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Will this Bitcoin stuff amount to anything more than a hill of beans?

Bitcoin Porsche

I was perusing the interwebs the other day, looking at some good ole fashion car porn – mmm, Audi R8, oh yeah, Ferrari 458 – when I came across a story about a man who bought a Porsche for three hundred Bitcoins. Three hundred of anything didn’t sound like a lot so my curiosity was certainly piqued. Reading more about the sale of the Porsche I learned that the buyer initially purchased the three hundred Bitcoins used for purchase, for $4 a piece, a total of $1200. Those same imaginary coins were valued at approximately $39,000 at the time of the sale. Now that’s a good deal. But I wondered, valued at $39,000 according to whom? How? Ah, there in lies the rub.

I find the whole thing very confusing, but one common idea is now reinforced in my mind: If you sold your Porsche for some Bitcoins, you might be a moron.

For those unfamiliar with the world of online currencies – aka normal people – Bitcoin, according to their own website, “is an experimental new currency that is in active development. Although it becomes less experimental as usage grows, you should keep in mind that Bitcoin is a new invention that is exploring ideas that have never been attempted before. As such, its future cannot be predicted by anyone.” Experimental currency?! Well, sign me up!! Will you guys take a check? I’ll give you a gazillion Petebucks for ‘em. The only thing I like more experimental than my money is my medicine. Am I right? Anyone? Is this thing on?

Bitcoin is essentially just a placebo for the barter system, where instead of trading goods and services – like say, you offer to paint your neighbor’s fence if he builds you a dresser – you’re trading a sportscar for well, nothing… in the hopes that some other sucker determines that your nothing is worth… something. It’s traded like a stock, if that stock was just a piece of paper with no relation to any business or entity. I have to admit, I find the whole thing very confusing, but one common idea is now reinforced in my mind: if you sold your Porsche for some Bitcoins, you might be a moron.

I guess we should not be that surprised that there are certain people seeking for alternative currencies. The internet may not have been created by people who didn’t want their real world interactions tracked, but it those people were some of its earliest settlers. Over time, that community has grown, and it has a vested interest in making its financial transactions as opaque as any other. And for years lunatics have been ranting and raving about the all-but-certain plunge of the dollar, telling frightened people to buy gold, that the apocalypse is coming. Ironically, they themselves have made quite a bit of actual coin doing so.

There’s been a recent explosion of interest in Bitcoin fueled less by these people and more by the simple fact that some of them have managed to make a shitload of money with the stuff. There are a finite number of coins so while it’s virtually unsustainable as an actual currency, that only increases its perceived value. These aren’t dollars. They are casino chips for nerd gamblers.

But is it dangerous? Recently the price per Bitcoin went from about $30 to $250, then back down to about $60. I guess the word “dangerous” is in the eye of the beholder. If it was me and I was beholdin’ three hundred magic beans when I used to have a Porsche, and those magic beans lost more than double their value in days, yeah, dangerous is about right.

Money shouldn’t be speculative. If you’re mortgaging a home, you should know what those payment are going to be like next week, next year, etc. The consistency, the reliability, is what spurs investment and economic growth. But I’m no economist so what do I know. I’ll defer to two experts on the subject:

“Search for a nine to five, if I strive
Then maybe I’ll stay alive
So I walk up the street whistlin’ this
Feelin’ out of place ‘cuz, man, do I miss
A pen and a paper, a stereo, a tape of
Me and Eric B, and a nice big plate of
Fish, which is my favorite dish
But without no money it’s still a wish”

Finally, someone’s making sense.