Courtesy of Mish.
I recently commented that it would not surprise me if bitcoin plunged to $1.00. That was not a prediction, it was a comment.
Still, I still feel a collapse in bitcoin is likely.
For discussion, please see Cash Dinosaur: France Limits Cash Transactions to €1,000, Puts Restrictions on Gold; Bitcoin End Coming?
In response, reader Creighton writes …
Hello Mish
While I'm not going to argue the point about the possibility that Bitcoin drops to $1, or less, (that could happen yet, but not for the reasons you propose) I felt it necessary to point out something you seem to have overlooked.
While it's likely that the US government watching Bitcoin in order to get some pointers about releasing it's own version of the US$, they would also have noticed that Canada attempted to do that exact thing two years ago.
It went nowhere. And it went nowhere for the same reason that the US, or China, or any other nation, couldn't expect to succeed in the same market.
Bitcoin was first to market in the, previously non-existent, field of non-state Internet currencies. Precious metals don't work, because there has to be a vault somewhere. The Liberty Dollar & Egold both tried that, and both got raided. There is a real market for a working non-state currency, that can't be screwed with by state actors. Bitcoin isn't perfect, as I have stated before, but if it's going to zero, it will be because one of the many start–up cryptocurrencies that have arrived since Bitcoin turns out to be substantially better at doing the same things.
I understand that you are not a crypto-geek like myself, and that I'm biased because I understand how Bitcoin actually does what it does, but I can honestly say that it does some things in completely novel ways; and has features that no fiat currency, digital or otherwise, has been able to do internally. There are entire financial institutions in the finance industry founded upon solving many transaction problems that Bitcoin handles just fine internally, for the cost of about a nickel per transaction. Bitcoin is actually capable of taking over all the functions of notary publics & most of the functions of county clerks, everywhere.
Western Union's cash transfer business model is walking dead. Keep an open mind, because there is a fair chance that you will eventually use Bitcoin, or its successor, in some capacity within a decade. Perhaps only as a cash transfer method, with the intent of switching back to cash immediately, but that day shall come.
Governments can no longer just suppress these new crypto-currencies and expect them to go away. The last chance to crush Bitcoin was several years ago, before the hashing rate (the cryptographic support of its security model) shot past the capability of the largest non-classified supercomputer on Earth….
