E Bitcoin - Up Close And Personal

Bit by bit Bitcoin keeps revealing its plusses and minuses. Ides Of March, an article by Egon von Greyerz that I found, touched on points I made in my recent Bitcoin exclusive to TalkMarkets. 

My previous article had focused on how Bitcoin stacks up against Aristotle's' classic definition of sound money.von, Greyerz isn't awed by the fact that, as of late, the market value of Bitcoin has exceeded that of gold, a highly-touted point made by those who are heavily invested in Bitcoin.But, we have to remember that, at this point, Bitcoin is not (yet) subject, as precious metals are, to relentless constraint by the BIS, central banks, and western governments.

According to von Greyerz, the market value of Bitcoin, capped at $20 Billion, doesn't come close to the $7 Trillion value of above-ground gold. As such, it's no more than a gnat on a mountain of fiat.

A distinction must, I think, also be made between the soft value of Bitcoin, contrasted with the hard value of gold and silver. Bitcoin "valuations" don't represent value so much as price. And price is subject to every whim of the market.

I would suggest that Bitcoin, which has only been around since 2008, lacks the history and functionality of gold and silver, which have been monetary metals for at least 5000 years... and both have been treasured as long as humans have treasured earthly things. It remains to be seen if Bitcoin's desirability, acceptance and negotiability will ever match that of gold and silver. Try paying the IRS with Bitcoin.

As a store of value Bitcoin comes up short. Its value is its price, And, outside cyberspace, it has ephemeral value... no more reality than a thought.Maybe not that much if the thought is a really creative one. One's faith in Bitcoin is faith in the Internet--and those who try to keep the Internet operational, honest, open, and off-limits to burglars and thieves with their hacking toolkits. 

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