"J. P. Gilliver (John)" wrote

| But what bugs me is: why do they even have that value? Just because
| something has cost someone $X to produce, why should it even be worth $X
| to anyone else?

Money is weird stuff, isn't it? Bitcoin is hard to
make and limited in supply. In those respects it's a lot
like gold. Why was gold worth money? Mostly because
it's both limited and immutable. So a few people got
rich mining it, but mostly it served as a stable, neutral
medium of transaction. Jewels are similar.

The problem, though, with cryptocurrency is that
the whole system is tenuous. A breakthrough in
computing could make it worthless. It's being stolen
as fast as it's being created. And minor problems can
be disastrous, like the link I posted the other day about
a whole pseudo-currency that's now worthless because
the inventor died and didn't leave behind his laptop
password.

But maybe the most tenuous aspect is the lack of
agreement. To be currency, everyone has to accept
it and it has to be transferrable. With cryptocurrency,
there's no gov't or organzation promising to stand
behind it, and I can't go to the supermarket with a
bitcoin and get change. I also can't go into a bank and
exchange it for dollars. One can probably cash in, but the
market fluctuates wildly. Given all that, it's really no
more a currency than futures bets in the stock market.
You might win money. You might not. But you can't
buy groceries with your futures bets any more than
you can with a lottery ticket.

I think the biggest forces behind the trend are 1)
investors who see a possibly lucrative gimmick and 2)
millennials and technophiles who see anything techy
as progress. The same people who think it's "cool"
to buy things by waving their phone, oblivious to the
privacy/security issues and the fact that such payment
systems create an extra, superfluous, expensive
middleman fee system. The banks are winning big
with this anything-but-cash attitude.

I know a young woman who used to work at CVS,
a drugstore chain. I was in the store one day buying
something. She tried to explain to the pitiable, dumb old
man (me) that Square is much better than cash. She
offered no reason why and was very doubtful when I
explained that Square charges fees that eventually
come back to her. She strongly believed it's a free
service. Of course, it is for her. The merchant is
charged the fee. I've noticed that about a lot of
millennials. They have a naive sense of a golden age
of tech, like Star Trek, where there's no racism,
everyone cooperates, and nothing costs money. All
you need is a cellphone to wave as you leave the
store. Let them eat iPhones.