At the risk of offending folks who own Bitcoin, we’re going to share our thoughts with you. First, we don’t really think of Bitcoin as an investment. Bitcoin is not Gold. Bitcoin is not a coin. Bitcoin is not currency. Bitcoin is not money anywhere in the world.
We might think of Bitcoin as “a digital token” or as “digital paper.” To me, it’s like an on-line edger or an Excel Spreadsheet that tracks the number of Bitcoins each user has. First you give them money, then they track it for you.
The “mining of Bitcoins” and supposed “limitations” on the number of Bitcoins in existence, sounds too much like technical jargon some marketing con artist would dream up.
Bitcoin Mania Too Much Like Tulip Mania
Throughout history there were people willing to pay any price for an investment just because it’s “a hot investment” and everybody thinks it will continue to soar in price. Take Tulip Mania as one example.
Tulip mania is a period in the Dutch Golden Age during which contract prices for some bulbs of the recently introduced and fashionable tulip reached extraordinarily high levels and then dramatically collapsed in February 1637.tulips rapidly became a coveted luxury i
A tulip, known as “the Viceroy” (viseroij), displayed in a 1637 Dutch catalog offered for sale for between 3,000 and 4,200 guilders.
A skilled craftsworker at the time earned about 300 guilders a year.
At one point 12 acres of land were offered for a Semper Augustus bulb.
Tulip Mania is a classic example of a financial bubble. When the price of an item goes up and up, not because of its intrinsic value, but investors buy it expect to sell it again at huge profit. The idea of paying $1 Million Dollars for a tulip bulb is foolish. But, “the greater fool theory” entices you into thinking you’ll find a buyer to pay you $2 Million.
Big Bitcoin Problems That Persist
- Most retailers won’t accept Bitcoins because the price is too volatile.
- Good money must have a stable value between buyer-seller.
- Bitcoin use is complex on purpose.
- Bitcoin has high transaction fees.
- Bitcoin, by design, has low processing speeds.
- Insiders report in-fighting among development teams.
- Like tulips, there’s no real need for Bitcoin.
With more research, we could probably write three pages on the pros and coins. Search Google or check Investopedia — Bitcoin has lots of people singing its praises. My intention in this article is to warn that the promises, hype, volatility, profits and extreme losses at times define Bitcoin as questionable investment. Bitcoin be fun, like gambling, but don’t bet your retirement on it, please.