoin and manias is another animal entirely. Despite repeated attempts, no one can figure out who he is, appropriately enough. What that all means is that Bitcoin and the rest are electronic currencies — pure data entries in electronic ledgers — created and transferred by networked computers with no one in charge. The role of cryptography is not merely to guarantee the security of the transaction, but also to generate new units of the currency.
The creator earns the value of the new coin when it enters the system. You can buy or sell Bitcoin on online exchanges, and there are even a few Bitcoin ATMs scattered about. The closest one to me in Brooklyn is about two miles away; the closest US dollar ATM is at the deli half a block away. Mining requires enormous amounts of computing power. The bulk of this mining goes on in China, where most of the electricity comes from coal, so this is a dirty business. As the limit is approached, the coin-creating algorithms get more difficult to solve, meaning more computing power is required, and more carbon is generated.
Even the most seemingly immaterial of things often have deeply material roots. I should emphasize that the algorithms used to generate Bitcoins are pointless. They serve no useful purpose. What about it as money? You draw down the store of value the cash on hand or in the bankand use it as a medium of exchange. The value of the US dollar is that everyone in the US and beyond recognizes the currency as fulfilling successfully all these tests of money.
The dollar is valorized by the goods and services that it can buy. Bitcoin has serious problems in all three aspects. Almost no one accepts Bitcoin, nor do any businesses of note keep their books in Bitcoin; it fails both as unit of account and medium of exchange. And its short history — the first Bitcoins were minted in — has been turbulent. There have been multiple thefts, frauds, and hackings, which partisans dismiss as growing pains. But with no regulator, no deposit insurance, and no central bank, this sort of thing is inevitable.
Introduce regulators and insurance schemes, though, and Bitcoin will lose all its anarcho-charm. Gold is like Bitcoin in being a stateless form of money, which is why libertarians love it, but it does far better on the store of value measure. The price of gold varies by less than 1 percent a day — email of the day on bitcoin and manias its price is still more volatile than the much-maligned US dollar.
It is a semi-reliable store of value. But gold does little better on the other measures: The political cast of the Bitcoin universe email of the day on bitcoin and manias mostly libertarian, but it has a left wing. But aside from anonymity — which is nothing to sneeze at! The switch to paper money was a response to the crisis of the old gold-centered system. Leaving aside the entrepreneurs and speculators, who are just looking to get rich, the political vision of Bitcoin is of a decentered, stateless world, with competing money systems.
That would mean no fiscal or monetary stimulus in an economic crisis — just let things run their purgative course. And we should have done the same in —9. Cryptocurrencies would be an advance on the idea of competitive currencies — improvised currencies that could challenge the state monopoly itself. Actually, we had competing currencies in the nineteenth century; all kinds of little email of the day on bitcoin and manias issued banknotes that often turned out to be worthless.
Of course, there is no inflation, and government money has proved far more stable than its alternatives, either gold or Bitcoin. But libertarians — and there are a lot of them in tech and finance, the co-parents of Bitcoin — are always worrying about inflation; they worry about it the same way that hedge fund titans see talk of lifting their tax breaks as a rerun of Nazi Germany.
But unlike more conventional speculative assets, its value is completely immaterial. Stocks are ultimately claims on corporate profits, and bonds are a claim on a future stream of interest payments.
You can say no such thing for Bitcoin. Its only value is what someone else will pay for it later today or maybe tomorrow. And what email of the day on bitcoin and manias speculative email of the day on bitcoin and manias it is. Everyone wants to be part of the action.
Bitcoin imitators are sprouting up daily. The company has disclosed almost no information about itself, and almost nothing is known about its founders. The firm has no agreements with any cryptocurrency promoters, nor does it have prospects for any. The mere name change did the trick. For that to happen, the bubble would have had to be financed by banks that would be put at risk of failure when things fell apart. But shirts will be lost. More seriously, this bubble shows that some people have too much money.
Our society — and I mean that broadly, since a lot of the money going into Bitcoin looks to be coming from Asia — has plenty of cash for speculation and not much for human need. Bitcoin, once a fairly arcane topic, is now everywhere. The Health of Nations Issue The First Red Century Issue By Taking Power Issue Journey to the Dark Side Issue The Party We Need Issue Rank and File Issue Between the Risings Issue Up From Liberalism Issue Uneven and Combined Issue Struggle and Progress Issue Ours to Master Issue Paint the Town Red Issue A World to Win Issue Alive in the Sunshine Issue Misery Index Issue Assembly Required Issue 9: Modify Your Dissent Issue Phase Two Issue Liberalism is Dead Issue 2: And Yet It Moves Issue 1: