I have mentioned that my son is the Gargoyle of Wall Street. He bought pieces of Bitcoin for an average of $190; he bought his initial piece of Monero as a gift for his father at $7.50 and the various bits he has bought since average a total investment of, maybe $14.
The value of his BTC investment is now worth, at this moment, $9,649, a 5,078% return on investment. The value of Monero at this writing is $175 equal to a 2,093% increase in investment on his gift to me. That is "not bad" as an investment decision-maker. No, not bad at all. In fact, my son is a cryptocurrency savant.
Nonetheless, there remains a recurrent nightmare about the cryptocurrencies, especially the Big Enchilada BTC. They are called "currencies" after all and Bitcoin a "coin." Currencies and coins are mediums of exchange. I'll give you a bunch of these green pieces of paper if you give me that car. The cryptos are at the same time, a "store of value," the function gold performed for hundreds of years and still used as such by some. Those two functions are distinct and, as is often the case in economics matters, at odds one with the other. Bitcoin has proven to be a tremendous machine at creating ever increasing value. But Bitcoin's proven incredible success as a store of value is a disincentive to its use as a medium of exchange, which, in economics terminology, is the basis for its "fundamental" value.
To briefly exemplify this on-the-one-hand-on-the-other-handless: Who in God's name would have taken her one Bitcoin, valued in February at around $3000 and bought herself and two friends at that time a nice four or five day vacation in the Bahamas when she had every reason to expect that the worth of her one Bitcoin was going to continue to accelerate, and quickly. If our hypo vacationer had used her Bitcoin as a medium of exchange for that February vacation, by November 27, the value of the Bitcoin she used to make her reservations on Expedia (which you can do) in February was worth more than triple its value in dollars. It would sicken our vacationer--She paid, in effect, $9,649 for her vacation vacation. So why use Bitcoin, if you have good reason to believe that it is going to continue to increase? And good reason you have. Thus, Bitcoin's peerless role as a store of value is a disincentive to that which establishes its "fundamental" value, its use as a medium of exchange, and an increase in such usage would drive its price down, hurting its role as a store of value.
In Harry Truman's lament and to his frustration he could never find a one-handed economist. He would find no one-handed economists to give him advice on Bitcoin.
The value of his BTC investment is now worth, at this moment, $9,649, a 5,078% return on investment. The value of Monero at this writing is $175 equal to a 2,093% increase in investment on his gift to me. That is "not bad" as an investment decision-maker. No, not bad at all. In fact, my son is a cryptocurrency savant.
Nonetheless, there remains a recurrent nightmare about the cryptocurrencies, especially the Big Enchilada BTC. They are called "currencies" after all and Bitcoin a "coin." Currencies and coins are mediums of exchange. I'll give you a bunch of these green pieces of paper if you give me that car. The cryptos are at the same time, a "store of value," the function gold performed for hundreds of years and still used as such by some. Those two functions are distinct and, as is often the case in economics matters, at odds one with the other. Bitcoin has proven to be a tremendous machine at creating ever increasing value. But Bitcoin's proven incredible success as a store of value is a disincentive to its use as a medium of exchange, which, in economics terminology, is the basis for its "fundamental" value.
To briefly exemplify this on-the-one-hand-on-the-other-handless: Who in God's name would have taken her one Bitcoin, valued in February at around $3000 and bought herself and two friends at that time a nice four or five day vacation in the Bahamas when she had every reason to expect that the worth of her one Bitcoin was going to continue to accelerate, and quickly. If our hypo vacationer had used her Bitcoin as a medium of exchange for that February vacation, by November 27, the value of the Bitcoin she used to make her reservations on Expedia (which you can do) in February was worth more than triple its value in dollars. It would sicken our vacationer--She paid, in effect, $9,649 for her vacation vacation. So why use Bitcoin, if you have good reason to believe that it is going to continue to increase? And good reason you have. Thus, Bitcoin's peerless role as a store of value is a disincentive to that which establishes its "fundamental" value, its use as a medium of exchange, and an increase in such usage would drive its price down, hurting its role as a store of value.
In Harry Truman's lament and to his frustration he could never find a one-handed economist. He would find no one-handed economists to give him advice on Bitcoin.
