Jason Farrell

Former Fed Chairman Alan Greenspan was asked recently on Bloomberg TV whether he thought Bitcoin, which had an 80-fold run-up this year, was a bubble. Video below:

“I guess so… currencies, to be exchangeable, have to be backed by something,” he grumbled. Without intrinsic commodity value or the force of a government, Greenspan claims, there’s no way to “back up” a currency. Bitcoin is worthless as an exchange medium, he says, because it has no such backing.

He did note, however, that wealthy individuals might create their own individual currencies quite easily. So Buffettcoins might really be worth something. Bitcoins, however, which merely run on trust built by a few million individuals, are headed for ruin.

We’d better trust Mr. Greenspan’s opinion. He ran the Fed for nearly 20 years, after all, and can predict bubbles better than anyone. Like when he predicted in 2004 that the housing bubble would burst: “While local economies may experience significant price imbalances, a national severe price distortion seems most unlikely in the United States, given its size and diversity.”

OK, maybe he didn’t predict that. But he’s on TV being interviewed, so he must know something, or whatever. The Sunlight Foundation’s Eric Mill disagrees, having recently tweeted that “decentralized, immutable records of activity guaranteed by network consensus are revolutionary, and only Bitcoin is doing it.”

What do you think? Let us know in the comments.

Jason Farrell

For The Daily Reckoning

Ed. Note: The future of Bitcoin remains to be seen. But rest assured the Laissez Faire Today email edition will be following it very closely. If you want the most up-to-the-minute research on this and other freethinking topics, you owe it to yourself (and your portfolio) to sign up for the FREE Laissez Faire Today email edition.

Jason Farrell

Jason M. Farrell is a writer based in Washington D.C. and Baltimore, MD. Before joining Agora Financial in 2012 he was a research fellow at the Center for Competitive Politics, where his work was cited by the New York Post, Albany Times Union and the New York State Senate. He has been published at United Liberty, The Federalist, The Daily Caller and LewRockwell.com among many other blogs and news sites.

  • Jonathan @ Pensas.co

    Bitcoin looks very much like a bubble. The current chart is identical to every bubble we’ve seen in history.. As for Greenspan? The reason he can predict bubbles is because he helped create them during his 20 years in the Fed.

  • Daryl

    The same goes for debit/credit cards. These days all is electrified.
    By the way you can still use your phone for transactions.

Recent Articles

Got Tech Stocks? Sell These Flops Now…

Greg Guenthner

The latest victim of the crude rout is none other than the stalwart tech stocks. These are the go-to trades that have held up all year long. I'm talking about stocks like Google, Yahoo! and Microsoft. Like I said before, these aren't no-name stocks you're seeing drop more than 10% from their highs last month.


Three Time Bombs in Your 401(k) and How to Disarm Them Now

Dave Gonigam

By the time you do… Kaboom! It’s too late. They’ve already blown up your retirement. There are three time bombs the mutual fund industry has planted within your 401(k). By the time you’re done with this article, you’ll know how to identify them. And, more importantly, how to disarm them. Dave Gonigam has the scoop...


A Strong Dollar’s Not All That Bad

James Rickards

On the eve of the FOMC’s meeting announcement, our CIA financial strategist suggests, “To beggar thy neighbor or not… that is the question.” Read on to find out why having a strong dollar is good for you, but not so good for the Fed...


The Great Unraveling of the Commodities Super Cycle

Greg Guenthner

There's an entire parade of metals and energy plays running off the side of Commodity Mountain like a herd of lemmings. Gold cracked $1,200 after a $30 drop. Silver cratered more than 5% on the day. Copper fell another 2% Natural gas is down. Heating oil is down. Oh, and our main culprit, oil, coughed up another 4%. And that's just yesterday's losses...


Same Currency War, New Battle Phase

James Rickards

The current global currency war started in 2010. Our own Jim Rickards published his book, Currency Wars, soon after that. One of the points that he made in the book is that the world is not always in a currency war. But when we are, they can last for a very long time. They can last for 5, 10, or 15 years, sometimes longer. Read on to learn the latest battle phase of the current currency war...