Bitcoin, a cryptocurrency, of course if you don’t know what Bitcoin is you will not know what a cryptocurrency is; so let’s move on.
Merryn Somerset Webb has a column in The WeekendFT adorned by a portrait of herself. I can certify she is as shapely as in the picture and her décolletage does plunge as much as Bitcoin may. I have met her so this is not guesswork. She lays bare the facts about Bitcoin and wonders if it might be an alternative to gold. She mentions a rinky-dink Ruffer Fund that has put 2.5% in Bitcoin. This is the first sniff I have had that Bitcoin is beginning to come mainstream.
If you are a money launderer, tax evader and/or drug dealer you will have been in it for ages. If you are thinking of diversifying into these activities you should be interested. An obvious barrier to entry, if you are just starting up, is a Bitcoin costs around $40,000. But they are tradable in small slices. In her article Merryn writes that she owns 0.0066 of a Bitcoin.
The problem she does not address is how to get into this crap game safely. I don’t know, but my instinct is to use a reliable intermediary who will not lose the Bitcoin code. It would be bad if I go ga-ga and nobody can find the code (it will be in my sock drawer) although this and worse will happen to other Bitcoin owners so, unlike gold, there will be a diminishing supply of Bitcoins.
The price is volatile. This is because there is not much liquidity. It reminds me of the sugar market in the 1970s. 95% of the world sugar market was traded on long-term or inter-governmental contracts. So, as interviewees are so fond of saying, the 5% wagged the tail.
If I were you I’d stay on the touchline and see how this game plays out.
Today’s entry is hilarious, with multiple “actual LOL’s,” as the kids say. Thank you for the bracingly fresh perspective.