How many old farts are sitting there listening to the news and hear that Bitcoin has settled at $1400 at the close?
How many know what Bitcoin is?
The truth until recently I had no idea what it was……so to help out all those people scratching their heads when the term “Bitcoin” is mentioned…..
Bitcoin has transformed from an idea that some treated with great enthusiasm to an asset of strikingly growing value. It is digital currency, of which there are many others, and its price has soared in recent weeks. I will admit to not understanding what bitcoins are in principle, to the extent that I have not even been able to define my own questions. But now that I have developed some basic level of understanding, my core question is this: Is bitcoin a currency designed to facilitate commerce, or is it a commodity that has intrinsic value, which rises and falls according to supply and demand?
A currency can be treated as a commodity, being bought and sold to take advantage of fluctuations in its value relative to other currencies and assets. But its primary purpose is to facilitate exchange within and between societies. The alternative exchange mechanism is bartering, in which the price of a pair of shoes is defined relative to myriad other unique items, from corn to books and beyond. The problem with this is that without a common currency that provides a common and understandable valuation of each item, the process of trade, from investment to purchasing food, slows with major consequences for the economy. Alternatively, a currency arises with an exchange value separate from its use value. One example is gold, whose use value is somewhat limited, while its exchange value has been much higher, providing a stable basis for commerce.
Bitcoin may be the way of the future……so now you know what it is dealing with…….and you will not be caught off guard when the change comes……
I still like the feel of cash…….