Supporters of bitcoin say that it works just like fiat money, but its supply is limited by the 21m cap, whereas governments can print money that reduces the value of the fiat currency.
That is true but is missing the big picture. The supposed 21m bitcoin cap doesn’t actually offer any real protection. Sure, bitcoin itself will not create any more dollars, but what is stopping any other imitators starting the same thing?
Yes, government prints money that devalues the currency. But what is important to remember is that government is the only one who can print more money. With e-currency, anyone can print more money! And that’s supposed to offer better protection than government fiat money? There are no regulations or authorities involved. I bet you there are hundreds of programmers out there testing beta of their own currencies already.
Gold holds its value because it has a finite supply and cannot be ‘printed’. If you and I can create gold out of thin air, what would be the value of gold be?
The higher the value of bitcoin, the faster and better the competitors will be. The seed of Bitcoin’s failure is planted at the very moment it becomes successful.
Now if only I can short bitcoin – the chart is looking like a classic bubble.
Be the first to comment