Security quotes of the week

It's no more "something of value" than the "I trust my country's government will not go bankrupt and default on the its bonds plus interest rates" thing that make most (all?) fiat currencies...

I can use my country's currency to pay taxes, buy anything from groceries to real estate, or buy the currency of other countries. If I obey the relevant regulations there is no problem with me using Euros to buy millions of US dollars (if I had the money, anyway).

OTOH, there isn't a lot of stuff one can buy with Bitcoin (let alone pay taxes) and the sort of stuff that one can buy is typically either illegal to buy otherwise, or another cryptocurrency. Remember that even at blockchain conferences, they sell Bitcoin t-shirts only for dollars, not Bitcoin. (Also, try buying a million actual US dollars with Bitcoin and see how that works out for you.) This means that as far as Bitcoin has “value” at all, it has value mostly to people who want to buy illegal stuff, and cryptocurrency speculators. As has been explained elsewhere, it is completely useless as an everyday-type “currency” for buying groceries or bus tickets.

It is difficult to figure out what people see in Bitcoin to make them spend lots of actual money “mining” the stuff, but any value proposition there depends strictly on being able to find suckers who are willing to pay more for Bitcoins than the electricity to mine them, depreciation on the mining hardware, rent, etc. costs. And certainly according to the theory, if you have Bitcoins today you would be silly to spend them because if this thing – against all odds – does work out in the end, being deflationary by design, your Bitcoins will be “worth” more next week and even more next year. If it doesn't, you can only hope to unload them on some other sucker, hopefully for not a lot less than what you paid for them yourself.