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Central Banks Can't Ignore the Cryptocurrency Boom (bloomberg.com)
The boom in cryptocurrencies and their underlying technology is becoming too big for central banks, long the guardian of official money, to ignore. From a report: Until recently, officials at major central banks were happy to watch as pioneers in the field progressed by trial and error, safe in the knowledge that it was dwarfed by roughly $5 trillion circulating daily in conventional currency markets. But now as officials turn an eye toward the increasingly pervasive technology, the risk is that they're reacting too late to both the pitfalls and the opportunities presented by digital coinage. "Central banks cannot afford to treat cyber currencies as toys to play with in a sand box," said Andrew Sheng, chief adviser to the China Banking Regulatory Commission and Distinguished Fellow of the Asia Global Institute, University of Hong Kong. "It is time to realize that they are the real barbarians at the gate." Bitcoin -- the largest and best-known digital currency -- and its peers pose a threat to the established money system by effectively circumventing it. Money as we know it depends on the authority of the state for credibility, with central banks typically managing its price and/or quantity. Cryptocurrencies skirt all that and instead rely on their supposedly unhackable technology to guarantee value.
At least in the U.S., if you have less than the insurance limit (I think it is about $200K) and the bank loses it, then you can get reimbursed. If you have less than whatever in internet coins and they get lost, you get squat. That's going to be a big hurdle, who guarantees those transactions? All it would take is one major exploit on a crypto-currency to tank it.
Cryptocurrencies are currently the bubble du jour. As central banks have suppressed interest rates for so long, people are desperate for yield in anyway shape or form.
Cryptocurrencies are the easiest thing to game and blow up into a bubble. People are rushing in and flipping it to a greater fool the same way people were doing this with houses back in the mid 2000s.
Cryptocurrencies certainly have a lot of interesting uses, however their value is a direct threat to government control of currency. They're currently enjoying lax regulatory oversight which anyone with half a brain means that current valuations are bloated and in a perilous position if governments start deciding to heavily regulate it. I know, coindorks will come thrashing about saying "crypto will bypass this and become the next reserve currency!"
No, if governments make ease of conversion into fiat difficult in anyway or outright ban it that will directly impact the price of the coins in the longterm.
If you're using crypto presently, consider it purely a speculative play and continue to take profit along the way. If you've put your entire life savings into anything like this, you're an idiot and need to seriously reconsider your exposure to risk!
It's been in a bubble since 2012 apparently. Still waiting for it to burst.
Wrong, it crashed from $1,000 to $250 from 2013 to 2015.
Anyone who knows their economic history even a little bit - and who isn't just a rabid gold-bug - knows that the gold standard was a complete disaster, totally unsuited to national economies... When people proclaim that something is 'the new gold standard', as if what they are praising is something laudable, they are nearly always unaware of the irony of their statement - which is pretty fitting, as for a long time entire nations (most of the world, even...) were unaware of just how damaging their glorified 'standard' was. Praising something as a 'new gold standard' might have a dictionary meaning of something being of a high standard - but the meaning in terms of economic history, as something being disastrously misplaced as a high standard - is a far more fitting meaning for the term.
Nothing has intrinsic value. Things are only valuable because we decide they are.
-- Give me ambiguity or give me something else!
Some things are abstract constructs in their entirety, and you cannot eat, drink, or wear them, or use them to hunt with, or even turn them into a ring. Such things with a physical manifestation do not tend to lose half their value in terms of their utility between starting lunch and ending it, as happened in the Weimar Republic with cash.