With interest in bitcoin reaching an all time high now that the value of a Bitcoin has taken off, crossing the $400 mark (now $600) and stories circulating about the fortunes that have been made, I guess it’s time to ask the only question that matters; would you want to be paid for your webseries in Bitcoin?
It seems logical that the new media and web series industry, that publishes globally and increasingly collaborates across boarders would seek a way to avoid costly currency conversions, and also gain the efficiencies promised by new technologies such as bitcoin. It’s not just the practicality of commerce, there has clearly been a larger ideology affecting the adoption of bitcoin. Most notably its spirit of independence, as the first decentralised currency and its exclusion of corrupt financial institutions.
Last Thursday saw the strongest warning yet from acclaimed money manager, Peter Schiff, who is credited with calling the 2008 stock market crash, as well as the US housing market crash that started in 2005 and identifying the continuing multiyear bull-market in gold since its beginnings back at $250 an ounce (now $1,200 an ounce), that Bitcoin is in a bubble.
Speaking on Schiff Radio with callers promoting Bitcoin as an alternative, Schiff noted that the rush to buy bitcoin seemed to be based on the belief that there are only “21 million bitcoins”, which while technically true is also a misrepresentation because a “bitcoin” is made up of 100,000,000 individual virtual currency units, effectively meaning their are over 2 quadrillion bitcoin units available.
In the course of any financial assets existence, there will be a time at which its value is questioned. Schiff points out that gold at such times falls back to its intrinsic value; it’s usefulness in electronics and jewellery, not to mention the expense of digging more up. Having no physical quality means that if you can’t exchange a bitcoin then a bitcoin is worthless, putting them on par with any already existing fiat currency.
While it is true that national currencies such as the Dollar or Euro also have no intrinsic value, governments do require taxes are paid in them and so have some powerful support.
The thing that strikes me about bitcoin is how dissimilar its introduction has been to any other currency. Whereas the value of gold, or the dollar, or a wheel is obvious as it has a function. The explanations of why you should own bitcoin start off as they would do with any normal pyramid scheme. And why not? Anyone who has invested in bitcoin will see the value of their holding increase as others join the party.
“The final word, that’ll get me loads of hate mail”, I should have said. That’s because while the fans of bitcoin are vocal and passionate and it’s easy to imagine a new digital currency coming along and changing everything, there isn’t much you can buy with a bitcoin currently. Further more it’s impossible for bitcoin to be considered a store of value, at least until its price isn’t fluctuating wildly on a day to day (or hourly) basis.
The truth is that most people piling into bitcoin right now are imagining what others will pay for them in the future, and not what a bitcoin is worth to them. For this reason I wouldn’t recommend adopting bitcoin in any meaningful way until its price has been stable in some range for a number of years. You wouldn’t buy dollars to get rich quick, while people are buying bitcoins for that reason it represents a speculation at best. If bitcoin really is a technology of the future, I believe it’ll find its true value on the other side of a very large, very painful boom and bust.. which seem to have just begun.