We are here again in a situation where
bitcoin is dying and every news article and opinion on it will start saying
I told you so.
We have been here many times before and always we have proven every doubter wrong. But will there be a time that they will finally be right? Will they finally tell us
I told you so?
The first familiar critique is that Bitcoin exhibits classic signs of a bubble. A bubble, roughly, occurs when people buy something not because of its intrinsic value, but because they expect the price to go up. Dimon made reference to the classic bubble in tulip bulbs in the 1600s. Bulbs’ intrinsic value lies in the beauty of the flower they produce, but at one time the bulbs grew to be worth more than houses. More recently, a Bitcoin worth $120.82 in late August of 2013 was worth $4,672.82 in late August of 2017. The problem with such bubbles, is that they can wreak financial havoc when they burst.
A related, but distinct, problem is the question of how digital currencies might be regulated. The Commodity Futures Trading Commision in 2015 defined Bitcoin and digital currencies as commodities. The U.S. Securities and Exchange Commission in July 2017 announced that it was investigating whether digital currency endeavors are de facto unregulated securities.
A third critique, as described by my Forbes colleague Panos Mourdoukoutas, is that governments dislike competition in the issuance of currency. There is money to be made by making money. This perk that accrues to the issuer of a currency is known as seigniorage – the difference between the value of money a government produces and the cost of producing it (often, literally, the paper it is printed on). Digital currencies can represent unwelcome competition (though so can credit cards, for example, since they allow people to make payments without holding currency).Read the full article https://www.forbes.com/sites/phillevy/2017/09/15/bitcoin-beware-the-empire-may-strike-back/#30d2eac040e5
