Cryptocurrency: Next Catastrophic Bubble?

[Adipose]

Posting because a modder indicated that being paid in cryptocurrency, such as Bitcoins, was preferred over cash. Brought to mind the thought that if cryptocurrency ever becomes a universal medium of exchange then we gonna be in deep s...t sooner or later. Modern paper currency is bad enough but cryptocurrency is a disaster waiting to happen. AIU, modern paper currency is backed by nothing other than the "full faith and credit" of the government issuing the paper. In other words, paper money only has value as a medium of exchange because the government says it does and other governments will accept that it does. Therefore, business can be done. Cryptocurrency, otoh, has value only because the person who created the currency says it does and other people are willing to provide goods and services in exchange for cryptocurrency(aka digital money/CGC). I think of that kind of money as a figment of someone's imagination and a result of the gullibility of an awful lot of folks at large. IIrc, the creator was some programmer in Japan. We don't even know his/her name...unless we've discovered it since the last time I checked.

[Ethreon]

Money are representations of value that only work because some people back them and some other people accept that backing.

[Adipose]

Money are representations of value that only work because some people back them and some other people accept that backing.

AIU, no one is backing "cryptocurrency". Cryptocurrency has value only because the people using it want it to, and are willing to provide goods and services based on that desire...nothing else. The market in "cryptocurrency" is one of the most volatile in the history of money and, apparently, crashes with great regularity. From my point of view, anyone who does business with cryptos is asking to be skinned...sooner or later.

[Adipose]

Money are representations of value that only work because some people back them and some other people accept that backing.

Btw, that's basically what I said in the initial post. That's what "full faith and credit" means. However, modern paper money is backed, really, by nothing substantive. Not gold, silver, gems or any other form of something physical that is regarded as having value. The only reason modern currency has value is because the government that is issuing the money has a robust, relatively sound and thriving economy and other governments/countries recognize that and are willing to accept the issued currency as a medium of exchange in return for goods and services. Countries with less healthy economies have currency that is correspondingly less valuable.

[smschulz]

the concept will probably grow and morph into something in the future but won't go away.

[Adipose]

the concept will probably grow and morph into something in the future but won't go away.

Take a look on the Internet. The number of Sites dealing with, or in, Cryptos is astounding. Google "Bitcoin" or some such and be amazed at the number of hits. Btw, there're lots of examples of Cryptos. Bitcoin isn't the only one on the Web. Apparently, if one knows how to write the program then it's possible to create your very own Crypto. Then all you need to do is persuade folks that it's worth something. Personally I wouldn't be surprised if the whole idea becomes a financial bomb waiting for someone or some group to set it off. Can you say "broken" economy. As Tommy Lee Jones' character remarked in "MIB": "Humans are such a gullible breed." (IIrc)