The hard money people are pretty split on cryptocurrencies. I think both the proponents and the skeptics have great cases.
On the skeptic side the point is made that that cryptocurrencies aren’t backed by anything. There’s no gold or silver behind them. Gold and silver have been valuable and stable (in terms of purchasing power over the long term) for milennia.
Cryptocurrencies have almost no track record, and the record they do have is highly volatile.
I am a fan of gold and silver. The pullback we’ve seen in metals as of late probably constitutes a real opportunity for those who are interested. Even as Bitcoin has risen as gold falls, I’d still rather have a pile of gold than a pile of Bitcoins.
Ideally however I’d like to have a pile of both.
For what cryptocurrencies lack, they also have many things going for them. Chief among these things is that they challenge the Federal Reserve note – the dollar. This is a good thing. For far too long our monetary central planners have acted as if they can print without ramifications (or close to no ramifications) because the dollar is the reserve currency of the world.
There has been no real rival to the dollar for decades. Even with all the reckless QE experimentation and with a national debt which will never be repaid, the US dollar remains a shabby king, if no longer “almighty.”
I’m not saying that Bitcoin and its cryptocurrency brethren constitute a real threat to the dollar. They don’t – yet. But the blossoming of these new currencies is a market reaction to the abuse of the dollar by the Federal Reserve. People don’t trust the dollar the way they used to, and people are looking for alternatives.
Welcome to the weird, wild world of cybercurrencies, where Bitcoin is king and Catcoin, BBQcoin, Sexcoin, Coinye and HoboNickels form the palace court. (Well, maybe not HoboNickels.) There are now more than 70 Bitcoin alternatives, according to one list, a financial marketplace worth more than $12 billion.
Bitcoin, created in 2009 by an anonymous programmer using the name Satoshi Nakamoto, rose to $1,200 last year before falling back to about $900 today. All Bitcoins in circulation are worth about $10 billion today, and more merchants have begun accepting the currency. Even some Girl Scouts are taking Bitcoins now.