Bitcoin as Currency?

Here is the #1 definition of money: “a store of value.” Theoretically, this is incorrect. It should be this: “a valuable thing to store.”

Any time you buy an investment, you had better have an exit strategy. There is no exit strategy for bitcoins.

Anytime that anybody tries to sell you an investment, you have to look at it on this basis: “What are the future benefits that this investment will give final consumers?” In other words, how does it serve the final consumer? If it does not serve the final consumer, then it is a Ponzi scheme.

Bitcoins will never achieve this. It is a mania going up. It will be a mania coming down. It will not increase the division of labor, because people will recognize it as having been a Ponzi scheme, and they will not again buy it. They will not use it in exchange. Companies will not sell goods and services based on bitcoins. Bitcoins have to have stable purchasing power if they are to serve as money, and they will never, ever achieve stable purchasing power.

There has to be an economic justification for a capital investment, and there is no economic justification of buying bitcoins as an alternative currency. That was how bitcoins were initially sold, and it was impossible as an economic concept from the beginning. The Austrian theory of money shows why.

Blockchain technology in the business world. This technology is going to cut transaction costs. What he describes here is plausible.

It is plausible with respect to the employment implications of this new technology. But in order for this to take place, there has to be stable purchasing power for whatever currency is used to complete the transactions.

If the Blockchain technologies rely on cryptocurrencies, then there won’t be much effect of the Blockchain technologies in business. They will not be implemented.

In short, make certain that you separate the two discussions: Blockchain technology vs. cryptocurrencies. They are not the same.

In contrast to my knowledge of Blockchain technology, I know a lot about monetary theory and monetary policy. I have said that bitcoins will not function as a currency until it stabilizes in value. I apply this to any other cryptocurrency. I even apply this analysis to gold. I don’t think gold is money. Until gold stabilizes in value in relationship to the US dollar, it is not going to function as money. Neither is silver.

So far, there is no cryptocurrency that is going to function as a currency. Cryptocurrency means anti-currency.

If the market ever develops a way for stabilizing the purchasing power of particular cryptocurrency, then I would recommend its use in Blockchain transactions. But here is the problem. As soon as a cryptocurrency looks as though it’s going to function as a currency, people will start buying this cryptocurrency. But that will raise its price in relationship to the dollar. That will destroy its function as a currency.

The wild mania of bitcoin’s dollar price since June 2017 testifies to the fact that bitcoin cannot become a currency. No one will ever again buy bitcoin unless he thinks that bitcoin is going to become another mania. He invests in terms of the greater fool theory.

The greater fools have already bought. Some have sold. The others will sell if the price goes up.

The original argument from bitcoin supporters was that bitcoins would replace the dollar and other national currencies. They also said they would preserve privacy.

Bitcoin investing has been a mania. The mania on the way up has now ended.

Source: GaryNorth.com

6 Things to Know about Crypto Currencies

1 Crypto, yes. Currency, not yet.
Until you see major national chains adopting point-of-sale software that provides automatic bitcoin conversions, you can safely ignore bitcoins.
2 Crypto Investment?
If you bought early, most likely no meaningful amount, then you can keep the ride.
If you want to join now buying 2% of your portfolio expecting the bull ride for the next 5 years, it could be worth testing. More than that would be a risky gamble.
3 Obvious Trend:
The future of money is towards digital currencies, eventually to replace Cryptos by an OFFICIALLY SANCTIONED digital currency.
4 Some Risks if Crypto succeed:
These blockchain currencies will be outlawed once they become a threat to the banks.
5 The mistery of Satoshi:
The origin story sounds like the good guys against the corrupted institutions, appealing a brand new world.
But is it really “no one” in charge?
When that Satoshi will Exit his position?
6 The key is the Blockchain technology.
I like better the Vitalik´s origin story and vision for ETH to solve real problems in all industries. So, I prefer in those projects, companies and specially startups…