I don't get Bitcoin
I don't get Bitcoin.
There. I've said it. Its out there.
I don't understand why I need it. I don't understand why anyone needs it other than as a speculation vehicle - and if that's what you're using it for, then that's fine.
I hear many arguments as to why I need it - for why everyone needs it - and I just don't get it.
Mabe I'm old. Maybe I'm wrong. At this point I don't know if I'm wrong or everyone else is, but..... I just don't get it.
So what Reasons do i hear for why I need to own Bitcoin?
It's not controlled by a central bank or body
And that doesn't terrify you? the main reason it's good is because its the monetary equivalent of anarchy? There are no controls over it and no recourse if something goes wrong.
Lose your password - tough luck!
Vendor won't accept it as a payment method - not my problem!
Market manipulators are buying/selling it and the price has gone down - too bad - its unregulated!
Why would it be controlled by a single body? It's a new sort of currency
Is it? who's spending it? no one accepts it as payment (yet...looking at you, Tesla). if i have a pound in my pocket, i need it to still be a pound tomorrow, regardless of what a dollar is worth. Until items are priced in Bitcoin, i cannot use it as a currency without exposing myself to very serious f/x exchange risk.
Its the future of money
Is it? the Bitcoin network is barely able to process the few transactions that happen now. what happens if people start buying everyday items with it?
It crashes, that's what! it slows right down, to the point where its barely functional. how annoyed are you if your card won't work on the first swipe? now imagine that everyone uses bitcoin but only 30 people in the world can transact in any given second, as opposed the five million who can at the moment.
But you're not supposed to spend it - Its a store of value
Is it? says who?
The man who bought it before it dropped 30% in a day? his value hasn't been stored!
The woman who bought it before it went up a hundredfold in price? Her value wasn't stored either (not that she would complain).
It is too volatile to be a value store, and that is caused in part by the lack of liquidity in the market (see above, regarding the lack of transactions)
OK, not a store - an inflation hedge
Is it? An effective hedge? so it offsets inflation?
What's inflation been over the last 10 years?
4% per year?
5% per year?
10% per year?
Bitcoin has grown so much faster over the decade than inflation that it is not hedging it. It has outperformed inflation - no one's arguing that it hasn't - but does that mean it is a hedge? Of course not. Is the dollar a hedge against my Sterling money?
Its an inflation hedge in the same way Gold is a hedge
And i don't own gold either (beyond a single gold coin i received as a present).
Here is a serious question. Why would a 20 year old who has never had the urge to buy gold buy bitcoin because it might act like gold? does that seem rational?
Another serious question. How do we know it acts like gold? because its limited in amount? it's been around for 15 years and hasn't gone through a full market cycle yet - seems early days to say its the same as gold.....
But I want some
Then go for it. I won't stop you. i hope you make money from it (because if you don't make money, you're going to lose it...Bitcoin is not stable and it doesn't go sideways. if its not going up, it is going down).
For me to treat Bitcoin as a serious investment, there are a number of hurdles that need to be cleared. and I recognize that the block chain has many uses that are remarkable already, while also recognizing that we have barely scratched the surface of what it can potentially do (think the internet in 1995 - truly incredible, but nothing compared to what it is now)
But while I believe that the block chain will do great things, I'm not convinced that being a defacto currency is one.
I just...don't get bitcoin....