The Case that Bitcoin Is a Bubble (economist.com)

An anonymous reader shares an excerpt from the Economist: It seems that every day, Bitcoin seems to hit a new high. But the reported price can move up and down by $1,000 or so within a few hours. This might have made it a great investment for those who got in at the right price and are nimble enough to get out in time. But it doesn't make it a useful means of exchange (Editor's note: the link could be paywalled; alternative source). When the price is rising fast, those who use bitcoin will be reluctant to part with it; when the price falls, those who sell goods will be reluctant to accept it.

Comments

Re:Makes stable pricing impossible.

[PopeRatzo]

If I hold one bitcoin, and someone starts messing with derivatives, I still have one bitcoin. What if I just simply choose to ignore the derivatives ?

What happens with derivatives affects the underlying value of instrument from which it is derived.

Remember the economic crash in 2007-2008? Look what the trading of derivatives in mortgages did to the value of a house. Yes, if you owned a house before the crash, you still owned a house after the crash. It was just worth a hell of a lot less.