Thursday, December 7, 2017

On the Bitcoin madness

At the time of posting this article, December 7, the price of  Bitcoin has shot upwards towards $17,000.  If this is not a bubble, show me what is. I won't pretend to understand Bitcoin .... I clearly don't and kudos to those who can understand what it's all about and what crypto mining and bitcoin mining machines,etc.etc. happens to be and makes a profit off them.  

Andre Damon  at WorldSocialistWebsite
Warnings of new financial bubble as bitcoin price hits $10,000

The price of the digital currency bitcoin reached $10,000 late Tuesday, an eleven-fold increase since the start of the year, when it was valued at $900.

The explosive surge of bitcoin, the first so-called “cryptocurrency,” or digital money, has eclipsed the run-up of any comparable asset in modern history. As the New York Times noted Tuesday, “The Dow Jones industrial average, in its biggest year, 1915, went up 82 percent, or one-tenth as much as Bitcoin has gone up this year. Amazon’s red-hot stock is up only one-fifteenth as much as Bitcoin this year.”

To find financial bubbles comparable in scale, commentators have reached back hundreds of years to compare the bitcoin mania with the Dutch Tulip bubble of the 17th century and the South Sea bubble of 1721.

But with the rally in bitcoin and other cryptocurrencies showing no signs of stopping, Wall Street and major financial institutions around the world are pouring billions of dollars into a financial asset that is totally unregulated, has no clear rules for lending and exchange, and no consumer safeguards.

With major investors flush with cash from open central bank spigots and soaring stock prices, there is every indication that this dangerous asset class is assuming an ever-larger presence on the balance sheets of banks, hedge funds and other outposts of the financial system.

The odds are increasing of another global financial meltdown on the scale of 2008, this time centered on cryptocurrencies instead of subprime mortgages.

The origins of bitcoin are shrouded in mystery. First introduced in January of 2009 by an unknown individual or group claiming to be a Japanese man named Satoshi Nakamoto, its nameless creator is now sitting on a nominal fortune of some $7 billion.

The currency was initially proposed as an anonymous and secure method of payment that bypassed central banks and government regulations, leading to its early adoption by anarchist and libertarian-minded individuals. In the ensuing years, however, it became clear that, due to its wild price fluctuations and institutional restrictions, bitcoin was inconvenient as a method of payment.

While an array of other cryptocurrencies have been created in an attempt to fill bitcoin’s purported role as a cash substitute, bitcoin’s proponents now advocate it as a long-term store of value, similar to gold, and supposedly immune to geopolitical instability. They promote it as a safe haven for investors living in countries with unstable currencies.........

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