The bursting of the Bitcoin bubble
economist.com
economist.com
People weened on CNBC and other breathless, 24/7 financial news give way too much credence to short-term market flutterings and twitterings.
Something that can trace its ancestry in a vague way to Bitcoin? Maybe. Bitcoin itself? Exceedingly unlikely.
Still some calibration and iteration for Bitcoin to do as new lessons are learned about P2P currency. But the Bitcoin protocol and implementation are under active development, so I wonder to what extent it can still evolve without a reboot.
I guess this requires a trusted central third party as an eschew to hold the fund for the email recipent and for verifying the recipent's account via email.
Then the payer can transfer funds to it, using a transaction that requires signing with keys that only the payer knows and can pass to the payee directly. Bitcoin transactions can also have timeouts and have the inputs locked while the outputs are still floating.
On the other hand I suppose the existence of Silk Road is not sufficient to drive prices up, because most vendors will just convert their BTC to dollars again immediately.
Right now Bitcoin has a controlled monetary inflation of 30% a year. Its user base isn't growing. It's actually shrinking if you count the speculators as "users".
I agree with other comments, right now it might be better to hold dollars. Also gold, despite it's depreciation lately.
I think Bitcoin will survive. I can see the African diaspora using it in the near future because it's cheaper. Bitcoin won't go up in US dollars at least until some 1st world country devaluates its currency severely, and people start looking for options.
Swiss Francs, CAD, and even USD are much safer if stability is your concern. If the Euro indeed collapses as you seem to fear, you may even find yourself making gains.
(Maybe not the ammo, in Europe. Get a bat.)
Switzerland is an ideal banking country in geopolitical terms. It borders with three major economies, but is also an easily defendable mountain fortress. It has remained largely undisturbed because it would simply cost too much to invade.
That's why, for hundreds of years, it has been a banking mecca. Europe has been wracked by war for centuries, during which banking houses are periodically plundered by invading armies. But Switzerland with its defensive advantages and long history of neutrality rises above the noise. If you're a rich European, the safest place to park your money in the past 1000 years has been Switzerland.
And what happens to the money when the dictator dies? Do the Swiss banks return the money to the people on their own volition? Of course not.
I admire Swiss privacy laws, but they should be applicable only to the Swiss citizens. Switzerland has no reason to shield non-citizens and criminals from around the world.
Requiring citizenship in order to obtain secrecy is, if you think about it, not really going to work. How do you prove that the account holder is a citizen if you don't know who it is?
Neutrality means, necessarily, that you will deal with scum. But it also reduces your chances of involvement with devastating wars. The Swiss have made their choices.
Alternately, the Swiss can tell each country how much money their citizens have in Switzerland (in aggregate).
Neutrality requires secrecy. If you favour one group with disclosure and not another group, you're no longer strictly neutral. You have to treat everyone identically or it no longer works. That means that you are the refuge of scoundrels and a bulwark of liberty. The Swiss have decided entirely reasonably that that's what they want.
The Swiss desire peace. In their history they've suffered from some stunning little civil wars. In order to obtain and retain peace, they have amongst other things decided on a policy of strict neutrality. They can in part uphold this because of their geopolitical position in Europe -- an almost perfect natural fortress. It is easy to defend and they can keep themselves in food and water more or less indefinitely.
As a consequence of neutrality and defensibility, their country has natural competitive advantages in banking. Complaining about the Swiss being good at banking is like complaining about the USA being good at farming. In both cases natural features and political history have pretty much made certain outcomes more or less inevitable.
Now, if you really wants to make it right - buy water blocks for your cards, route water pipes outside your building and mine :) AC will thank you :)
Once you truly get it, most comments become irrelevant.
Usually you get better fare from the Economist.