There’s been a lot of buzz about bitcoin, and other “cryptocurrencies,” lately. The people who bought bitcoin early apparently have made outlandish amounts of money, and now the word is out — and a number of people have been trading in hopes that they, too, might strike it rich in the trading markets.
Calling the trading price of bitcoin volatile is like saying Donald Trump is a tad outspoken. The price seems to yo-yo back and forth for no evident, real-world rhyme or reason — of course, any real-world event other than people investing in bitcoin or selling bitcoin. Today, for example, the price of bitcoin fell more than 10 percent. The linked article has this helpful information: “Additional market data shows that other cryptocurrencies, including nearly all of the top-20 coins by total capitalization, are down amid the day’s trade. Among the worst performers are IOTA, which is down more than 18% in the past 24 hours, and monero, which has fallen nearly 15% in the same period, according to CoinMarketCap.” No one seems to have any explanation for why all of the cryptocurrencies took a beating today.
And that’s one reason why I won’t be investing in bitcoin. For all I know, it might be the next big thing and a crucial part of the coming digital economy. But, if people can’t provide any reason whatsoever for its price movement, then it sure seems more like outright gambling and less like a true investment. That, and the fact that I can’t understand precisely what bitcoin is, no matter how many times I read explanations of it, makes bitcoin seem more like a bitcon — a hyperspeculative bubble that has been foisted upon people who hope to make money and who are too embarrassed to admit that they don’t understand what cryptocurrency really is. And, of course, the late investors in these matters always seem to be the ones who are left holding the bag when the “smart money” exits.
People who are considering getting into bitcoin might do well to remember the tale of the Emperor’s new clothes.