Bitcoin faith.

Any value that bitcoins might have is not derived from its unique software.  The bitcoin software is open source.  The number of potential competing currencies that could use the bitcoin software is unlimited.  The source of bitcoins value comes from the faith of holders of bitcoins that others will accept them in the future as payment in return for other things of value – just the same as with U.S. Dollars.

Both currencies, bitcoins and Dollars, are supported only by the faith of the holders and nothing else.  Both bitcoins and Dollars have no intrinsic value.  But, one big difference between bitcoins and Dollars is that the U.S. Government will accept U.S.Dollars for payment of debts owed to the U.S. Government.  The fact that bitcoins have most of the attributes of Dollars does not mean that they are a sound store of value.  Just like bitcoins, Dollars have no intrinsic value and any value is only  supported by faith.

If a person wants to speculate, an investment in bitcoins is appropriate.  If a person want a store of value, U.S. dollars are a better choice.  But, a better choice for store of value is an investment in a diversified portfolio of common stocks.  Common stocks represent ownership in valued physical and intellectual assets – essentially a broad basket of commodities.  Common stocks themselves would not do well as a currency, but if a “mutual fund” of diversified common stocks were to issue bitcoin-type credits based on bitcoin’s software and backed “dollar for dollar” by common stocks, those bitcoin-type credits could operate as an asset backed currency,

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