IMHO. Bitcoin is an example of valuing something based on it's rarity, for bartering purposes, like Gold. That's why it is convertible to USD. Bitcoin has no intrinsic value as a manufacturing metal like silver has, gold has some but not much value in this manner either, so gold is a decent comparison to bitcoin. Bitcoin's rarity is based on limiting "mining" licenses, to people who can create new bitcoins. None of this, the rarity portion of it, is regulated, so it's rarity is based on your belief that that's what is happening. If bitcoin falters, like China shutdown some exchanges in the past, or someone suddenly "discovers" a large cache of bitcoins, there's no one to complain to. There's a leap of faith here.

Anyway, digital currency carries a code list with it describing the transaction details everytime it is used. At this time, most transaction are just a change in ownership rather then actually buying something, as those opportunities, buying stuff is still limited. The code behind the bitcoin has some value going forward, but buying a bitcoin does not get you ownership in that technology.

Almost everybody buys bitcoin hoping to unload it to someone else by converting it to an established government backed currency, USD or otherwise. The ability to liquidate your position, and ease of doing that, are what's making bitcoin move price-wise, IMHO, like it has recently. Illiquidity would make the value crash, so you are just a few bitcoin exchange closings away from a value crash.

Gold historically gained value in times of inflation, because gold's rarity does not change over time, and fiat currency rarity does change. In the past, USD were backed by gold to limit inflation, and also limited economic growth, which become unacceptable during downturns in the economy as the government could not issue more fiat to bring us out of it. Since 1968, USD are no longer backed by gold but gold has a history of trust as an investment, which means eventually convertible to USD. That's the important part, everyone eventually wants USD conversion, same with Bitcoin.

Take it with a grain of salt then. It's comparison to gold is a good one, and gold has a history. A "limited production" currency, like bitcoin or gold or any other crypto currency does not have a lasting value for economic exchange, as it captures it's value based on rarity. maybe bitcoin morphs into something other than a currency. It's value as a currency is smoke and mirrors. It's value as a transaction verifiable based currency is a good one however, so really the originators of bitcoin should have sold stock in that technology instead of trying it as a currency in itself. i would have bought that stock if there was a patent behind it. There's actual value in that case.

Hopefully tax payers won't have to bail you bitcoin "investors" out. Bitcoin has a total value less than $100 billion. Counterfeiting is of no concern to 99.9% of us. What exactly IS the "TREMENDOUS amount of...upside in owning/trading cryptos? Nice statement but no facts. Competing crypto currencies actually makes your case even less plausible. Fiat currency is backed by the trusted ability of the government to grow the economy and collect income taxes to pay off its debts (including US bonds) and not to be constricted by the rarity of the backing means. This has been proven with gold as I've said. You are fooling yourself with technical mumbo jumbo and "investing" in something you can't even explain.

Your best bet is to read up on it at other online sources, rather then read it as re-gurgitated here. At best bitcoin or other cryptos has a finite shelf life and it will end badly for some people left holding the bag with too much "invested". This will happen because of a lack of "demand" as others have described it for rationalizing the value. The lack of demand will happen becuse the exchanges will be closed down. It's another way for people to make money without actually doing anything to earn it. JJP, Stern, Spooky, maybe American Pinball, these people PRODUCE a product, something worthwhile. Bitcoin is a Netflix program in the making, "House of Cards".

Think about this. You trade bitcoin and if you make money it gets taxed. In USD.

For anyone stating that "investing" in bitcoin is like buying US stocks: Stock prices reflect the intrinsic value of the company, based on various factors, but the company is providing value by producing something, making pinball machines for example. The stock value rises and falls based on that intrinsic value and also demand for it's stock that's true, and the amount of stock is limited as well. Investing in bitcoin is like buying a stock in an idea that something is valuable because of its controlled scarcity. Like buying Apple stock because OMG there's only 5.17 billion shares, it's scarce! And if Apple was just a computer generating stock shares.

Actually it was 1972 that finalized the end of the gold standard. The price of gold was set at $35 until then and the price was allowed to fluctuate and private ownership was allowed after Nixon signed the paperwork. So there was no more reason for the US to hold gold reserves in Ft Knox and the US Mint started sell the reserves off at market values. FDR did take away the gold backing of a USD in 1933 because he needed to inflate us out of the Depression. You are correct about that.

The USD is backed by the guaranteed probability that the economy will generate enough GDP to guarantee the amount of tax revenue that the US Government needs to collect. And that the Government is not constricted by a "rare" backing method to be able to grow and shrink the money supply to ensure the economy generates that revenue. It's why US Bonds are considered the safest investment in the world, the fact that guaranteed tax revenue will be used to pay off that debt. "Fiat" is a term bitcoiners or cryptos focus on to mean that the actual money is worthless and can be replaced by something, bitcoin or crypto currency, that truly is worthless. It's a completely naive belief. Running $1 trillion deficits is another story.....some day the amount of debt re-payment will be unsustainable if this continues.

The US proved in 1933 that basing money's value on a commodity's "rareness" is a ticket to economic disaster and the variables (money supply/interest rates) need to be more controllable to steer a huge economy.

Actually gold is used for dental reasons, try filling a tooth with bitcoin.

I am going to have to drain this topic for myself. Reading this is like watching your kids make harmful mistakes after you've done everything to convince them not to do something. You crypto currency people as my Mom always says, "are in for a rude awakening". Why don't we make me doing jumping jacks a currency? There's only so many I can do and as I get older I can do even less of them. So it's scarce and getter rarer. A great foundation for a currency. Sayonara.

It is not a "currency". That's the fundamental issue here. Who here has bought something with bitcoin and wishes they just hoarded it like everybody else? That pizza you bought today, if bitcoin reacts like bitcoin investors are saying and keeps going up, that pizza cost you $500 2 years from now. Why WOULD you spend it, thinking it will be worth more tomorrow and beyond?

That's what Yahoo said when Google came along.