Sincere thoughts on the brink of a new Bitcoin and crypto crash…
Another Bitcoin crash came today. An ounce of gold, aluminum, or any other commodity has a unique value. The one dollar bill has no inherent value, but is backed by the US government. A paper check has no inherent value and may be worthless if there is insufficient balance in the account from which it was drawn. To accept a payment check, you need to have some level of trust. However, cryptocurrencies have neither inherent value nor the support of any reliable institution. Why should I believe that a cryptocurrency will have any value tomorrow?
And it’s getting worse. A large amount of electricity is required to maintain crypto-enabled blockchains. Someone has to pay for this power, and probably this cost is paid by the users of these “currencies”. A gold coin or $50 bill can sit quietly in my pocket and cost no one to maintain its value.
Inflation can certainly erode the value of a paper bill, but with appropriate investments in real assets, I can protect against inflation. I will not bet on cryptos or tulip bulbs. I don’t care what any celebrity has to say on the subject, nor am I swayed by stylish ads promoting crypto.
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