Tell Me Again Why Someone Should Own Bitcoin

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From practically the time bitcoin launched in early 2009, I have been wondering what the heck it is good for.

In the beginning, there were two basic theories: One said this first cryptocurrency was a refuge from government, and the other — possibly the one embraced by bitcoin’s creator — said it was an alternative to the corruption, instability and self-dealing in a financial system that had just finished wrecking itself, and everyone else along with it.

Alas, neither of these theories has panned out. Indeed, as in Monday’s market meltdown, cryptocurrencies have often done the opposite of what they were supposed to do.

It seems less like digital gold than a digital slot machine. I can’t shake the feeling that most people use it not because it’s a good substitute for anything they need, but because it’s fun to watch the reels spin without knowing whether they’ll pay off. In other words, bitcoin’s not good for much of anything except giving people who have money to burn a novel way to set it on fire.

Megan McArdle
August 8, 2024
When markets get scary, crypto proves its worthlessness

A team at work uses Bitcoin all the time. They use it to catch the bad guys.

But for me, I don’t see how it would do me any good. The volatility makes it just too risky for my tastes.

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16 thoughts on “Tell Me Again Why Someone Should Own Bitcoin

  1. The only reason it has value is HODL, and the reason it is useless as a currency is HODL.

    Liquidity is the very definition of a currency. Bitcoin is illiquid, so it’s not a currency. And if it isn’t a currency, then what is it? It represents no asset other than itself.

    • It was intended to be liquid, and still could be… but the likelyhood of that appears far lower than when it was created… and…

      After the fall of the Dread Pirate Roberts{s}, .gov is now the primary holder.

      If you could easily convert to and from fiat at a 7-11 kiosk, it would take off. Don’t hold your breath.

  2. It was and always is a grift/gift for geeks. Giving people that live/work in the computer world something of their own.
    And it’s marvelous for that very thing.
    But currency is something you can hold in your hand. Everything else has a co-owner. Like the power company. The US government/fed bankers, the USD. And so on.
    It can’t be considered a currency if someone else maintains control over it.
    If they can turn off the power, or shut down the banks, declare green dollars are no longer excepted and must be traded for red dollars?
    You don’t have a currency; they have a control mechanism.
    Silver, gold, platinum. Handheld tangibles. That’s currency.
    Least that’s the way I look at it.

  3. The way I look at Bitcoin and all its offspring is that it is fiat money, just like Continentals and Greenbacks, but without the government backing.
    For a non-government substitute that’s actually sane, I’ll take gold or silver coins.

    • It is distinct from fiat, and from many other crypto, in that it cannot be inflated without first gaining control of 51% of the mining power, something no government can presently do.

      • That is true, but keep in mind the literal meaning of “fiat” — “let it be so”. Something is a fiat currency not because it can be inflated at will, though certainly that is true for most of them. Instead, the term refers to something valueless that is magically transformed into “money” by someone’s say-so. “I declare that xyz shall be money”. (Or “legal tender for all debts, public and private”.)
        A bitcoin has no more inherent value, as opposed to fiat value, than a digital signature I might put on one of my emails.

        • Yes, but fiat is *liquid*.

          It is liquid for no good reason other than that people value it. Said another way: People value it because people value it.

          The same *could* be true for anything else (including tulips), but it’s *not* (presently), because any credible attempt to produce such a thing will presently be put down ala “Liberty Coin”, Muammar al-Qaddafi, etc.

          Barter is a bitch, because commodities are not usually all that liquid. So is bitcoin money? Compared to what? Is Fiat money? Fiat is arbitrarily inflatable, and therefore *will* be inflated, yet people still value it, for the moment. We know Fiat is going to crash.. what we don’t know, is when, or what will replace it.

          Price controls *will* remove products from the white market, where the price is lower than the cost of production, and move them to the black market, where people cannot use the courts or police, so organized crime will flourish… again… (prohibition).

          I’m guessing what’s next will be a combination of things like pre 1964 US silver coinage, common calibre ammunition, less perishable food, motor fuels, etc.

  4. “A team at work uses Bitcoin all the time. They use it to catch the bad guys.”

    Okay, Joe, that pegs the curiosity meter. Could you explain in further detail just what that means?

    • If I recall correctly, Joe works in information security. A lot of people engaged in questionable or illegal activities use Bitcoin to pay for things in the laughably mistaken belief it is untraceable!

      So if you’re looking to honeypot people willing to buy illegal goods, that good ol’ blockchain comes in real handy to prove the wallet the coins came from or went to were under the control of some group or agency looking to catch them in the act. Blockchain is wonderful at providing electronically signed and sealed evidence and confessions of your bad behavior that cannot be faked! The computer equivalent of Chris Hansen showing up and saying “What are you doing here?!?”

      Governments and banks love the idea of a functional blockchain. Imagine a ledger of a drug dealer’s every transaction that cannot be forged! Same goes for money laundering and tax evasion.

  5. I use it as currency. I buy access to web services that some busybody might decide to criminalize at some point.
    Funny thing is, I bought $100 years ago, paying it out $15 at a time, and never have to buy more with dollars.

  6. For me it’s speculation. I put money into it that I could afford to loose and it’s currently up a lot. I pay my taxes on my gains and I don’t worry about it very much. Maybe someday it’ll become fiat. It’s certainly no riskier than my greenback that the government seems intent on devaluing. Maybe that’s why my bitcoin is appreciating compared to greenbacks…..

    Hey, wait a minute….

  7. The only fundamental difference between Bitcoin and other digital currencies and the US Dollar is that the Dollar has the backing of the US government….for what that’s worth. Which currently isn’t saying much. NEITHER has any intrinsic value and function on blind faith.

  8. Bitcoin? No power. No Bitcoin.
    I’d rather invest in ammunition. Ammunition is a ready medium of exchange. It’s functional should the need arise. Plus the prospects of paying taxes on ammunition is “interesting”.

    • That’s funny!
      No doubt Tampon Timmy A-Walz and Hyena Harris have a 5-year plan to do just that.

      • As I recall, an earlier far-left politician (Tedddy Chappaquiddick Kennedy) proposed a punitive tax on ammunition on the theory that it would let him violate the 2nd Amendment without getting caught.

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