Bitcoin?

[Cronk]

Supply is only one component of price. The other is demand. World oil supplies are a little short these days but I don't see the price of gas falling.

 

[Jon]

Another view is that nearly all money nowadays is digital, and that requires energy to keep it alive, to keep it secure from hackers, legally accountable and so on.

 

[Cronk]

Only physical cash you have is not digital.

 

[The_Doc_Man]

Only physical cash you have is not digital.

Yes, but since governments can "print money" any time they like - backed or not - then even paper money is a depreciating asset. Bitcoin, like most other currencies and non-currency "collectibles," is simply another item for which the current value depends on supply and demand. Gold and other precious metals are currently appreciating in value because demand is greater than supply - particularly since there is still a lot of effort involved in mining and refining. I.e. while there is still active mining under way, we are nowhere close to reaching a supply replenishment level that would reduce the price.

Since Bitcoin and all of its variants inherently "float" without any backing, there is no more stability in THAT currency than there was in the Greek drachma a few years ago, or in the German Weimarch mark right after WW 1.

 

[Steve R.]

Since we are delving into the nature of money; at its most fundamental (simplistic) nature it is an "IOU".
I work for you for one hour and you give me an "IOU" for one hours work which I could then use to "buy" one hours work from another person.
Of course that is complicated by the real-world fact that not everyone's work is considered to be of equal value. A surgeon would tend to view his work as being more valuable than that of a fast food worker. Other real-world issues also distort the value of money, such as fads, desirability, and scarcity.
When governments print money (deficit spending) they are depreciating it since it is not backed by the actual labor used to "support" each dollar. We see that depreciation as "inflation".

 

[The_Doc_Man]

I can't remember the story or author right now, but there was a "space opera" novel some years ago about a ship going out to revisit planets that had been settled centuries ago by people using some bizarre star-drive but now the ships were hundreds of times faster and they were trying to reach out to their lost cousins. One of the places they found involved a culture that had no ordinary money. They used the "OB" (obligation) method, in which if you did an afternoon of work for someone, they wrote on a piece of paper and signed it, thus allowing you to go to a diner and get something to eat. You paid with the "OB" note and the diner would feed you - but then find some other task to settle the debt. This debt had already been incurred because you would not get the "OB" note until you did the work. In conversation, the protagonist (one of the cultural explorers from the new ship) ran across a member of the fire department (a volunteer unit) bemoaning his fate that he was unable to reach the fire station in time to get in on a fire at the local brewery, where the "OB" markers to the firemen would guarantee them kegs of beer!

But in essence, the story emphasized the point that money is an artifice - a method of balancing the books on items of inherently unequal value - and that the trick is agreeing on how to determine equality of value. Which introduces the topics "exchange rate" and "balance of trade."

 

[Cotswold]

I can't remember the story or author right now, but there was a "space opera" novel some years ago about a ship going out to revisit planets that had been settled centuries ago by people using some bizarre star-drive but now the ships were hundreds of times faster and they were trying to reach out to their lost cousins. One of the places they found involved a culture that had no ordinary money. They used the "OB" (obligation) method, in which if you did an afternoon of work for someone, they wrote on a piece of paper and signed it, thus allowing you to go to a diner and get something to eat. You paid with the "OB" note and the diner would feed you - but then find some other task to settle the debt. This debt had already been incurred because you would not get the "OB" note until you did the work. In conversation, the protagonist (one of the cultural explorers from the new ship) ran across a member of the fire department (a volunteer unit) bemoaning his fate that he was unable to reach the fire station in time to get in on a fire at the local brewery, where the "OB" markers to the firemen would guarantee them kegs of beer!

But in essence, the story emphasized the point that money is an artifice - a method of balancing the books on items of inherently unequal value - and that the trick is agreeing on how to determine equality of value. Which introduces the topics "exchange rate" and "balance of trade."

Can this be summarised simply by barter?
It used to work all over the place, certainly in England in years gone by.

 

[Uncle Gizmo]

I did consider buying some bitcoin when I first posted this thread...

But I felt that bitcoin was a threat to the establishment and they would take action against it...

I also see it as some sort of computer program and I've never seen any software which is safe. Even Microsoft cannot stop knock off versions of its software getting out there!

 

[Steve R.]

But in essence, the story emphasized the point that money is an artifice - a method of balancing the books on items of inherently unequal value - and that the trick is agreeing on how to determine equality of value. Which introduces the topics "exchange rate" and "balance of trade."

The government by printing fake "OBs" totally undermines that concept. The books can never be balanced. (Inflation can be considered a (destructive) method of balancing.)

 

[Cronk]

Rather than the specific bitcoin, better to use the term cryptocurrency. Since bitcoin started in 2009, there are now lots of different 'bitcoins', well over 100 cryptocurrencies - see a screen shot of a crypto broker below.

There are now fund managers and ETFs where it's possible to get exposure to investment in cryptocurrencies.

Last year, I put a very small amount of my investment money into 3 different cryptocurrencies just to get a feel for it.