Bitcoin may be worth $19K but what can you actually buy with it?
“Bitcoin has no natural intrinsic value. Can you buy a house with it? Can you use it for daily interactions? It may be valued at $US18,000 ($23,477) right now but what I want to know is how you convert it into fiat currency and realise that value. The risk comes at the moment of conversion,” quoting Sopnendu Mohanty, Fintech chief for Singapore’s monetary authority (MAS).
Sopnendu is right. There are real risks in a currency that you can’t easily use. There are fledgeling exchanges springing up to convert Bitcoin into fiat currency, but how secure are these?
Bitcoin’s closest ‘competitor’, Ethereum has more promise in my view.
Ethereum has a “gas limit” rather than a block size (Bitcoin has a fixed 1MB block size which limits its functionality.) The gas limit is a cap on both processing and storage/bandwidth because the cost of a transaction/function is fixed in units of gas for each type of instruction.
For this reason, Ethereum has some social utility and plausible market value. It can be used for “smart contracts” and to secure access to valuable computing power.
Now that bitcoin is in the news almost every day, expect the hackers to go hacking – to either steal more Bitcoin or hold more people to ransom .. for bitcoin.
It seems like the wild west out there at the moment and Governments and regulators get nervous when they sense a loss of control.
I’d expect strong regulations coming in early 2018 – so as always, buyer beware!