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Is Bitcoin For Real?

Dec. 06, 2020 10:21 AM ET10 Comments
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As of lately, people's interest in Bitcoin has surged directly proportional to its price increase which is approaching 20k.

The frenzy of articles, newscasts, opinions from everyone is reaching an apogee.

I decided to chip in with my two cents(regular dollars).

First, the question that I would like to address is what is Bitcoin.

Is it money? or is it just a token commonly agreed upon? 

The definition of money is pretty straight forward: A medium of exchange and storage of value. So far bitcoin can qualify for that, to an extent. 

But money is of course more than that: it's also a legal tender, backed by the full faith of the government, and is widely circulated and accepted by all market participants. Here bitcoin starts to have problems, no government backs it(besides Venezuela maybe), and although it could be wildly circulated it's not widely accepted.

So in order to enjoy your bitcoins, you have to exchange them for dollars. Well, then what's the point. Furthermore, no one is PAID in bitcoin, so in other to get your bitcoins you have to buy them for US dollars. In other words, it has no intrinsic value.

I know a place just like that, where you could go and exchange your dollars for tokens that you can use only inside that place, all the people inside agree upon their value, you can also increase the value of your tokens by doing the right moves, but when you get out you have to redeem them for dollars.

If you were thinking of a casino you were right.

This might sound like heresy to the hardcore Bitcoin fans out there, but that's just the reality. It's a speculative asset with no intrinsic value besides the enthusiasm of its participants, and it's prone to wild, volatile swings.

Unfortunately, some people see its price going up as a validation of their beliefs and as a measure of its legitimacy. The more expensive it gets the more it must be for real, right? Confirmation bias at its best!

Good luck out there 



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