Bitcoin Buyers Are Only Again Fooling Themselves –

Bitcoin Buyers Are Only Again Fooling Themselves - 1

Money is the lynchpin of modern economies. We need not grow our own food, make our very own clothes, and build our own furniture. We are able to specialize in what we should do well and use the amount of money we are paying to buy what we wish. It issues what’s accepted as money – seashells barely, whale tooth, and woodpecker scalps have all been used. The folks of Yap used stones canoed in from a huge selection of miles away.

People have been ready to be paid in shells, scalps, and stones because they were confident that they could use them to buy things. Money doesn’t need to be something you can hold in your hands; indeed most of us choose to live in an essentially cashless society. Our income goes directly into our bank accounts and our bills are paid out of our bank accounts.

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Bills that aren’t paid electronically are paid with the debit card, or credit card. We only need cash for paying people who receive take inspections or credit cards, or for transactions we don’t want the nationwide government to learn about. Which brings us to bitcoin BTCUSD, -0.05%, and other cryptocurrencies. Unlike electronic money that moves through the bank operating system and is monitored by central banking institutions, bitcoin uses cryptography and decentralized control preserved by blockchains. Doesn’t that appear impressively strange?

Part of the allure of cryptocurrencies is that lots of people worship computer systems, while few understand blockchain. If bitcoin was an accounting system maintained by an army of accountants with paper and pencils, it wouldn’t be nearly as cool or alluring. As an investment, a bitcoin is no better than a woodpecker head or a Yap rock. Real investments – like shares, bonds, and apartment structures – generate real income: bonds pay interest, stocks pay dividends, and apartments pay local rental income. Bitcoin whatsoever generates no income. Speculators buy bitcoins because they think they will sell their bitcoins afterwards for a straight, higher price.

This is the Greater Fool Theory – buy at a foolish price and sell to an even bigger fool for an income. 2,000 a few weeks later. During the South Sea Bubble in the 1700s, fools bought worthless stock that they hoped to sell to other fools. One company was created “to carry on an undertaking of great advantage, but no one is to learn what it is.” The shameless promoter sold all the stock in under five hours and still left England, never to return. Another stock offer was for the “nitvender” or selling of nothing. Yet, nitwits bought nitvenders.

Bitcoin is a modern-day nitvender, in that the price of bitcoin is forget about related to financial basic principles than was the price of the South Sea nitvender stock. Bitcoin prices are supported by only the faith that higher fools shall pay higher prices. In 2017, as the bitcoin bubble picked up speed, the stock price of Long Island Iced Tea Corp.

500% after it changed its name to Long Blockchain Corp. On the top of the bitcoin bubble, an organization released a cryptocurrency that didn’t even pretend to be always a viable currency. It had been truthfully promoted as a digital token that experienced “no purpose.” Yet, people spent hundreds of millions of dollars buying this nitwit coin.