Comment Re:Still wondering... (Score 1) 490
Boy, it's really bad. Sad because bitcoin was a good concept, but the execution has been terrible. Just look at a chart of the USD/bitcoin exchange rate over the last year or so:
https://mtgox.com/trade/history
This asset has "gone parabolic", i.e. experienced an exponential increase in relative value. Like silver did just before coming crashing down the other week. I realize that during that time the US dollar has decreased in value marginally relative to other currencies and more significantly relative to commodities, but this sort of instability in value relative to one of the most significant baseline currencies (and therefore, relative to any other currency or even relative to hard assets like gold) doom bitcoin to me.
It's clear that bitcoin was set up in a way to promote massive early speculation in bitcoin. The awarding of a fixed amount of bitcoin per unit time regardless of the amount of resources being devoted to bitcoin mining has now created a situation where those mining before have an excess of an asset they need to pawn off on some greater fools, and where mining bitcoin is essentially worthless because there is so much competition for a small number of bitcoins awarded per unit time. As a result, bitcoin has simply become an arbitrary asset to speculate on - like a super-silver, but with no industrial use and no jewelry applications.
To show how worthless this is as a currency, in a 48-hour timeframe according to that same chart linked to above, the exchange rate has varied between $8 per bitcoin and $6.60 per bitcoin (i.e. it has lost almost 20% of its value in 48 hours). During the same 48 hour period, in one of its highest volatility phases in decades, silver has changed in value by about 5-6%, and gold by about 1% in US dollar terms.
The US dollar is imperfect in many ways, but there's a bunch of smart economists that work to create some relative stability in its value in terms of goods and services it buys so that it's useful as a currency, can be invested to generate returns, loaned out, or exchanged for goods and services.
The more I see of this, the less likely I would ever be to use bitcoin for anything. The value is too unstable and the management of the bitcoin economy too poor.