There have always been pursuits of a
better economic system for transacting business.
The latest incarnation is, of course,
the Blockchain, and digital currencies. The idea seems to be to
remove the central banks from these transactions, and simply have
people exchange digital chits back and forth. Trouble is, theories
seem simple, until you put them into practice. Bitcoin has been
reported on extensively. This currency seems safe, in that it is
pegged to the total quantity of gold – 21 million ounces or
somesuch. So its value is going to go up, theoretically. But
somehow, the digital entity, decentralized as it is, got swept up in
speculative frenzy last fall. The value of one bitcoin went ou to
near 20,000.00 – and then collapsed. Now it stands at around
$6,000.00 .
This behavior seems remarkably
like any other bubble or speculative froth. What was supposed to be
a distinct entity, not at all like some penny stock, ended up
behaving a lot like some penny stock, some pump and dump thingy. The
blockchain technology itself is suspect now. It seems to require
more and more computing power, as the ledger contains all of the
transactions ever made regarding the digital currency. Some are
saying that the processing power to “mine” bitcoin or process the
ledger's transactions is equal to that of a small country. Others
are saying that the blockchain model is good for pursuing other goals
that require huge amounts of processing power.
To me, the whole idea of
crypto-currency seems to be a real slick way for one or a small group
of people to print money on a colossal scale. The recent story in
Wired about the Tezos currency is a good example. Time will tell,
and I could be wrong. But for the average small investor, with only
a few bucks to spare, my advice is this: Open a savings account, and
toss some money in every month. You will keep all of it, and you
should even get some fractional interest money. No commissions, no
transaction fees, and no bullshit. Just your money in the bank. Oh
yes, and try not to touch it.
Thanks for reading.