The media is getting very excited by the value of a Bitcoin having supposedly reached $100,000 overnight.
It didn't. What happened was that became the price someone was willing to pay for it. That's not the same as value.
As has been long known, fools and their money are easily parted, most especially by tricksters. The price of Bitcoin has risen by 40 per cent since Trump was elected.
This is not going to end well.
People will demand that they be bailed out.
There is a crisis in the making here. There are no good outcomes that I can see to this.
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Why should we bail anyone out
The police raids over the last few days suggest a strong link between crypto and crime
The vaults in the Midland Bank head office used to contain huge numbers of beautiful but worthless shares and bonds from South American companies issued in a frenzy that lead to a crash
Nothing is new
As I understand it crypto, Bitcoin, is not issued by any government and therefore cannot be legal tender. So, I cannot see that it has value at all.
But as I said, fools are easily parted from their money
Everything in this world is worth what someone else is prepared to pay (if you want to sell). Outside that it has no value.
Unless you’re involved in large scale or high value illegal activities and want to keep your financial transactions hidden.
You are perfectly right, price and value are different things, and each often have a different answer.
In any transaction there is always one price and two values. The seller sees the value of the product to be less than the price received – if they didn’t they wouldn’t sell. The buyer sees the value of the product to be more than the price paid – again, if they didn’t, they wouldn’t buy.
Fairly standard economics, but people often don’t realise what is plain to see. Good to see such fundamentals being pointed out.
I agree, why should we bail anyone out? I have serious doubts about all digital currency, Inc Central Bank. They will cause enormous problems, IMHO it is just when, not if. It’s interesting that Sweden and others now see the absolute need for cash and want everyone to have some to fall back on.
61,245 BTC/Alt coin but mostly BTC or $5,818,275,000 held by the UK, possibly more if future pipelined POCA cases succeed.
I could think of a few good causes that could be used for as I’m sure you could Richard. Tulip Mania or not.
They’ll get bailed because saving money comes before saving people. How else can you explain it? Even more so if the money belongs to someone rich.
It’s not just crypto. We are still waiting for an AI breakthrough to justify the billions of dollars already invested. Much of which has already been been spent. Not on R&D to try and find a breakthrough product, both profitable and desirable, that would make all this worthwhile. It is simply being burned every time someone types something into chatgpt or whatever other company’s model.
For a few years now many of the worlds biggest industries have been trying desperately to find marketable products without actually building anything useful. In your other article this morning you highlight the misalignment of goals around weight loss – why fix food when you can print money by making people dependent on a weight loss jab which may or may not be affordable by the intended market.
I fear for how many average people’s savings / pensions / debt may be tied up in all of these industries.
Much to agree with
“People will demand that they be bailed out.”
People can demand all they want but there is no mechanism in the USA to “bail out” Bitcoin.
Owning Bitcoin is no different than holding stock in GE, Sears or a losing lottery ticket.
I have just made a video on this….
There will be a bailout, but not for the ordinary person
Ann Pettifor (on substack) is also predicting a bail out “Because the shadow banking system is so large (47% of global financial assets) and because it so interconnected with High St banks, its failure would bring down the global economy.”
So the rich will be just fine, the rest of us presumably will be paying for it with the loss of the remains services we still have limited access to.
Ann is right
I do wonder if Ms Pettifor has her tongue firmly in cheek.
I don’t think so
The shadow banking system is a huge issue that nobody ever wants to discuss. The same applies to the Black Economy. Then there is Bitcoin.
All of these categories play to the strengths of the worlds’ crooks and gangsters; whom, it seems are taking over the world; or are we just noticing they are now consolidating their hold. It is a reminder to me that the idea of ‘left’ and ‘right’ has generally referred not to a real, usable distinction, but to a myth; a nineteenth and twentieth century mythology that thought ideology determined the world. It wasn’t then and isn’t the case now. The world is determined by the level of influence, power and success of the exploitative crooks and gangsters who are far more numerous in the world than another mythology that still has too much purchase on human belief and credulity (that the crooks and gangsters are a small minority; they aren’t, especially the crooks, and their number is largely determined by how easy it is simply to cheat people for advantage, without likely being found out).
Neoliberalism embraces a supposed nobility of individual purpose that covers the desire to have a society that is open, above all to the dis-application of public scrutiny of private purpose; in order to disarm the public to the exploitation of crooks. The gangsters follow where the crooks open the road; and that, if I may forestall a criticism, this is not cynicism, but plain fact.
Crypto is very DYOR (do your own research) and a potential inflation hedge, (but increasing the crypto/eventually real money supply as well). Bailouts won’t be a thing for Bitcoin. Having a supportive US government gives the industry some sort of stability for now
You are seriously mistaken on all this
“Richard Murphy says:
December 5 2024 at 12:20 pm
You are seriously mistaken on all this”
Agree on that for sure.
There is Country risk also. El Salvador where BTC is legal tender has a big stack and is mining at least 1BTC a day.
Biggest single company I could find is Michael Saylor’s Micro Strategy holding 402,100 BTC at todays price in USD $41,416,300,000 If that is hedged God only knows what will happen to counter party risks
Bitcoin is the South Sea Bubble of the 2020s. At some point ($100k? $200k?) a sufficient number of holders will decide to take their profits and sellers will outnumber buyers. The price will start to slide slowly, then rapidly, then there will be a rush for the exit and the price will collapse. This could easily happen within the space of a week.
People just forget ‘stuff’ because of ‘recency bias’. For instance, between February 2000 and February 2010 share prices on Wall Street and in London fell by about 23% and 22% respectively, while the FTSE Eurofirst 300 was down by 34% and the Nikkei was 44% down.
This crypto Ponzi all feels reminiscent of 2007/08 to me.
Me too
They are not so much Fool’s as Stupid,
for the Fool can be educated, the stupid cannot.
NO BAIL OUT FOR THE STUPID.
Cipolla’s Golden Law of Stupity (The Brexit Voter)
“A stupid person is a person who causes losses to another person or to a
group of persons while himself deriving no gain and even possibly incurring
losses.”
If bitcoin can “have a value” in dollars is it still crypto-currency? Would that make it a “commodity” or just “merchandise”?
Or a con?
I agree. These bitcoins are worthless. So instead I am buying bananas taped to pieces of board. There’ s a great rate of return.
Also , I intend to buy loads of those “commemorative medals ” I see advertised on daytime TV. I think there’s one called the ” Churchill Battle of Britain Brexit Coin” with a Union Jack on one side and the head of Nigel Farage on the other. It can only increase in value with every passing day. Honest!
Seriously though this debate reminds me of your discussion about how many in the West have now purchased enough “stuff” so that growth in genuinely useful or beautiful products can never be more than miniscule. For all the sad elderly Empire Loyalists buying useless patriotic commemorative medals there are much younger people with far more money, buying Bitcoins.
I am 73 years old.
Thanks