The market is finally showing some weakness after a wild post-election stock market run-up, and it’s taking Bitcoin with it. At least so far.
I wrote a little about this last month, but did not focus enough on Bitcoin, which everyone is talking about more than ever.
This week a lot of us were amused when Nouriel Roubini of Roubini Macro Associates appeared on Bloomberg Television and said Bitcoin is the “biggest bubble in human history” — worse than Dutch Tulips, the dot-com crash and on and on. (Personally, I prefer the Beanie Babies comparison.)
Three years ago, Bitcoin was under $400, a price I thought was too high even then. As far as I’m concerned, Bitcoin has no intrinsic value and should be worth nothing. So why does anyone think it’s worth thousands (and in some cases, millions) of dollars?
It’s the theory of false scarcity. There are a limited number of bitcoins in the world and the usage of blockchain technology has assigned the ownership of each coin to specific wallets owned by individuals. So to take “ownership,” I have to use the universal blockchain mechanism, accepted by all as valid, to transfer a coin.