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Jake Van Der Kamp

Transaction fees hamper everyday bitcoin use
-- South China Morning Post - Business , January 8
When is the last time you heard anyone say that bitcoin is here to stay?
I certainly cannot remember hearing anything of the sort recently. All that I hear and read is that bitcoin is a speculative bubble headed the way of the dodo bird.
Now I don’t pretend to understand how it works. People have explained blockchain to me before, that drew from me only a grimace of idiocy. I’m in my sixties. I was raised on vacuum tube technology. This one is beyond me.
As much as bitcoin’s recent trading does indeed exhibit the traits of a speculative bubble, I think there may be a lasting role for cryptocurrencies other than as a criminal’s money laundering currency of choice, which the reported impossibility of tracing transactions certainly makes bitcoin.




It is not because cryptocurrencies are necessarily so good that I think there is a lasting future for them. It is more that the traditional hard currencies - the dollar, the euro, the yen or any of them - are steadily losing the attributes that made them “hard.”
The problem at heart is that we have lost gold. For most of the history of civilisation, gold was the ultimate backing of currency because, fortuitously, the amount of it in circulation at any period, times the speed at which it turned over, roughly matched the growth of the economies that used it.
The bitcoin revolution isn’t coming. Here’s why
This meant that as an accident of history, currencies based on gold maintained a more or less steady value.
In the late nineteenth century, however, this began to change. The world’s economy expanded faster than the availability of gold, despite huge discoveries of the metal’s ore. The result was worldwide deflation. Prices fell. The growth of international trade and investment also strained the fixed price of gold in major currencies.
Things grew worse in the 20th century, and in 1973 the United States finally declared a formal end to gold backing for the US dollar. The rest of the world followed.


The value of a banknote in your wallet now rests only on your confidence that the relevant monetary authority won’t print too many of them.
In the space of only a few decades, it has proved a vain hope. True, most monetary authorities have not printed too many of them. That is only the way of countries like Venezuela.
Instead, they have sought economic stimulus by cheapening their currencies with more complicated tricks, such as quantitative easing, which force interest rates down while not changing the amount of money in circulation.
Explainer: Key questions you need answered about bitcoin
Without going into all the technical details, the result has not been economic stimulus, but government profligacy, diversion of money from mainstream industries into financial chicanery, home prices driven to astronomic levels and investment otherwise misdirected by subversion of the price of money.
We are living in the boom phase of this monetary delusion at the moment, but when it is shattered, as it must inevitably be, one big question will arise: What value does the dollar, or the euro, or the yen have, when the people responsible for maintaining it can play the fool like this with its underpinnings?
The real value of gold is that no human can manufacture it, or easily find it and extract it. Perhaps the only way to give a currency a worthwhile backing is to put it similarly beyond human reach. If it takes only one fool to destroy it, and such fools will certainly arise sooner or later, let no one touch its backing.


This is essentially what we have with the extreme difficulty of mining bitcoin from mathematical workings. It is far from ideal, but it at least represents a search along the right path.
Why is South Korea suddenly terrified of bitcoin?
We may not need it as a unit of account. Traditional currencies do well enough for that. Perhaps we may not even need it so badly as a store of value. We have plenty of liquid investment choices. Who holds cash for wealth?
But we will increasingly need something better than fiat currencies for a steady, solidly backed unit of transaction. The world’s central bankers have betrayed the responsibility entrusted to them in this respect
It will have to be a digital currency; that much is clear. Now let the search begin for something better than a bitcoin farm.


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Bitcoin

Let the search begin for viable alternatives to the world’s fiat currencies. Is bitcoin the answer?

What value does the dollar, or the euro, or the yen have, when the people responsible for maintaining it can play the fool like this with its underpinnings?

A physical bitcoin, the most popular among a myriad of cryptocurrencies around the world. Photo: Dreamstime

Bitcoin a threat to financial stability, says US Fed official

File photo of bitcoin in Washington. A senior Fed official warned bitcoin may pose a threat to financial stability after racing past US$11,000 this week. Photo: AFP

FILE PHOTO: U.S. Treasury Under Secretary for Domestic Finance Randal Quarles speaks during a Reuters sponsored panel discussion on the future of the U.S. housing foundations Fannie Mae and Freddie Mac in New York, U.S. July 19, 2006. REUTERS/Keith Bedford/File Photo

Bitcoin breaks US$20,000 as it steps into the big leagues on the world’s largest futures exchange

A pile of bitcoin tokens. The virtual currency has started trading on its second major exchange in a week with the launch of futures contracts on the CME. Photo: Getty Images

Bitcoin bubble embodies our bipolar year of optimism and doubt

Bitcoin trader Yoshinori Kobayashi speaks in a media interview in Tokyo on December 12. The virtual currency Bitcoin has seen an extraordinary rise throughout 2017 but has left many convinced that it is a bubble waiting to pop. Photo: Reuters

A view of Ducatus cafe, the first cashless cafe that accepts cryptocurrencies such as Bitcoin, on their opening day in Singapore December 21, 2017. REUTERS/Edgar Su

Bloomberg Best of the Year 2017: Eugene Mutai, a bitcoin 'miner' and software developer, poses for a photograph with cryptocurrency 'mining' machines at his home in Nairobi, Kenya, on Saturday, Sept. 9, 2017. Photographer: Luis Tato/Bloomberg

Bitcoin fears drag down crypto-linked stocks after South Korea says it may close exchanges

Bitcoin’s ongoing woes are dragging down stocks related to crypto-currencies after South Korea’s government announced that it wanted to crack down on speculation. Photo: EPA-EFE/SASCHA STEINBACH

Bitcoin sees wild swings ahead of launch of futures trading

A man uses the bitcoin ATM in Hong Kong, on Friday, December 8, 2017. The price of the digital currency swung wildly ahead of futures trading on the Sunday in the US. Photo: AP

People line up and wait to use the Bitcoin ATM in Hong Kong, Friday, Dec. 8, 2017. Bitcoin is the world's most popular virtual currency. Such currencies are not tied to a bank or government and allow users to spend money anonymously. They are basically lines of computer code that are digitally signed each time they are traded. (AP Photo/Kin Cheung)

A collection of Bitcoin (virtual currency) tokens are displayed in this picture illustration taken December 8, 2017. REUTERS/Benoit Tessier/Illustration

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What value does the dollar, or the euro, or the yen have, when the people responsible for maintaining it can play the fool like this with its underpinnings?


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Jake's View

Expresses the views, ideas and conclusions of the author. (Eg. Enough of Crazy Rich Asians, think of crazy poor Hongkongers.)


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Jake’s View

Let the search begin for viable alternatives to the world’s fiat currencies. Is bitcoin the answer?

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}What value does the dollar, or the euro, or the yen have, when the people responsible for maintaining it can play the fool like this with its underpinnings?

What value does the dollar, or the euro, or the yen have, when the people responsible for maintaining it can play the fool like this with its underpinnings?