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.
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.
Bitcoin just plummeted 50% due to a crackdown on the trade in China. But China has very good reason, argues Joe Wiesenthal.
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.
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.
The same goes for debit/credit cards. These days all is electrified.
By the way you can still use your phone for transactions.
Our friend Jim Rickards and founder Addison Wiggin believe the dollar will soon meet its demise. Chris Mayer, on the other hand, thinks the dollar will only get stronger this year and next. We'll let you decide for yourself. In this featured essay Chris lays out his train of thought and a guide for investing in a strong dollar world. Read on...
The first thing you might notice about the life of Felix Dennis is that he devoured crack cocaine during massive orgies with hookers at his mansion. Yet despite his penchant for sex and blow, he admitted, "making money is the one addiction I cannot shake." And thankfully, he wrote a book about it. Chris Mayer explains...
Bitcoin has been pretty quiet lately. But that doesn’t mean big things aren’t taking place behind-the-scenes for the digital currency. In today’s Laissez Faire Today, Chris Campbell pulls back the curtain and shows you how bitcoin is quietly slipping into the mainstream. He also shows you why now could be the time to buy now, or forever hold your peace. Read on…
According to my friend and fellow technician Ryan Detrick, The Russell’s quarterly win streak of 8 is the index’s best performance of all time—even topping two monster runs in the 90s. So if small-caps are slipping, where can you find the next hot sector? The answer might surprise you…
The Swiss gold referendum in November is far more important that many people realize. The outcome could quell or confirm doubts about the amount of physical gold available at the New York Fed. And that could send the price of gold higher by multiples. Dr. Ron Paul brings you up to speed on what's happening in Switzerland...