This article entitled “Clint Eastwood’s Advice on Bitcoin Speculation,” is a perfect example of the kind of crap advice being given by financial commentators who are trapped in the old paradigm – only dollars are money. In it he compares the large price increases in Bitcoin to the investment bubble in tulips of 17th century Europe. I’d like to point out the huge differences.
First of all, unlike a flower, which has no utilitarian purpose, Bitcoin is useful. It is digital money. And by the way, very few U.S. dollars are tangible. They also are digital currency.
So if both dollars and Bitcoin are money, then why buy money with money? Because some money is better than other money.
It would not make sense to buy Venezuelan Bolivars with dollars right now. Why not? Because of the rapid reduction in the value (purchasing power) of Venezuelan money – in comparison to the less rapid reduction in U.S. Dollars. They are both inflating; but, the Bolivar is losing value more quickly. Much more quickly.
So, given the opportunity to put your hard earned money in Bolivars or Dollars it’s a no-brainer. Right?
Then why is it so difficult to understand why some people prefer to put their money in Bitcoin? The rapid rise in the dollar value of Bitcoin is because some people see the same relative difference between Bitcoin and Dollars as between Dollars and Bolivares.
For us Bitcoin, is not a speculation, we use it like money. But, rather than lose its purchasing power each year, like dollars have done since 1913, Bitcoin has more purchasing power annually. Make that monthly. Or lately… daily. By a lot.
So now let me give you one example of how Bitcoin is an improvement over Dollars in a very utilitarian way – the transfer of funds from one country to another.
We can’t use Bitcoin to pay the cable bill, or buy groceries at the market. Not yet. That could change as more and more retailers around the world begin to accept it. (I’m old enough to remember when very few merchants accepted credit cards.)
So, when we need pesos we transfer Bitcoin from the digital wallet where we keep our crypto-currencies (not just Bitcoin) to Bitso, the Mexican Bitcoin exchange. It takes about an hour for the block-chain to confirm the transaction.
Then we tell Bitso to transfer the pesos to our Mexican bank account. Presto. We’ve turned Bitcoin into pesos instantly. The transfer from Bitso to the Mexican bank is instant.
How long would it have taken to transfer dollars from our American bank to our Mexican bank? /Two to three days for a bank wire, and a $30 charge from the U.S. bank.
You can’t do that with a tulip bulb.