If "BITCOIN" is the answer.....what is the question....

To "BITCOIN" or not.....that is the question....

We all know about the rise of Bitcoin, and if you were wise enough to get in.....congratulations! But remember, you might not really gain if you don't ever get out and "spend" those paper gains.

I think the BLOCK CHAIN underpinnings of BITCOIN is wonderful....as are all the other crytography wonders like public key encryption we have seen in our lives. (Thank-you Whitfield Diffie)

To me, the greatness of a digital currency like Bitcoin comes from the distributed nature of the architecture and the privacy it could allow. In theory, it would NOT be centrally controlled and manipulated like normal currency always has been......it would also easily cross the artificial boundaries of nation and even natural boundaries like mountain or ocean, so long as there is some form of electronic connection between the parties. (and the rest of those in the currencies ecosystem...which might be the Achilles heel of it too)

So I see the beauty of BITCOIN.....but all of that goodness lay in its use as a currency. As a "store of value", I am not sure it has any value as of yet.

To me it is not a currency because it is not really used to buy and sell. Yes, on a very small scale, but in terms of the percent of the transactions made for buying/selling vs those made for simple speculation.....the vast majority are the latter.

Money was created to make barter efficient......so to call something money, it needs to be used as an intermediate good in barter. (check this video explanation out: https://www.youtube.com/watch?v=WCr5UVf-vKM)

So if it isn't money, some people call BITCOIN Digital Gold, to which I also laugh. Yes, GOLD isn't really money....same reason, not commonly used for barter. But Gold has industrial value, but even then, that value is low. BUT, it has value because over the many thousands of years, people used it as money...as a store of value. So even as a material, it has value for it's use.....but above that, people's subjective value for gold is high. Some think of gold as money......I am not sure I do.

Bitcoin has many of the characteristics of money which are......

• Durability. Objects used as money must withstand physical wear and tear.
• Portability. People need to be able to take money with them as they go about their business.
• Divisibility. To be useful, money must be easily divided into smaller denominations , or units of value.
• Uniformity. ...
• Limited Supply. ...
• Acceptability.

 The last one is certainly on the rise....though not so much for payment.....but as a speculative asset. (so, perhaps it will become used...)

Also......given its meteoric rise, I can't see it the same way I see GOLD. Store of value indicates stability to me. The big knock on GOLD is that it does not pay a dividend. It does not increase in value. But that is what I expect from a "STORE" of value....so the more stability I see in GOLD, the more I value it.....the less I feel it is being driven by speculation, and so the more I value it.

Do I with I had bought a few BITCOIN back in the day.....of course, just like I wish I was an IPO buyer of .COM stocks, and been smart enough to sell at the top. I did buy and sell Sun Microsystems stock through those years....selling as I went along...until the peak, when I bought some $3.00 options when the stock was up at $120.....I held them all the way down to $10 per share. Some of my friends held all the way to the end where it was selling at $2.50 after a 1:10 reverse split.....it was a blood bath.....but had I sold at the TOP (or as I did as it was going up)....I would have been happy.

So "speculation" is not where my skills lay......so given the trajectory of BITCOIN, I will stay out until I see stability and start using it as currency.

I doubt my post will convince anyone....check out John Mauldin's post that is information packed and mght.