Bitcoin – no historically proven value is a problem

Bitcoins (BTC) have relatively high value for the same reason that tulips had high value in the 1600s.  All things have exactly as much value as the good and services that people are willing to exchange for them.  Today, (9/14/2014) 1 BTCs can be exchanged for about $475.  The USD and BTC have one thing in common: Neither is backed by any commodity with historically proven value.  The USD is no longer backed by gold and BTC has never been backed by any physical commodity.   The U.S. Dollar does have one thing that BTC does not have: acceptance by the U.S. government for payment of debts owed to the government.   As long as the federal government taxes people, and as long as the federal government accepts  the USD in payment of taxes, then the USD will have that value.  The same is not true for BTC.   Unfortunately, in our current economy, I must hold a certain amount of USD in order live a reasonable life. But, most of my assets are held in the form of stock in businesses.

I believe that the future value of BTC will be about the same as tulip bulbs.  It would make sense to me to have and to own a cruuency that was backed by, for example, a specific number of shares of an S&P500 index fund, or by a total stock market index fund.  That kind of money would actually represent ownership in both physical and intangible assets that produce products and services that have historically been valued by many people.

Kurt Johnson, Urbandale, IA

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