Litecoin wallet problems

One purpose of writing this piece is a vague hope of being proven wrong by some economist who knows better than me. That would be nice. Because what I have come to think about Bitcoin is not nice. Before writing this piece, I presented my common-sense critique to Bitcoin proponents, and so far nobody has provided answers. Perhaps I asked the wrong people. So make my day—prove me wrong. Here goes.

Bitcoin is not a currency. It is a virtual commodity. You can place money in a commodity, like gold. But gold isn’t money, and neither is Bitcoin. It is not issued by a government. It is not backed by an economy using it as the standard medium of exchange. It is not governed by a central bank that keeps it from going nuts. And, indeed, Bitcoin has gone nuts. Or, rather, it’s gone tulips. That’s a pun, I’ll come back to that.

People trade in commodities that they don’t use, like gold. So why should you not trade in Bitcoin? After all, we know for sure, based on some solid (we think) cryptology, that the supply of available Bitcoins is predictably exact. With gold, someone can find a new mine, flooding the market and lowering the price. Not with Bitcoin. With gold, you need a third party to carry out a secure transaction. Not with Bitcoin.

So Bitcoin is better, right? Wrong! Bitcoin might be a robust technology. But the Bitcoin market is crazy. Either that, or I am.

You see, gold is like an air raid shelter. If investors lose trust in cash as an investment, they can’t shift to bonds or shares, because they too depend on cash. At that point it’s a good idea to invest in a commodity—something that is less volatile than cash. Like gold. Investing in gold means protecting yourself against a loss of trust in the dollar. So after the financial crash of 2008, the dollar price of gold went up. Now trust in the dollar is coming back. Gold has dropped in price against the dollar by 25 percent since 2012.