Former Federal Reserve Chairman Alan Greenspan said Bitcoin prices are unsustainably high and that the virtual money isn’t currency.
“It’s a bubble,” Greenspan, 87, said in a Bloomberg Television interview from Washington. “It has to have intrinsic value. You have to really stretch your imagination to infer what the intrinsic value of Bitcoin is. I haven’t been able to do it. Maybe somebody else can.”
“I do not understand where the backing of Bitcoin is coming from,” the former Fed chief said. “There is no fundamental issue of capabilities of repaying it in anything which is universally acceptable, which is either intrinsic value of the currency or the credit or trust of the individual who is issuing the money, whether it’s a government or an individual.”
What I believe Greenspan is trying to say when he talks about intrinsic value is that unlike gold and silver, Bitcoin has no use outside of it being (a very limited) medium of exchange. Gold and silver will never drop to zero because they have value in the making of jewelry, dental work, as electronic conductors and sliver in medical sector. Bitcoin because it has no use outside that of a medium of exchange can drop to zero ( as can fiat currency).
So the USD is a bubble as well?
ReplyDeleteTotally. Just a long time in popping.
DeletePlease will you do your homework first before dissing Bitcoin/bitcoins.
ReplyDeleteAnd what pray tell is intrinsic value? Owing in part to its obvious aesthetic and industrial uses (which do not justify its current market price), gold only has market value because people agree to assign it value – i.e. the market has arrived over time at a perception of utility and value for gold as a store of wealth and functional means of exchange.
That is to say, gold's value is not intrinsic, but purely anthropogenic. Its market price is an artefact of human projection of perceived worth in direct relation to its scarcity and cost of extraction – the aggregate of individual subjective value judgments and time preferences driven by the survive-and-thrive instinct intrinsic to humankind. (It's only worth anything insofar as it is useful to and facilitates those fundamental essences of human life.)
The Bitcoin protocol – as opposed to the bitcoin currency unit it underpins – is more akin to http or smtp. In other words its potential utility, and therefore the primary source of any value the market might by definition assign to the currency unit, is the ability it gives market participants to transfer any amount of wealth anywhere on earth almost instantaneously and almost for free, bypassing completely the hegemonic empires of state and central bank, and all their corporate whores. If that is not a massive, indeed revolutionary, potential utility, then I will have to deconstruct entirely my Austrian / Libertarian worldview that I have carefully and conscientiously nurtured in recent years.
One of the great benefits of being able to stand on the shoulders of giants is that one gets to see even further ahead than they did. Taken as a whole, then, the regression theorem still holds. The Bitcoin protocol underpinning the bitcoin currency unit is a further development of the other free-source protocols that allow us to send emails and browse the web. It extends even further the exceedingly useful functionalities of those two protocols to encompass wealth transfer too, giving it a potential utility – and therefore market value – of quite simply mind-boggling proportions.
I’m sorry, but if you can’t appreciate that point, you really do need to do more homework on what Bitcoin/bitcoin is all about. Either that, or I really am barking up the wrong tree here (very possible, I admit).
You seem to admit bitcoin protocol/bitcoin currency's sole use is as a medium of exchange ... what Wenzel is saying is that gold/silver/etc have uses beyond being a medium of exchange ... if gold/silver were never used again as medium of exchange, they would still be valued (subjectively of course) because they have other uses as outlined above ... if bitcoin is never used as a medium of exchange it is literally good for nothing and, seemingly, no one would assign it any subjective value
DeleteBitcoin's worth is as a global public ledger and/or payment network that operates securely at little to no cost to users. Is this of no value?
DeleteHow do you justify $1200 per ounce for gold? Gold is valuable because it is valuable. What percent of $1200/ounce does the "instrinsic" part account for? There are better electrical conductors, better materials for filling cavities in teeth, and like gold, bitcoins don't oxidize.
Whatever one's opinion of bitcoin, it is hilarious to read that the seer of no other bubbles today somehow sees this one.
ReplyDeleteYes, that's exactly right, bionic mosquito. Comedy gold.
DeleteWenzel and Greenspan agree: Bitcoin is a bubble. How does that happen?
ReplyDeleteBecause Greenspan is saying something that is convenient to Wenzel. That's how.
DeleteBernanke (who said gold isn't money) might one day say that Bitcoin is a bubble and Wenzel would post that too. Because it is convenient.
Idiot, how do you explain Wenzel posting: Ron Paul: Bitcoin Could 'Destroy the Dollar'? How does that work in your nutty framework?
DeleteBecause it's RON PAUL, doofus.
DeleteHe takes Ron Paul's opinion seriously.
How often does he take Greenspan's opinion seriously?
@anonymous
ReplyDeleteI don't have time to refute step by step.
Just the obvious points.
You claim bitcoin allows you to transfer any amount of wealth anywhere in the world almost instantly and almost free.
Actually, you can already do that with an ACH transfer (upto 10K), wire transfer ($25 for any sum) cash (as much as you can stuff undetected into your suitcase or cash cards. You can also do hawala.
The limits in all these cases don't arise from the medium, but from government restriction, which could be enforced much more thoroughly through BTC than by other means.
Second. Bitcoins aren't "free." They require not only a very good computer, but an excellent internet connection, encryption of a very high order not only for the connection but for the hard drive.. and considerable technical knowledge to thwart the net-savvy people who swarm around bitcoin users.
None of that is free or widely prevalent.
In most countries, you don't even have good enough internet.
Plus, all of it can be snooped on and shut down.
That is just one objection out of dozens I could raise.
@Tony
ReplyDeleteYou truly are a priceless troll.
How do you explain Wenzel posting your rants?
I didn't realize he had posted an actual article by any of the pro-Bitcoin posters here. Just on occasion one by men who's overall work he respects. When it comes to anti-Bitcoin people, even a FED-monster like Greenspan is suddenly "wise" about the subject.
DeleteBut i guess i need to teach you the meaning of logic again.
Anyway, at the very least i engage in the same type of subjective sloppy posting Wenzel himself does.
How it that evidence coming by the way? Or are you going to engage in further cowardice?
"Good News for Bitcoin"
ReplyDeleteby Lew Rockwell
"Alan Greenspan doesn’t like it; Ron Paul thinks it could destroy the greenback (well, with the help of the Fed)."
http://www.lewrockwell.com/lrc-blog/good-news-for-bitcoin/
Not really a strong argument in itself. But apparently, they are not always necessary when talking about Bitcoin, so why not do it back and forth?