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. 

Along that line, I was reading last night about Attorney General Sessions prosecuting a group of Russians who are believed to have pilfered millions of Yahoo accounts. That and the news last year that digital accounts of a sovereign nation had been stolen from the securest of banks shakes my faith in the supposedly impenetrable vaults and corridors of cyberspace.

On the other hand, we know that bankers can embezzle, that banking systems can topple and fall, and that fiat currencies tend toward worthlessness and oblivion. These facts could prevent and delay exchanges of value, but they would never destroy the intrinsic value of gold and silver.If melted in a fire, gold and silver coins would lose numismatic value, but not their intrinsic value.

I like the point von Greyerz makes about Bitcoin being a speculative investment because it sharpens the realization that Bitcoin is much like putting your "in-hand" assets toward the purchase of a pre-loaded debit card. The difference is that a pre-loaded debit card will certainly not appreciate in value, whereas your wallet of Bitcoin certainly might.

BUT, a pre-loaded debit card will, except for inflation, will surely retain its dollar value, whereas there's surely no guarantee that your Bitcoin wallet will.

The fact that Bitcoin goes through periods of rapid appreciation is both a blessing and a curse. Just as a rising stock market attracts flocks of eager investors, a fast-rising Bitcoin attracts buyers, and each buyer pushes the price and attractiveness of equities and Bitcoin even higher. The curse is that the upward momentum of equities and Bitcoin tends to separate their buyers from fundamental market realities. 

Euphoria contains the seeds of its destruction. A pendulum can only swing so far in one direction. In Nature, organisms grow to a maximum size, and at that point, size becomes a threat to their existence. The assumption of eternal growth is a false and devastating one that's ignored or denied by greed-blinded investors. 

Bitcoin looks like a gravy train right now, but I expect it to price itself out of the mass market. It's like there will always be a market for a few Bentleys and Lamborghinis, but it will always be overshadowed by the market for Fords and Hondas. When Bitcoin becomes super-expensive (which is the wealth dream of every owner) new investors won't want to plunk down $20,000 for a tenth of a Bitcoin and will find a lower-cost alternative for a transactional system. We see the same relationship between $1,200 per ounce gold and $17 per ounce silver. Figures from the US Mint for 2015 show that it sold 800,000 gold Eagles, but something like 60,000,000 silver Eagles.More than 60 silver Eagles are sold to just 1 gold Eagle.

Suppose worse comes to worse... bank doors are locked, ATMs are inoperable, credit cards are rejected, and dollars won't buy peanuts.But the Internet is operational, and you have Bitcoin in your wallet. Even so, how many businesses, how many individuals will want to accept crypto dollars in payment for goods or services? In such circumstances, if you had a choice, would you rather accept Bitcoin that you can see on a monitor, or gold coins and silver coins you can feel in your hand?

I grant you that Bitcoin is hugely attractive because it thumbs its nose at government control, and Bitcoin owners should enjoy that while they can. The fact is every government wants to control everything--and that includes every domestic and foreign asset within its circulatory system. The time-tested way for governments to exercise control is through legislation, which governments claims as an exclusive right... and maintain armies to insure it. Legislation levies taxation. Taxation is the camel's nose under the tent... Legislation> Taxation> Regulation> Control. And all it will take is for governments to feel that Bitcoin is getting too big for its britches.

I know it sounds as though I'm totally opposed to cryptocurrencies in general, and to Bitcoin in particular, but that isn't the case. I plan on owning one or more cryptocurrencies-not as a major asset--but as a fractional investment, and as an alternative medium of exchange. My motive is "just in case," and will be more hedge and "insurance" than drive to profit. I'm still of the opinion that cryptocurrencies-all 700-plus of them--will go through a "shake-out" that separates and defines the top two or three live ones from the deceased.

You're probably not as old as I am, and may not remember how, during the 1950s and 1960s our pocketbooks were full of "charge cards" from Conoco, Gulf, Mobile, Shell, Phillips, Sunoco, Shamrock, Lion, Amoco, Hess, etc., and from retailers such as Sears, Penny's, Wards, Goldsmith's, Neiman-Marcus, Dayton's, Hudson's, Macy's, Target, Beales, Zayre's, Burdines, Wanamaker's, Bullock's, MM Cohn, Marshall-Fields, Famous-Barr, and Bonwit Teller, to mention a few.

We never suspected, say forty years ago, that those charge cards would become collector items, and that in 2017 we'd be using just one or two "Credit Cards" to buy gasoline, clothing, household goods, lawn mowers, medical care, event tickets, lodging, hamburgers, pizza, and groceries.

Bitcoin use may never become as popular and as universal as credit cards. There's a good reason for that.Credit cards let us spend other people's money if we promise to pay them back--with generous interest, but with Bitcoin, we're spending our own money... and in fact, we pay for our purchases well in advance of walking out of the store with them... or receiving them from Amazon.

The big complaint about gold and silver is that they pay no interest, but the same is true of Bitcoin. Buying gold and silver is not an investment--unless you're actively involved as a trader who buys low and sells high. Gold and silver are "lifestyle preservers"- wealth preservers.Their value keeps pace with inflation and the cost of living. Bitcoin, however, is paid for with present dollars that incessantly lose purchasing power year in and year out. Just as owners of gold and silver hope to receive the payback of price appreciation, so the owners of Bitcoin hope the dollars they have tied-up in cryptocurrency will appreciate to reward them for their faith.